Who is your competition? It may not be who you think it is. I was reminded of this again recently as I read a Knowledge@Wharton interview with MasterCard CEO Ajay Banga. You might think MasterCard’s competition would be American Express or Citibank – no, Ajay says their competition is cash.
As Banga explained, 85% of the world’s transactions are conducted using cash. He asserts that to focus on his traditional competitors means wrestling with them for 15% of a global market. He’d rather go after the other 85%. Genius!
So, let me ask again, who is your competition?
If you operate a local theatre, you may assume Netflix and Amazon are your competition. What about other sources of entertainment?
If you sell sandwiches, certainly you’d consider Subway a competitor, what about grocery store deli counters; or even bigger, what about the grocery store itself?
If you’re selling wallpaper, I guess your competition would be anyone who sells wallpaper; but what about paint stores?
If you drive a taxi, is Uber your competition or is it mass transit, or maybe it’s walking? It probably depends on where you drive your taxi.
So, really, who is your competition and why does it matter?
Accurately identifying your competition will have far-reaching impact. Here are some of the ways it may change your organization…
Your Thinking – Perhaps more than anything else, broadly and accurately defining your competition will impact your thinking. When Coke decided a few years ago, their competition was not limited to other soft drink manufactures, rather, their true competition were all the beverages consumed globally on a daily basis by every man, woman and child, it changed their view of their business. Today, it’s not just about Coke, Diet Coke and Sprit – Coke has over 500 brands and sells more than 1.9 BILLION servings a day. This would not be the case if Coke thought Pepsi was their only competitor.
Your Positioning – If this isn’t a term you’re familiar with, it is a marketing term. It represents how you want to position your product or service in the mind of your customer, or potential customer. In the Master Card example, I don’t know their official positioning statement, but in light of Ajay’s comments, it probably says something like:
MasterCard is the safe and convenient way to pay for all your purchases.
Your Advertising – If you wanted to position your product based on the previous statement, your advertising could show a group of people at a restaurant who realize they don’t have any cash; panic turns to delight as they realize one member of their group has a MasterCard! (I know this sounds bizarre to an American audience, 50% of our transactions are already purchased using credit cards. Ajay is thinking much bigger than the US.)
Your Planning – When you change the items above, your goals change. When your goals change, so do your strategies. Then, your strategies must translate to the tactics of day-to-day operations to have any effect. And ultimately, the tactics you select should determine how you allocate resources – people, time and dollars.[GLS_Shield]
Who is your competition?
Author: Mark Miller
Mark is a business leader, author, communicator, photographer, husband, and father. He spends his time helping leaders grow.