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Brands Must Redefine Their View Of Competition


Brands Must Redefine Their View Of Competition

A few years ago, we were in a meeting with a consumer goods company talking about the way Trader Joe’s laid out its product displays. The conversation quickly turned into an assault on how inefficient the design was and how it was violating a number of product display rules that the rest of the industry had learned years ago. For example, the open freezers—while inviting—allowed cold air to escape. And shelves above those open freezers tended to offer nonfrozen goods from completely different product categories. But while the freezer design may have been inefficient and costly, and the organization scheme may have been atypical, the increasing popularity of Trader Joe’s (along with its private label products) was undeniably cutting into the company’s sales at an alarming rate. And there was nothing to suggest that the trend would change anytime soon.

Companies that fail to challenge the established views of what their industries sell and how they operate miss valuable opportunities and leave themselves vulnerable to potential disruptors. Look at the interior design industry, which has long catered to wealthy clients and priced itself too high for the average new homeowner. Interior designers fight tooth and nail for those clients. And then there’s Décor Aid, a New York–based start-up we’ve worked with that focuses on bringing interior design services to customers who have, until now, been completely ignored by the industry. Décor Aid has used Jobs to be Done principles to understand what jobs people are trying to get done when they move into a new home, apartment, or office, regardless of whether those customers currently consume design services or could reasonably afford what’s being offered today. By establishing partnerships with dealers of attractive modern furniture and creating proprietary technology that simplifies and strips cost out of the design process, Décor Aid has been able to undercut the prices of traditional interior design firms, quickly capturing market share from incumbents and attracting customers who used to rely on DIY alternatives. In addition to the traditional design markets of attending to an entire home, the company also targets jobs that were previously unaddressed by the industry, such as refreshing a room or preparing a home for a major event.

Focusing too narrowly on traditional competitors also leads companies to become complacent. They focus narrowly on innovations that sustain the business on its current path, further increasing the likelihood that they’ll miss new potential. A few years back, Kraft noticed that it had fallen victim to this kind of complacency. In 2011, the company decided to turn things around with the launch of MiO, a water flavor enhancer that enabled consumers to create their own personal types of water. This was followed by MiO Energy and MiO Fit in the next two years. Prior to launching MiO, Kraft hadn’t created a new category since DiGiorno frozen pizza (now owned by Nestlé) in 1995. Its last new beverage brand was Crystal Light (launched in 1988).3 Kraft was rewarded for its efforts to stave off stagnation: MiO reached $100 million in sales in its first year.

An Alternate View Of Competition

Looking through a Jobs-based lens provides a different view. Competitors can be any offerings that satisfy the same jobs. Importantly, this means that in different contexts, the field of competitors changes.

To see what we mean, let’s think about footwear. What is the competition for a pair of Nike sneakers? If the job is defined as providing comfortable foot support for runners, the competition may well be sneakers from New Balance or Brooks. But what about the people who are trying to accomplish emotional jobs when they buy a pair of sneakers? If the job is expressing individualism, for example, the competition could be a bumper sticker or a radical change in hairstyle. If the job is projecting status, the competition could be a watch. Nike recognizes that its core customers have more jobs than just those of comfort and support in footwear. Nike also recognizes that every time a customer satisfies one of those emotional jobs by visiting the hair salon or buying an expensive watch that customer has less incentive (and less extra cash) to buy a new pair of sneakers. That is why Nike has moved beyond traditional tactics—such as associating athletes with its products—to find new ways to satisfy emotional jobs for customers. NIKEiD, for example, allows customers to design custom shoes by choosing the style, materials, and colors of the shoes. The tagline for the new venture? “Express your identity.”

Businesses that take a broad view of competition not only differentiate their products within the market but also broaden the overall market by bringing in spending that traditionally belonged to other industries.

Competing Against Nonconsumption

Closely related to the topic of competition is the idea of nonconsumption. As consultants, we often hear of organizations that claim to be the first or only ones doing something. Our first reaction is skepticism. Many of these organizations fall into one of three groups.

The first group is the business that defines what it is doing so narrowly that it creates the superficial appearance of nonconsumption. This type of business does not lack competitors; it has simply put on blinders. A business that operates only on Tuesdays and sells only children’s DVDs may be able to claim that it is the only business of its kind, but it still competes with movie retailers, toy stores, playgrounds, and other businesses that satisfy jobs related to entertaining children. Look at the experience of Digital Equipment Corporation, a business that dominated the disappearing industry of minicomputers in the 1990s. As recently as the mid-nineties, it was defining its market segments in terms such as “workstations that cost $6,000–$10,000,” even while customers were shifting in droves to the cheaper and more flexible PCs. The company was bought by a PC maker.

The second group is the business that is doing something truly unique in its market but does not recognize that the concept has already been tried elsewhere. This group reminds us of the importance of learning by analogy. We can gain valuable insights by looking at how other organizations have solved product design challenges or satisfied similar jobs in other markets.

For example, micro apartments are becoming a popular way to increase affordable urban housing in the United States, especially as people stay single longer, but the concept is hardly considered new in high-population-density locations throughout China and Japan. Companies that are launching new offerings in their markets can often reduce their risks by looking first to similar concepts in other markets.

The third group consists of those with actually new ideas, often as the result of a new or emerging technology. Areas of true nonconsumption can present attractive opportunities for growth, but they can also pose significant risks. Organizations exploring truly new ideas need to identify the reasons for nonconsumption and measure their ability to overcome those factors. When Microsoft launched its WebTV (later MSN TV) in the late 1990s to provide Internet access on televisions, it was by no means pursuing a bad idea. Today’s most successful companies have come out with products that are variations on that same theme: Apple TV; Google Chromecast; Amazon Fire TV; smart TVs by electronics leaders such as Samsung, Panasonic, and LG. But it failed for a number of jobs-related reasons, including the fact that it could satisfy no jobs particularly well. Large high-definition TVs weren’t around in the late 1990s, and the average tube TV did little to improve the browsing experience. At the same time, dial-up Internet was still the norm, so the experience was painfully slow and unreliable. Today, companies are succeeding in this arena because there is sufficient infrastructure (including bigger TVs, faster Internet, and more Internet content) to satisfy the entertainment and information-seeking jobs that consumers have. Even great ideas may be dependent on underlying infrastructure, behaviors, and other preconditions that need to change prior to mainstream uptake.

Stacking Up Against Competitors

Don’t get us wrong. While we see far too many organizations ignoring asymmetric competitors and other threats, we are not suggesting that you ignore your traditional competitors as well! Too much of writing about strategy and innovation focuses on responding to the usual suspects, but it would be foolish not to pay them close attention. One reason we leave competition to the final part of the Jobs Atlas is so that your examination of rivals will be well informed by the other aspects of the Atlas. You’ll be able to assess the full-range competitors, including ones that you wouldn’t have prioritized had you begun your work with a typical competitive analysis.

There are three principal factors to consider in your competitive assessment:

First, what are your relative advantages in delivering against key jobs and success criteria? Procter & Gamble likes to call this the Right to Win. Do you have advantages in proprietary technology, complementary offerings, brand perceptions, customer access, distribution and alliances, or cost structure? If rivals have some advantages, how will you render them moot?

Next, what is your relative flexibility to adjust plans? Plenty of large incumbents have been upended by new market entrants (not just start-ups) because the behemoths have been unable to adjust course quickly enough. In our experience, far too many entrants worry about an industry Goliath knocking them off quickly. Outside some fields where that’s the modus operandi, such as fashion, the incumbents generally will take a while to notice something different and take longer to do something about it—and even longer to do that something well. This creates an advantage in fast-moving fields, although not everywhere. Some markets will take a much longer time to gestate, so your flexibility isn’t as vital.

Finally, what will be rivals’ impact on marketplace perceptions? Competitors may be slow to respond effectively, but they can still cause problems. They can price their subpar offerings at rock-bottom levels to force your pricing down as well. Equally, they can resort to the time-honored strategy of sowing FUD—fear, uncertainty, and doubt. Innovations struggle when customers perceive risks in adopting a new solution, even if those risks are unfounded. Industry Goliaths can be quite effective in spreading FUD throughout the marketplace. It’s frustrating, and it slows innovation, but it works. Figure out how you will respond.

Marketing Beyond Your Core Competition

Darren Coleman, a UK-based expert in brand marketing, recently shared a number of stories about organizations—from banks to real estate sellers to consumer goods companies—that have used Jobs-based strategies to differentiate and grow their brands. His experience spans Europe, the Middle East, and Southeast Asia. One example that stuck out was a prestigious racquets and lifestyle club in the United Kingdom. After engaging in some qualitative research with existing members, the club came to an interesting realization. Upon asking these members what jobs they were trying to get done in their first weeks and months, the club noticed that the answer of “play tennis or squash” was actually showing up much lower on the list than expected.

On one end of the spectrum, members talked about jobs related to staying fit and healthy or enhancing their overall well-being. On the other end of the spectrum, however, a surprising number of members talked about how they joined the club as a way of meeting people. Some were looking for business-oriented networking opportunities. Others were simply looking to meet new friends. Armed with this new knowledge, the club focused on delivering experiences that were specifically designed to satisfy those jobs.

It used its newly created Jobs-oriented experiences to focus its customer segmentation efforts, attract new members, and upsell on its memberships. Furthermore, these efforts helped the club attract premium-brand partners that wanted to expose their brands to the club’s high-net-worth membership base. Collectively, these efforts were able to boost the club’s financial performance.

Looking at what the industry is selling—or at how things have always been done—may offer some helpful insights, but it’s not the key ingredient for innovation. Organizations need to recognize that they are not simply selling products or services; they are selling ways to get jobs done. Taking a Jobs-based point of view and truly understanding what your customers are trying to get done in their lives increases the number of ways in which you can satisfy your customers, and it lets you do so in ways that set you apart from the competition.

Keep These Points In Mind:

  • Taking a traditional view of competition—looking simply at what your direct competitors are doing—can limit your long-term prospects. It’s important to challenge established views of what an industry sells or how it operates.
  • Adopting a Jobs-based lens can create a broader view of competition, illuminating more avenues for growth and sharpening your view of where potential disruptors might appear. This approach can also help ensure that your brand staves off complacency and remains fresh as the world evolves.
  • Areas of nonconsumption—those areas in which your competitors are not already playing—can offer substantial potential but not without some degree of risk. Thoughtful planning can help you understand what those risks might look like before you overinvest.
  • While a broader industry view is essential, that’s not an excuse to ignore traditional competitors. Your Jobs-based insights should prove valuable as you evaluate how your own advantages can set you apart and develop plans for remaining flexible as your industry changes.
  • Remember that even though industry incumbents may be slow to change, they’re still an important force with the ability to impact your expectations related to product quality, price, and functionality.

More of this approach is featured in my new book JOBS TO BE DONE: A Roadmap for Customer-Centered Innovation.

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