Gaining Competitive Advantage: Rethinking “The Competition”

What makes furniture store IKEA so successful? There is the great selection and low prices, but what about the store experience itself? IKEA understands that the shopping experience competes with not just those of other furniture stores, but also external factors that have nothing to do with furniture. These factors pose a threat to the adoption, completion, and quality of an experience. IKEA has learned to use these “competitors” to their advantage, as can any company seeking to differentiate its offerings.

Upstream Competitors

Consider the scenario of a person visiting IKEA with young children. The journey of shopping at a store does not start once you set foot in the building. At IKEA, finding a convenient parking spot can be quite a challenge depending on the day of the week (see Figure 1). The prospect of circling the parking lot may be enough to make you think twice about when, or even if, to visit IKEA.

A crowded parking lot.

Figure 1. Anticipation of a crowded parking lot such as this one may deter some people from visiting a store.

In the above example, parking is an upstream competitor: something that has the potential to prevent people from entering the experience in the first place. IKEA has addressed this issue by designating certain spots near the entrance as “family-friendly parking.” These spaces allow shoppers with children to begin their shopping in a more relaxed state of mind, having been spared the anxiety of navigating their little ones safely through a busy parking lot.

Other examples of addressing upstream competitors include drive-through coffee (no need to leave your car to get your caffeine) and websites that allow you to log in using existing credentials such as your Facebook account information (no need to set up yet another username and password you are likely to forget).

Downstream Competitors

Suppose a shopper has selected his items and completed his purchase at IKEA. Now that they have collected the customer’s money, IKEA might consider this the end of the experience. However, they know that the customer’s goal has not been accomplished until the furniture is in place and in use in his home. For some, the thought of having to lug heavy furniture home and assemble it is enough to delay furniture shopping altogether (see Figure 2).

A man reading assembly instructions.

Figure 2. The hassle and frustration of assembling furniture may prevent some from even setting foot in a furniture store.

The above example illustrates the concept of a downstream competitor: something that has the potential to prevent people from entering or completing the experience because of anticipated after-the-fact hassles. IKEA has addressed this competitor by offering optional delivery and installation services. Similarly, some retail stores offer complimentary alterations so that shoppers can walk out the door with properly fitting clothing instead of having to deal with alterations later.

Another example is the Swiffer Sweeper, which uses disposable cloths for sweeping and mopping floors. When researchers studied people cleaning floors in their homes, they realized that a key pain point of the chore came after the floors were clean: people had to clean their dirty mops. By switching to Swiffer, customers could simply throw away the soiled cloth and be done. By identifying the competition not as the mop itself, but the downstream act of cleaning the dirty mop, Swiffer redefined how floors could be cleaned, resulting in a breakthrough product with annual sales of hundreds of millions of dollars.

Simultaneous Competitors

Upstream and downstream competitors represent factors at play before and after the core product experience. There are also external factors at play during the experience.

Once customers make it into the store, IKEA must contend with several competing forces that have nothing to do with furniture. Anyone who has ever had (or witnessed) young children melt down in a public place understands the precarious nature of attempting to run errands with kids in tow (see Figure 3). For the IKEA shopping experience, children are an example of a simultaneous competitor: something people must cope with at the same time they would be interacting with your experience.

A crying child in a store.

Figure 3. A crying child may negatively affect the shopping experience for her parents and surrounding shoppers.

A simultaneous competitor has the potential to prevent people from fully engaging with or completing your experience. Understanding that not everyone can or wants to hire a babysitter when they need to run errands, IKEA has decided to offer Småland, a free, supervised area for children to play in while their parents shop the store. Kids left in Småland are safe and occupied, freeing parents to focus on shopping with fewer distractions.

Since trips to IKEA are often rather lengthy, another potential simultaneous competitor is hunger. Rather than have their customers leave, IKEA provides a fast, family-friendly restaurant inside the store so shoppers can recharge for another round of shopping. At the low prices offered, IKEA must make little to no profit on the restaurant food, but it is a small price to pay in order to defeat this simultaneous competitor.

Making the Pie Bigger

When you go head-to-head with your direct competitors, you are essentially seeking to get a bigger piece of a pie. It is a zero-sum game in which you are battling for the same customers based on a narrowly defined product offering.

By addressing upstream, downstream, and simultaneous competitors, there is the potential to enlarge the overall pie. You are bringing in new users to your product by bringing in new users to your category of product. For instance, Nintendo Wii became a huge success by making gamers out of previously non-gaming segments such as grandparents and toddlers. These new users are likely not the early adopters who are fans of your product, but people you win over by addressing what is most important to them (hint: it is not your product!)

Imagine the new parent who cruises through the Starbucks drive-through while her baby sleeps soundly in the back seat. She is not making her coffeehouse selection based on a thorough evaluation of coffee roasts, but rather based on who can help her caffeinate without disturbing her little one’s slumber.

Analogous Competitors

Upstream, downstream, and simultaneous competitors represent concrete threats to the adoption and unfolding of an experience. From a UX perspective, there is another type of competitor that does not pose as much of an immediate threat, but can nevertheless play a critical role in developing your experience strategy. It is the analogous competitor: something from another domain that sets users’ expectations for how your experience should work.

Consider how design firm IDEO fosters the cross-pollination of ideas. In one instance, when redesigning a hospital emergency room, IDEO sought inspiration by observing NASCAR pit crews. Emergency room doctors and NASCAR pit crews are analogous competitors because they both deal with time-sensitive high-stress situations handled in small teams (see Figure 4). Studying the pit crews sparked new ideas for how hospitals can better optimize ERs.

A busy Emergency Room and a Nascar pit crew

Figures 4a and 4b. ER doctors and NASCAR pit crews are analogous competitors because they both involve small teams working together in critical situations.

Let’s return to our IKEA example. IKEA is a place where there are crowds of people of all ages trying to see and find different things, often in the context of a full-day excursion characterized by anticipation, unplanned expenditures, and mental and physical exhaustion. When viewed in this light, the perfect analogous competitor to IKEA is Disneyland. Though IKEA is not in the business of amusement parks, they can take inspiration from how Disney theme parks help people navigate, be as efficient or leisurely as they desire, discover old and new favorites alike, and recharge.

By paying attention to analogous competitors, you can respond to people’s evolving expectations about domain-independent topics such as customer service, interaction paradigms, information display, and personalization. A good place to start is by looking at experiences that are ubiquitous. Facebook and Google can be analogous competitors to just about anything by virtue of being such a big part of people’s lives. While conducting research on your products, you may have heard comments to the effect of “Why doesn’t it work like Google search?” Do not ignore this feedback simply because your product is not in the search engine business; by understanding how people’s expectations are influenced by a wide range of experiences, you can determine how to respond to those expectations.

Product-Centric Versus Experience-Centric
 Competitive UX

From a UX perspective, there are two main approaches to competitive intelligence: the product-centric approach and the experience-centric approach. In the product-centric approach, you identify the direct competitors in your space and then analyze the usefulness, usability, and desirability of their offerings. In the IKEA example, some of the UX aspects you would analyze include ease of navigation, ease of loading items into the shopping cart, and satisfaction with customer service.

In the experience-centric approach, you identify the experience you want to design or improve, and then analyze the external competitors to the situation. In the IKEA example, parking, furniture assembly, and children are competitors to be contended with that apply to furniture shopping in general. They do not represent alternatives to your product, but nevertheless pose a threat.

The good news is that upstream, downstream, and simultaneous competitors are likely to be a threat to your direct competition as well. By addressing them you can turn your enemy’s enemy into your new best friend. And by understanding analogous competitors you can make your product experience play well in the context of other excellent experiences your users enjoy.

You can beat the competition at their own game by improving your product’s user experience. By taking a broader view of the experience you want to deliver and by understanding these experience competitors, you have the opportunity to redefine what game you are playing.

Types of Competitive Advantage

From a UX perspective, competitive advantage can be gained through a combination of addressing experience “competitors” and going head-to-head with your direct competition. A competitor might deliver a winning UX by making their product that much easier to use, by taking the guesswork out of a mentally challenging task, or by appealing to a higher purpose. These three approaches can be thought of as creating logistical, cognitive, and emotional competitive advantages.

Logistical Advantage

The most obvious competitive UX advantage is logistical: you deliver an experience that is much easier than the competition. You do this by uncovering your usability gaps relative to the competition and then refining your experience to minimize errors and maximize learnability and efficiency. You can also choose to address logistical experience competitors, such as the parking and furniture assembly problems in the IKEA example, by removing upstream hassles to your experience.

Cognitive Advantage

The next UX competitive advantage is cognitive: you deliver an experience that makes an otherwise mentally challenging task a no-brainer. Going back to the IKEA example, it is one thing for the store to make it easy for a shopper to find a specific piece of furniture they have in mind, and an altogether different challenge to provide guidance to someone who has no idea how to furnish based on constraints such as space, lifestyle, or budget. Anyone who has seen the wonder that is IKEA’s fully furnished and decorated 375-square-foot model apartment will understand that IKEA is not just a warehouse of home furnishings, but also a source of inspiration to those who lack interior decorating skills.

Emotional Advantage

Last but not least is the emotional competitive advantage: you differentiate yourself not by what you offer, but by why you exist. In his popular TED talk and book, Simon Sinek argues that “people do not buy what you do, they buy why you do it.”

If a company stands for a higher cause that resonates with customers, then customers will go out of their way to align themselves with that brand, even if it is not the cheapest or most convenient option. An example Sinek gives is people who tattoo the Harley Davidson logo onto their bodies, not because of the superior features of their motorcycles, but because of the lifestyle the brand represents. The emotional competitive advantage helps prevent companies from becoming commodities that can be easily replaced by the next competitor that comes along and offers lower prices or shiny new features.

Freeman, B. (2014). Gaining Competitive Advantage: Rethinking “The Competition”. User Experience Magazine, 14(1).
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