Go where your competition cannot go

Years ago, I was meeting with executives of a tortilla manufacturer.  The company had been around for 20 years and had terrific growth recently.  I asked where they saw the greatest opportunity for their company, and the theme of their response was around their tortilla chips.

When you think of tortilla chips, you might think of Doritos or Tostitos, but when you go to a Mexican food restaurant, they don't serve you Doritos when you ask for chips and guacamole.  This company pursued a more authentic Mexican food experience.  In fact, they excelled to the point that nearly every Mexican food restaurant within a day's drive used their tortillas and tortilla chips, a remarkable accomplishment.  But when they considered how they could get their authentic tortilla chips directly to their consumers, they were competing for shelf space against the likes of Frito-Lay -- and the enormous shelving fees they pay to grocery stores for the right shelf or end-cap display.

 

It's interesting to consider that a manufacturer can have completely different customers for very similar products.  The ideal customer for their tortilla product is a restaurant.  They invested everything into building a distribution capacity to serve the restaurants. The restaurants then put their brand on everything they serve and the manufacturer fades into the background.

Packaging a consumer product is a different game.  Consumer care less about content than visual appeal, of course, so this manufacturer is going to have to get into the packaging and shelving business if they want to compete with Frito-Lay.  Or do they?

It's easy to be lured in by the top producer in your category.  They set the rules of the game. They pay cash for premium shelf space and provide the staff to keep it stocked so grocers don't have to.  But the top producers of tortilla chips doesn't have a restaurant connection.  None of them do.

I suggested that they invest in getting their product on displays where their competition cannot go: the restaurants to which they already deliver their tortilla products every morning.

This idea reeks of opportunity for all involved.  My favorite Mexican food restaurant is right down the street from my house, and I eat there a couple times a month.  The only thing they are selling at the cash register as I leave are some peppermint patties for a quarter.  Personally, I would love to walk out with some of their fresh salsa and a bag of authentic tortilla chips to enjoy at home.  The up-sell opportunities, at full scale, could mean millions of dollars of annual revenue, and create a new marketplace for similar products.

Maybe you feel differently, but in my mind, this strategy is far better than spending months to develop a lime seasoning, and millions to produce a media campaign, just to compete with Tostitos.

Go where your competition cannot go, and make your existing customers happier.

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