Positioning Your Business In The Market
Why you need to know where your business stands
Just outside of my father’s company a new business has opened. It’s a hot-dog and frozen yogurt establishment.
The idea seems a good one. The south of Tenerife (for those that have never been there) is a hot place, and a place where you can have a hot-dog and a frozen yogurt for dessert sounds like a perfect lunch/dinner at a place that has no real winter as a season. But 2 things where not considered when opening the establishment:
- Its location. It’s located is a secondary street which is only somewhat busy during business hours. Having a hot-dog meanwhile walking along the beach or a frozen yogurt downtown would be great, but I can’t imagine many people having those meanwhile they are in line to fill their paperwork.
- Its competition. The street already had 2 bars, 1 bakery (which also works as bar) and 2 restaurants. That in a street that you can walk in less than 1 minute from end to end. The bars and bakery survive mainly thanks to all the businessmen & workers having breakfasts in the morning (although 1 of those bars has just recently been sold and the bakery its looking for a buyer). The restaurants offer cheap food (1 self-service) or quality cuisine (a huge differential). Who eats hot-dogs for breakfast? How can you attract clients to your establishment when you offer nothing different?
The problem with this business is that it didn't have a clear idea of what its position would be. They had an idea and didn't think well about the location nor the competition they had.
When opening a new business always have these steps in mind:
- Identify the business’s direct competition (the ones near you and on your city/state. Don’t forget about online competition also)
- Understand how each competitor is positioning themselves (e.g. claiming to be the fastest, cheapest, largest, the #1 provider, etc.)
- Compare your position with the ones of the competition (what makes you different from each other)
- Develop that distinctive, differentiating and value-based positioning concept (think if it would be enough to attract customers from far places just to try your product)
The problem with the business mentioned above is that (apart from the not so convenient location) it didn't offer anything different from its competitors. It failed to understand the different competitor’s positions and to develop its own.
The only question my father has is, how long before it closes?