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Do you shop at Wal-Mart or AJ’s fine food?

How bout Whole Foods?  These stores, even though they sell a similar product, are not in competition with each other. And even though this sounds wrong to you now, you know its true. Because as soon as I mentioned these three stores, you had a feeling about each one.

The feeling was either, “I hate those guys, thats where I shop, I’ve never heard of them or I’m hungry .” But you have a set of notions and beliefs that either allow you to shop at Wal-Mart instead of Whole Foods or Ajs, because you would rather save money. Or you shop at Whole Foods over AJs and Wal-Mart becuase you believe in organic and green. Or you choose AJ’s because you believe in quality over price. But, you probably don’t visit all three, and if you frequent two of the stores it’s probably for specific products.

If you buy your meat at Whole Foods, Wal-Mart is not in competition with them for your meat purchases because your world view won’t allow you to buy meat there. If you buy your grocieries at Whole Foods, but your wine at AJ’s, the story you tell yourself about their wine isn’t consistent with the other stores.

And even though all three stores sell similar products, they aren’t In competition because of positioning.

One store sells cheap, one store sells green and organic and one sells quality. And the people who shop at those stores aren’t about to change their minds because they want to buy cheap, or green or quality.

They’re not buying groceries.

Your positioning matters. It will define everything from your marketing, to your color schemes to the way you speak. You can’t be everything to every one, so don’t try. You also can’t upend a strong business with a foothold on a position by completing with them in that position.

But you can destroy them by choosing a different one.

When Herb Kelleher started Southwest Airlines he had zero competition.  Warren buffet said if a capitalist had shot down the Wright brothers at Kitty hawk, the economy would’ve been better off. The airline industry in the 60’s was notoriously bad at business, despite having fares so expensive, most people in the US couldn’t afford a ticket. Herb wanted to start an affordable airline, on the side of his successful law practice, because he thought he could make it work. When Southwest airlines started in 1966 they were met with incredible law suits from the top-heavy players who were threatened by the business.  So much that in 1969 the board at Southwest tried to shut down the company because the legal fees were just too much.

But Herb offered to litigate for free and pay all court fees himself.

Southwest destroyed every airline of the day because Herb never gave up and they were 45% lower that all the other airlines by being incredibly productive. They revolutionized turnaround times for airplanes. As soon as the other airlines saw Herbs plan work, they started implementing lower fares, but they were so top-heavy and fat they couldn’t make it work.  Southwest had changed the game by choosing the right position.

Since 1972 Southwest has never posted a loss and never furloughed an employee, not by charging too much, but by being good at being inexpensive.

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That is what the power of positioning can do. But why get off course? We started out talking about Whole Foods so let’s talk little more about Whole Foods.

John Mackey started the Whole Foods concept well before the organic food revolution started, in the same era as Southwest Airlines.

The counter culture at the time didn’t want to go to Safeway. They wanted clean, green and organic, so John stated Safer Way stores in Austin. He did a great job and wanted to start a new store with his competition. He joined forces with two men who ran a neighboring organic food store to start Whole Foods. His partners, Craig and Mark understood that the new store had to be a real store which included beer, wine, meat, etc. They talked John into it and on the first day of Whole Foods opening they were profitable, without any advertising! Because the position of organic, green food wasn’t taken, which opened the door for Whole Foods to charge huge prices, which is great for them.

But, at the time of this article, there is no real market leader in the green organic and CHEAP space. When a wise entreprenur figures out a way to make this product cheaper, like Herb Kelleher did with Southwest, the game will change.

And it will happen.

That is just one of the many opportunities you have!

Look at the market you are planning on entering. One way to start with a bang is to have a HUGE differentiating factor in your business. Is there a cheap option, and expensive option, a hands on option, an all spanish option, a purple option? What can you do to differentiate yourself?

 

This is called positioning and it matters! It should dictate most everything you do in business. Your advertising, the colors of your website, your price points, everything hinges on your positioning.

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