Are you struggling to compete in an ever-aggressive marketplace? For this nugget, think of your competitors along the lines described by Geoffrey A. Moore who defined competitors as “Gorillas”, “Chimpanzees”, and “Monkeys”. By attributing personalities to competitors, Moore created a beautiful framework in which we can better understand how to compete.
Think of a “gorilla” as those very successful, big-box companies, like WALMART, or, in technology, MICROSOFT for computer software and APPLE for handhelds. These companies are the ones that establish the standards, make the rules of the marketplace, and shape customer expectations. Gorillas tend to be big, powerful, commanding, and often dangerous. Chimpanzees are the next biggest and next most dangerous. A monkey has no chance of toppling a gorilla or a chimp. So how does a monkey win in the marketplace?
You need to find a niche, (segment), that they have trouble serving. A niche in which you can win the leading position. Find a space in which gorillas and chimpanzees have unhappy customers, but a space that is large enough to sustain your business. Niches are often “zero-sum” games, so, be careful with your analysis. If it requires lots of stock keeping units, (SKUs), such as product line extensions, to get your revenue closer to your financial targets, you may find your operating and inventory costs make it impossible to sustain profitability. Learn early enough if your line extensions may not boost your overall revenue but may hurt your costs. What that means is that if you discover your niche is not profitable, you likely will not raise more sales dollars until you add OTHER niches to your original niche.
To go up against gorillas and chimpanzees you will need a niche in which you can succeed by selling a better product with better value-added services and at better selling prices. You will also need to saturate any niche as quickly as possible so you can determine your sustainability early enough. By “saturation” we are referring to AWARENESS which roughly equates to making 80% of your niche aware of your business model and of your compelling value proposition. Once you reach that point, you may want to cut back drastically on your awareness spending.
Even after having saturated your niche, there may be too few customers to sustain your business. At that point your sales or profits are not hitting your financial targets. You should consider reaching into , you need to discover an different niche to add to your business model. This may mean changing your value proposition or your business model in order to survive. It may also mean abandoning an original niche and shifting your proposition and business model to a different niche. Your job is to make your business profitable. Be sure your niches let you do your job.
And speaking of spending, in order to be able to offer lower costs, you will need to pinch pennies on everything: facilities, overhead, operations, inventory, staff, transportation, …everything. Especially when trying to go up against gorillas and chimpanzees.
Is there one strategy more effective than others when bumping against gorillas and chimpanzees? Moore suggests that an effective strategy may be to “slipstream the gorilla” with a similar product, manufactured less expensively, and advertised as “just as good but at a much lower cost”. You may also want to “slipstrem” the best of the chimpanzees in your marketplace.
[INSIDE THE TORNADO, by Geoffrey A. Moore. HarperPerennial. 1995. p-185.]