A good business idea does not necessarily have to be unique or brand new, rather the business idea needs to be distinctive and better than competitive offerings.
All too often entrepreneurs find themselves in a red ocean where prices are squeezed and where too much time is spent on selling rather than closing the sale. Instead of competing to be the best or the cheapest, it is better to be different and move into the blue ocean where the competition is irrelevant.
When you position yourself in the blue ocean, you make the competition irrelevant by designing your company or products to be unique in comparison to market and industry norms. To differentiate yourself, follow this three-step process:
- Research the competition
- Strategize how to be better than the competition
- Determine how your company will be different.
Step 1: Research the Competition
First, you need to understand what your competitors are doing - what products they are selling, which customer segments they are targeting, how they price their products, how they communicate value, and what differentiates their products or services. For insights on the competition, search Google, ask your customers, attend conferences, and review public documents, publications, and promotional materials.
Step 2: Strategize How to be Better than the Competition
With a better understanding of the market and customers, strategize on how to be better than the competition with GrowthWheel’s Position Map. The Position Map helps you systematically compare your own offering to the competitors offering in terms of five competitive factors.
The Five Competitive Factors:
1) Product Design
2) Customer Relations
3) Buyer’s Experience
4) Pricing Level
5) Brand Value
The position map requires you to score yourself and the competition along five dimensions. The resulting diagram provides a visualization of your company’s market standing and position. Once you understand how the competitive factors stack up, you can strategize to strengthen your position. If you are solely focusing on strengthening your market position, you will position yourself to be competitive in the red ocean.
Step 3: Determine how your company will be different.
Being better than the competition is a slippery slope. It is difficult to be the best all the time. Instead of staying in the red ocean and striving to strengthen your competitive position, it is better to identify new competitive factors.
To identify new competitive factors, consider:
- A broader industry definition
- Targeting a niche
- A broader product definition.
When evaluating customer relations, you may notice an overlooked customer segment. If you identify an uncultivated niche, tailor your offering to the niche and develop your own blue ocean where you are the big fish in a little pond.
As an entrepreneur entering a new industry, you may be tempted to imitate the best competitors. However, the best competitors are not always the ones that do everything well. It is better to identify a strong market position and differentiate your company from the competition.
If would like guidance on developing a blue ocean strategy, contact us to coordinate your GrowthWheel one-on-one consultation.