Misconceptions about Order Qualifiers and Order Winners

Many business owners believe that their products have to match their competitors' products point for point. As I explained in my article, Avoid the Red Queen, this type of strategy isn't always a great idea.

In fact, if every market participant achieves perfect parity with the others, they will soon discover that they have commoditized their marketplace, leaving no firm with significant pricing power.

Nevertheless, pundits are quick to point out that, in any marketplace, there are order qualifiers (qualities that must be met to even have a hope of competing) and order winners (qualities that lead to significant levels of success).

Some characteristics may be necessary just to be considered by shoppers, some characteristics may be necessary for marketplace domination, and some may not matter in the slightest. The ability to identify and replicate the most vital characteristics should, at least theoretically, determine whether a firm can stand a chance of surviving in a market awash with powerful new entrants.

You need to be clear about what you are selling. If you manage a consultancy, are you selling answers to urgent questions, or are you selling prestige in a box? The former might hire from non-target schools. The latter? No way!

I could go into more detail, and many popular business resources do. That said, the traditional model relies upon two dubious assumptions:

• Every market has room for only a single type of winning product
• A given business must remain in a static market

For many businesses, neither is true. If you can't beat your competitors at their own game, you are always free to take part in a new one.

Here are a few possible approaches to your situation:

• Change the marketplace - Shifting through space and time can result in massive changes to customer preferences. For instance, when I was in Seattle, restaurants' food safety scores weighed heavily upon my buying decisions. This is because King County required very visible, and very easily understood, ratings to be placed at the entrance to every eatery. Now that I'm back in Florida, issues of food quality are far less important to me. Without obvious and mandatory signaling, getting a feel for a local restaurant's food safety rating is much more difficult.
• Change the customer - Many would consider that, all things being equal, a lower per-unit price would be an order winner. This isn't always the case. Single people tend to find that buying perishable food in smaller quantities, even when the per-unit price is higher, makes economic sense. After all, food can, and will, spoil if not eaten quickly.
• Change perception and desire - It wasn't that long ago that diamond traders mocked those who dealt in artificial diamonds. Now even De Beers is selling man-made stones alongside its traditional offerings.
• Change the use case - In the 1970s, a scientist at 3M invented a very weak glue. Seen as a poor substitute for existing adhesives, it was deemed a complete failure... until the concept of a Post-it Note came about, and the value of his creation suddenly skyrocketed.
• Leapfrog the competition - Sometimes new technologies or approaches render current order qualifiers and order winners irrelevant. For instance, it was once thought that domination of telecommunication fields required the ownership of telephone poles and copper wiring. Over the past few decades, with the introduction of satellite communications, this has been proven demonstrably false.
• Wait them out - Customers can be finicky. There were times when they demanded avocado green appliances, shag carpeting, formica counter tops, and even hammer pants. Today, manufacturers would have trouble giving any of these products away. The nature and makeup of order winning and order qualifying characteristics can change on a dime - you might just have to wait for consumers to come to their senses. Do be careful, however: the market can stay irrational longer than you can stay solvent.

We're often trained to think that competition needs to be met head-on. This is rarely the case. Often a bit of ingenuity is all that is required to survive in the face of seemingly unstoppable competition. Of course, when in doubt, it never hurts to be seen as the premium option.

Questions come from readers like you. If you'd like your questions answered, send them my way.