This is a walkthrough (using Drive Organics) of how you might deal with the different areas of struggle:
Similar Businesses (They have the same taxonomy)
Drive Organics VS Sweet Cherubim Organic and Natural Food Store.
Cherubim is less than half a block away with similar products except it is also a restaurant and bakery. These additional services are Cherubim’s competitive advantage, which, create a pull on the market, which is hurting Drive Organics. They are both in the same category on the first level so we can level the taxonomy there.
Drive Organics solutions:
-Exploit their own competitive advantage (lower prices, frequent sales (location isn’t a factor)): Advertise sales and prices to the local target market
-Eliminate competitors edge: open a bakery and restaurant (Expensive) or bring in products from a local bakery and provide meal options.
Businesses in Different Industries
Drive Organics VS Safeway
Safeway is located near the skytrain station about 10 blocks away from Drive Organics. Drive Organics is not bleeding to death from this competition; however, it would be doing a lot better if it wasn’t there.
Safeway and Drive Organics have two different taxonomy chains, so if you follow up Safeway and Drive Organics until their chains meet at the 2nd highest level. They differentiate from each other because one is a Chain Store and the other is an Independent Store. This is the level that Drive Organics competes with Safeway. Use this levels competitive advantages to compete.
Drive Organics Solutions:
-Exploit their competitive edge for that level (convenient location, local produce): that means they can charge a little more for their good location and advertise their fresh veggies and baked breads.
-Eliminate competitors edge: it is not practical for an individual store to offer the same services and products as a chain store, but as a group this more of an option (Grouping is discussed in another blog post)
Drive Organics VS Rent Increase
As the population density increases for the area around Drive Organics there is more demand for business property; which leads to an increase in rent prices. This affects the monthly costs for Drive Organics. They have to find a way to incorporate that cost. Look to see at what level it affects their competitive advantage. Its their lowest level where frequent sales and lower prices is their advantage.
Drive Organic solution:
-Option 1: Reassess when the increase in population occur and see if there is a corresponding increase in sales. If so the additional sales will cover the cost.
-Option 2: If your rent is increasing chances are your competitors’ rent are increasing as well. Do some market research. If this is the case, raise your prices to incorporate the rent and you will still maintain your edge.
-Option 3: Drive Organics may find that neither of the above work and so they reposition their advantage. Look at the local market and see if there is a need that is not being met. Maybe a 24 hour Health Food store or a store that offers free health-conscious cook classes.
-Option 4: The market may be saturated and Drive Organics may decide that it is in its best interest to shift location or try a different industry.
Questions for inquiry:
Where does your business fit it? Who are your struggling against? These are specific examples but the process for dealing with problems in that area can be applied for any issue that comes up. Do you have a structure for dealing with your struggle? Once you have identified your struggle, what will you do next? Look to your groups to fortify your advantages.