Posted by on Jan 14, 2009 in Book | 2 comments

Last Fall I started a project to create a second edition of my book: The Entrepreneur’s Notebook.  Periodically I present a piece of the original text, and ask for suggestions or additions.  I was hoping some of the great marketing minds I have met on the net would weigh in on some of the topics.   And I have gotten some good feedback.

But I got busy, and haven’t put a section up recently.  Well it is time to get back at it.  Contributors will be included with credit in the revised text, which I still hope will be released some time next summer.

Today’s Text comes from a new section on Your Competitors I want to add to the 2nd addition. What do you think:

Even new, completely innovative products have competition. Long before your product comes into the market, customers have found ways to solve their problems. Understanding who your real competitors are is critical to your business success. As you analyze your competitors, it can be helpful to think about the three levels of competition.

Level Two. These companies offer an alternative solution to your customer’s problem. On the surface, they may not appear to be a direct competitor because the product or service is dramatically different. If, however, this alternative solution solves your customer’s problem, it is a competitor.

Level Three. These companies or products do not solve the same problem at all, but compete for your customer’s limited resources.

Your business may not have competitors in every category, but you have some. As you think about the solution you provide from your customer’s perspective, why would they choose one of the alternative solutions? Price? Habit? Unless you understand why they are making the choice, it will be difficult to help them choose you instead.

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  • http://couragebuilders.com Dale Collie

    Hey Lorraine — you’re just too sharp … I recall your telling me about this some time ago, but I’d forgotten … Maybe I can do something similar with my leadership books.

    So… Now we have Level 4 – more today than ever before.

    Level 4 – These competitors might be companies in the traditional sense, but more than likely they are “events” that take the attention of your customers in such a way that they will just not be buying your products, or the events take priority on supplies in such a way that you cannot supply your customers regardless of how great the demand, e.g. 9-11, death of Princess Diane, Katrina. The proximity of the event and its personal impact will influence the duration of the “distraction.”

  • http://www.trollaw.com john troll

    Lorraine:

    Who is a Level 1 competitor?

    The text seems limited to the compeittive process for goods rather than goods/services. Services now rule!!

    More subtly, I would argue that the competitive process is different for truly innovative products/services. Such products/services do enjoy a honeymoon period where they so dramatically solve a problem that they enjoy a semi monopoly. The factors that you list gradually overtake them. Your comments more accurately describe the new entrant whose product is not truly innovative.