I remember that, when I finished my first degree and was looking for a job, every other advert was from an organisation describing itself as ‘the leading player in their market’. However, when you were called for an interview, you would often find an organisation that you would not necessarily label as ‘leader’. Clearly, becoming a market leader can be just a matter of defining the market narrowly.
The problem with defining the market very narrowly is that it may be very good for market share rankings or even morale, but lead to a false sense of security.
When the market is defined narrowly, we get what is called the ‘product market’. For instance, we have the market for game consoles, the market for management consultancy, etc… The focus on the product market tells us who the direct competitors are.
If the market is defined broadly to include all possible technologies considered by the customer, we get a ‘solution market’. The focus is on the need that is being satisfied not how and, therefore, includes a variety of indirect as well as potential competitors. From this perspective, game consoles are also competing with computer games, TV, movies and other forms of entertainment; whereas management consultancy is in competition with all other sources of strategy advice.
The question that emerges, however, is how broad does the market analysis need to be? For instance, should a company that makes kitchen utensils pay attention to what Apple is doing?
The answer is… YES. Because the customer thinks in terms of experiences, not industrial codes.
In an article posted last week, Michael Hinshaw notes that customer expectations are shaped not only by what happens in the relevant industry, but also what happens elsewhere. He wrote:
‘Across the board, we’ve seen that customers aren’t just comparing the experience of dealing with you to the best in your industry – which they are, of course – but they’re comparing you against the best experiences in the world.
▪ If Apple can make my mobile computing experience easy, why can’t you?
It doesn’t matter that you sell software, or cars, or that your customers are consumers or business buyers. Customer expectations of experience are based on their perceptions of what experience should be. And just as those expectations are getting higher every day, the level of patience with and forgiveness of poor experiences has dropped to near zero.’
So, if you are in the business of designing and manufacturing kitchen utensils, you would do well to keep an eye on Apple. Because, you see, if Apple made kitchen utensils, this wouldn’t happen: