Discuss the direct and indirect competition, and differentiation strategies of vending machines business.

 

Competition (referring to a coffee shop as a business idea) Indirect Competition Need to be aware of any/all goods and services that your client may choose to spend money on. For consumers on tight budgets, buying a cup of coffee may be a luxury that they avoid during "tight weeks or a luxury they choose to avoid in order to control spending. To understand Indirect Competition, you need to think about the ways that your clients use their money and where your product/service fits among their needs/wants. Direct Competition This is the more obvious discussion point... is there a Starbucks across the street? Here again, you have to think beyond your initial scope of "coffee shop. Depending on your Differentiation, you may be competing with breakfast and fast food restaurants, bars, music clubs, art galleries, etc. While some of these are "indirect to the coffee shop, they are "direct" to your differentiation. This will come into play again next week as we discuss Value Propositions and Customer Segments. Differentiation S Add Value - It is not enough to be different, your differentiation must add value for your clients. It's easy to be different... "I will sell elephant themed pajamas at my coffee shop. We are absolutely the only coffee shop within 200 miles that offers these kinds of products. Given the popularity of elephants. clients will love our fluffy pants and our fresh brewed coffee!" I am certain you can find all kinds of data about how many people love elephants and how many people drink coffee, but it doesn't mean that your differentiation has added value to a client base that will support you. On top of that, if your pajamas sell really well, the coffee shop down the street can simply add pajamas to their menu.. eliminating your differentiation. Sustainable-The pajama example above is not sustainable. If your competition can easily copy or outperform you on your differentiation strategy, you don't actually have a differentiation strategy. There are few things that a competitor can't try to mimic, so you will not be able to stop them from trying. Just make sure you're better at it and have built some level of brand loyalty to ensure your clients will keep coming back.