Where is the competition?

by Guy Ralfe on August 19, 2009


Being a Boston resident I was contemplating how Dunkin’ Donuts has dominated the regions coffee and donut market and who were their real competitors. I then happened to read an article on toolkit.com that gave a description of the various levels of competition an organization faces which was very clearly laid out in three tiers.

First Level – the specific brands which are direct competitors to your product or service, in your geographic locality

Second Level – competitors who offer similar products in a different business category or who are more geographically remot

Third Level – competitors who compete for the “same-occasion” dollars

Relating back to our local Dunkin’ Donuts shop their first level competitors are going to be any local, regional or national brand coffee & donut shops operating in the geographic area such as Honey Dew Donuts, Krispy Kreme. In so far as second level competition goes this would be other food outlets offering coffee and quick food. McDonald’s comes to mind as they added the McCafé premium coffees to their restaurants over the last two years to compete in this space. At the third level, competition is in the form of gas stations and 7-Eleven convenience stores offering a quick cup of unpretentious freshly brewed coffee on tap at self serve counters.

Looking at these three levels you will notice that at Level One you are competing on a product, service and location basis as the customer is having to make a choice about a specialty offering. At level two you are now competing on a product, timing and convenience basis. This is when Mum has to get the kids some lunch but is dying for her caffeine fix, McDonald’s with their PlayPlace and fast food provides a compelling option. The level three competition shows up when the customer was not consciously seeking a coffee but since they are available they will take one. Level Three transactions are the ones you generally can’t count on getting but they make a big difference to the bottom line for whoever is winning them.

At the end of the day we compete on value, but what is often forgotten, is that the customer determines what is valuable. Don’t forget Value is not just currency but includes all the associated costs of making a transaction such as time, convenience, situation etc.

This is relatively easy to see from a product or service point of view but how is it for you the individual? We are all competing in a global marketplace at multiple levels if we like it or not; in our jobs, our relationships, our careers and our social networks – everything that we do. Technology has continually upped the ante and today we live in a marketplace where we are not much different from the marketer for Dunkin’ Donuts, just this time the product is ourselves.

    • We compete with our colleagues in the tasks we perform to get the recognition and to get the salary increase or promotion.
    • We compete as a contributing part of our company to win business, produce a higher valued products and services in the marketplace to increase market share and profitability.
    • We compete with every individual out there that wants what you have – and never underestimate for a second how many that is.

You may not be able to see your competition, but be sure your competition is always looking out for you!

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