Product Behavior

Many of my clients have too narrow a view of the competition. They tend to only view products that sell on the same shelf, in the same store, as their own as competitors.

A few years ago I did some work for a power-tool manufacturer trying to revamp a product line. The devices sell in places like Target and Sears, and several companies sell similar products. The companies are all locked in a features war complete with patent minefields and lawsuits.

My client’s consumer segmentation only included people who use those products, and to them, if you didn’t own one of those products, you weren’t in the market. And if you didn’t make one of those products, you weren’t a competitor. Of course, there were dozens of other products that could do the work of my client’s tools. Some worked chemically, some relied on the consumer’s muscle power to the hard work. Consumers could rent an industrial version of the product at Home Depot, or just hire a professional to do the work.

Those other products had definite advantages over our client’s product. But our attempts to bring in those elements that made these other competitors interesting were violently rebuffed. Their view of the world basically ended at the end of their aisle at Target.

Many companies see their products as simply the best way to solve a problem, and competitors are merely those other companies that are trying to solve the problem in the same way. Companies like that (like my client) end up locked into just doing the same thing over and over, iterating and adding marginal new features. Cars, cameras, cell-phone providers; no one ever creates a breakout product because they don’t look outside their neighborhood to see the other competition: substitutes.

Substitutes are simply alternative solutions to the problem your product addresses. There’s almost no product you can dream up that doesn’t have an interesting substitute; after all, consumers are probably already solving the problem some other way. And not bothering to solve the problem at all is a major (and overlooked) substitute. My client considered people who didn’t buy any product in their category as if they didn’t exist. Too bad, because it was a substantial number of consumers – like, most of the market.

Who’s your biggest competitor? What’s your biggest substitute?

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