Recently while brainstorming an idea, we tried to find out who our competitors are and what our differentiating factor is. Our differentiating factor boiled down to the fact that most of our biggest competitors in the field are targeting someone else as their primary customer, changing the entire design of their offerings. And as expected, our biggest fear becomes the competitor which is targeting the same primary customer base as we are planning to go after. To identify the primary customer base, and strategize the product around it is as important as anything else in a business.
Consider two blogging platforms as an example. I use WordPress to blog. WordPress provides bloggers a great set of tools to make blogging easy. A decent editor, excellent reports about the readership of the blog and great way to customize the blog makes WordPress an attractive choice for bloggers. The bloggers are the primary customers of WordPress, and WordPress focuses its resources towards their needs.
On the other hand, consider some other platform that provides a whole lot of services along with blogging, but with no special tools to help bloggers. For that platform, bloggers are not the primary customers. The primary customers may be social networkers, communicators or for that matter anyone else, and they might be serving them with excellence. The important thing is to have one and to know who that is. There’s nothing wrong in offering secondary services to your primary customer base because that might serve some of their needs and help you retain them.
The point to note here is, you must know your primary customer base and work to serve their basic requirements first. I believe having a niche as the primary customer base to start with will increase your chances of being successful. Reason being you will have a really focused group and you will know where to allocate the resources…after all, great strategy is all about allocating the resources in the right way.
So finally after long time I recently had a really productive day (working). A day working on my laptop, without Internet connection. And guess what, no emails, no checking of news or stock quotes, no Facebook, no blog surfing and no YouTube. During this time, I got 80 emails in my inbox, a couple of big news in my Facebook newsfeed, my unread blogroll went to an all time high, Microsoft stock touched a new bottom and Dow Jones…well let’s not talk about it.
As much as all these – staying connected, getting news, social networking – are necessary, it consumes a lot of time which on a non-connected day can be used doing something else. This is a typical example of technology being a necessary evil.
It’s not just Internet, there are many things – otherwise known as technological blessings – that fall in the same category. Take cell phone as an example. I have a few hundred contacts and their phone numbers in this device. How many phone numbers do I remember? Less than five of them. It is great that I can reach any of my contacts in a click, but losing my cell phone can be a really frustrating experience (I better take a back-up).
This day without Internet connection also made me think about technological dependence from another perspective. Every technological advancement creates new human dependencies on the technology. Eventually it becomes a necessary part of our lives which we – by default – expect to have. The importance of that thing is realized on the day we are without it.
So here’s an experiment: think of one thing that you by default expect to have all the time. Live for a day without it. You will definitely appreciate having it more than ever before!
I will end the strategy series with Starbucks.
Disclaimer: This analysis is based solely on the strategy discussion in Jack Welch’s Winning.
You enter a typical Starbucks and what do you see? Bunch of people sitting with their coffee cups reading, working on their laptops or talking (usually) softly, soothing jazz music playing in the background and baristas standing at the counter ready to take your order and prepare a fresh cup of coffee. One might argue why people pay the premium on each cup of coffee they buy at Starbucks. Apart from the great tasting coffee, the answer lies primarily in this atmosphere that Starbucks creates at its stores.
This links directly to the strategy of Starbucks: making the local Starbucks as the third place for the people in the community after their home and work. How is this atmosphere created? By providing friendly service, likable music and of course, great coffee.
In the recent years, Starbucks is facing growing competition from the like of McDonald’s, and the interesting thing to note is that McDonald’s is taking potshots at this very strategy of Starbucks in its advertisements. To counter the initial competition, Starbucks still maintained the same “third place” atmosphere and complemented it with serving simple breakfast and lunch options at its stores. This fit pretty well in its basic strategy. Next they started the $1 cup of coffee, which added an economical option to its premium-priced beverage lineup, but still maintained the atmosphere. It will be interesting to see how Starbucks will further reallocate resources to take on growing competition from the fast food chains.