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You’ve probably read a lot about competition and competitor analysis tools and methods (and that’s great). The problem is that most of the well-known tools, methods, and strategies used by companies to assess competition only address the obvious competitors: the products and services that can be placed in the same categories as your offerings (or at least in adjacent ones). This traditional way of understanding competition is based on a product perspective and, although identifying the products that share key features and functionalities with the ones your organisation offers is essential, it’s often not enough. You might be losing customers to the non-obvious competitors that cannot be found when we get stuck on the product perspective.
Think about your favourite chewing gum brand. If you don’t have one, choose the one you think is the most popular in the market. Now, think about its competitors. The companies and products that keep the managers that sell the gum you chose up at night. Try to make a list of five names and write it down, if you can. We are going to reflect upon it.
Let’s say you chose Trident, one of the market leaders, as your go-to gum. If I had to guess, I’d say your list of competitors comprises of other chewing gum brands such as Extra, Orbit, and Eclipse. It might even contain other types of sweets, like Tic Tacs, Halls, or Skittles. These are all products that share physical and functional similarities with Trident and definitely compete with it for market share and shelf space. But if the team at Mondelez International, owner of Trident, managed to make its gum superior to all of these other brands in the main product attributes (e.g. taste, texture, healthy sugar levels…), could they believe that all of the competition risks are now mitigated? Unfortunately, no. The aforementioned brands are product-perspective competitors and, if we look at competition from other perspectives, it becomes clear that Trident has other risks to address.
To change perspectives, let’s look at this phenomenon: global gum sales have declined 15% since 2007. Experts have associated the sales drop to an unlikely competitor, a particular product that was launched exactly in 2007. Can you guess which product I am referring to?
The decline in chewing gum sales invites us to look beyond the product perspective and find hidden competitors that might be stealing our customers. Photo by Karina Miranda on Unsplash Yes, I’m talking about the smartphone. The iPhone was introduced to the public in 2007 and, apparently, together with the several other smartphone models that followed, has been competing with gum, not as a chewable sweet treat, but as an alternative for killing time. That’s right. Smartphones and gum couldn’t be more different as products, but both seem to be good options for people trying to kill some time and fight boredom. The Economic Times shrewdly reported that chewing gum was a favourite way of passing time, but the smartphone is more and more filling every window of free time we have. It even distracts us in waiting lines, robbing the chewing gum options on display from the attention needed to generate impulse buys.
When customers choose using a product over the other in specific situations (e.g. choosing to check Twitter or Instagram on the phone over chewing gum when boredom strikes), it doesn’t matter if they share product features or functionalities, they are still competing for the customer’s time and attention.
So, if the smartphone is a non-obvious competitor to chewing gum companies, how could they have identified this and other invisible competition threats out there? The answer is in complementing the product perspective with frameworks capable of identifying these hidden threats. The Jobs To Be Done (JTBD) theory provides a broader interpretation of competition that can serve as a good framework.
Jobs To Be Done is an innovation theory that states that customers don’t simply buy products, they ‘hire’ them to do a job; when a Job To Be Done arises in people’s lives, they hire products to help them get that job done. JTBD are essentially problems people are trying to solve and relate to the idea of progress: “if I get this job done, I will find myself in a better life situation, thus I will be able to do/feel things I am not able to do/feel now”. Jobs To Be Done usually start with the words “Help me…”, “Help me avoid…” or “I need to…”.
When we use a JTBD perspective, competition changes.
Alan Klement insightfully points out that competition is defined in the minds of customers, and they don’t define or restrict competition based on the functionality or physical appearance of a product. Alternatively, they use whatever helps them make progress against a JTBD.
Therefore, competition goes from “products/services that share similarities” to “anything that can be hired for the same Job To Be Done”. And “anything” is not restricted to products or services, it can be really anything that can help people achieve progress (i.e. activities, environmental changes, other people…).
Back in the early 2010s, if chewing gum companies had realised their products were being hired for the JTBD “help me kill time and avoid boredom” (some of them probably did), they could have seen the smartphone as an emergent and powerful competitor. Such realisation could have resulted in innovation strategies potentially more creative than adding 3 different flavours to a single gum or engineering sugarfree options. One possible strategy would be to focus on the other jobs for which chewing gum is hired (e.g. “help me avoid bad breath”) and try to increase sales through them with targetted marketing strategies and product improvements.
Now, hopefully, if I ask you to make a list of Red Bull’s competitors, you’ll write down Monster Energy and other energy drinks, but you’ll also think about the jobs Red Bull is hired to do. Then your list will become more diverse and include things like coffee, energy caps, açaí, smoothies, a new mattress, meditation… Don’t you agree that all of these can be hired to do the job “help me get the energy I need to face busy days”? Realising this is important. Convincing people to switch from Monter Energy to Red Bull is one thing, convincing them to switch from meditation to Red Bull demands a completely different strategy (and it’s probably way harder).
When Reed Hastings said that Netflix's biggest competitor is sleep (or when the company said that they “compete with (and lose to) ‘Fortnite’ more than HBO”), it became clear that the company does not limit itself to the product-based view of competition. And that’s perhaps one of the secrets to their ability to remain relevant.
What about you? Which invisible competitors might be hurting your products?