What Are You Missing?
A short while back, Starbucks coffee made a change to its coffee menu that got my attention. Instead of labeling the beans Light, Medium, Bold and Extra Bold, Starbucks went with Blonde, Medium and Dark. Simple enough, right?
But when I inquired about the Blonde roast, the young lady behind the counter informed me that "If you really like the taste of coffee, you wouldn't like it. It's for people who don't like the taste of coffee but who still want to drink coffee. It's basically water." Gotcha.
Blame the change on Dunkin' Donuts, McDonald's and every other company that sells coffee. See, Starbucks, for all the Danishes and sandwiches it sells, is seen as a coffee house – meaning the folks who don't fancy themselves coffee drinkers would rather grab a cup of joe at McDonald's or anywhere else that serves swill.
After Starbucks realized it was never going to capture those customers – and with Dunkin', purveyor of some the wateriest coffee around, bearing down — Starbucks finally made the all-important move to add a watered-down version of coffee so those folks who really don't like the taste of coffee but who'd grab a cup to go with their overpriced ham sandwich can spend more at a local Starbucks than at a competitor's.
When I saw the changes, I said to myself, "Starbucks is going for the jugular – taking back any ground it might have lost and hitting its competition where it hurts, in the wallet."
This is about more than coffee. It's about not ceding an inch to the competition, and it's something companies in every industry do, though not often enough in my opinion. Here's how you can use this competitive mindset to benefit your business.
1. Stop thinking you need to be the best. Author and consultant Michael Michalowicz has written extensively about this, but a key mistake many business owners make is in thinking they need to be the best to be successful – i.e. have the best products/services. Actually, as he so brilliantly makes clear and backs up with anecdotal evidence, it's usually better to be different in some way, not better. Being better in business pursuits can be a rather vague notion to begin with, but being different is easy to single out. I can think of several products that have enjoyed recent success at retail, owed to the fact they looked different enough that anglers felt they needed to try them. Remember, getting a consumer's attention is the first step to making a sale.
2. Fiercely defend your territory. Truth be told, neither Starbucks nor Dunkin' Donuts much cares about the business of selling coffee. No, the real margins are in food and those fancy sugar-filled drinks they sell. If you're ever in line at a Dunkin' or Starbucks, you'll see what I mean: You'll be hard-pressed to hear a person order a simple coffee. So why did Starbucks make the change? It's simple: It'll aggressively defend its turf against all suitors, be it McDonald's, Burger King or the local gas station. Any business that sells coffee is a potential threat. Now the folks who'd normally stop at Starbucks for a muffin, but who would grab a coffee from 7-Eleven, can get both from Starbucks. I've said this a seemingly million times, but tackle retailers must to start to apply this logic. Instead of selling just tackle, they should consider carrying any item that an angler would take fishing with him, including apparel, eyewear and sundry food items.
3. Quit thinking you need to be first. Everyone likes to talk about the first-mover advantage – the advantage gained by being the first company/individual/product in a market segment – but there is such a thing as the first-mover disadvantage as well, where latter entrants are able to capitalize on the successes and failures of the first mover(s). Some folks feel this is what happened with the Alabama Rig: Mann's and Slick Lures opened up a category (first mover), but because of price and what some see as design flaws in the original, Mann's and Slick have been hurt by those who followed. Instead of worrying about being first, maybe do a simple line extension – add a new product to an existing lineup that you need to focus on to ensure that customers who want to fish your brands have the products they need.
I challenge you to look around your business to see what items, services and products you can add to keep competitors at bay. Whatever you can do to keep loyal customers loyal only to you is a net positive.
(Image provided by Jeck_Crow, via Flickr.)