Outlining the Operating Environment
“Around a perimeter of 50 km we have many other tourism businesses that have almost the same products, same prices and even work with the same customers as we do. It seems that we all, I mean the ones who are specialized on activity programmes, in this village, operate in the same business area! We of course do a lot of co-operation in very different ways. However, when thinking of developing products, it would be great if we could succeed in differentiating our offerings. In that way instead of competing with one another we could promote the well-being of the whole village.
A project has just been helping us to take a broader perspective on our businesses and thus think about what we could offer people so that our whole village benefits without disregarding the profitability of our operations. The main challenge we all face is finding good ideas that could help us to develop such products.”
The availability of services within a tourist destination is often concentrated on very specific locations. As a result, these locations are forced to compete fiercely over potential customers. Destinations suffer of a me-like syndrome: when a product proves to be successful, it is copied very fast within the destination and then from destination to destination. Could it be possible that the key to success lies in looking beyond the limits of traditional industries and predefined business areas?
Create your own category in which you can shine as a star: Restaurant Juuri
Traditionally the idea of competition has been limited to predefined business areas and product groups such as restaurant services, hotel, conference services or activity programme services. This makes competition tough, as there will always be someone who can offer the same services at lower prices and sometimes even excelling our quality level.
It has been pondered, for example, in the media why restaurants want to operate in a category where they have no chance of succeeding. Why should the seventh pizzeria in town be the sixth best? Why would someone want to create an extensive à la carte menu – for which they lack resources – when there would be enough expertise for making the best soup place in town? Successful entrepreneurs are either extremely clever or they are good at creating their own categories where they are shining stars. Tapas portions made according to Finnish culinary traditions are a good example of how a restaurant can create their very own category – combining global and local elements – and be successful in it. Restaurant Juuri, which was selected as the restaurant of 2010 by the Finnish Gastronomy Society, has done just that.
Looking beyond industrial boundaries: Swarovski Crystal World
Product developers may release themselves from traditional competition by creating their own or a broader category and perceiving their markets differently.
Czech Daniel Swarovski founded a company in 1895 that has become famous worldwide as a pioneer in the crystal and lately in the jewellery industry. Fierce competition in Bohemia’s (today Czech Republic) crystal market and an attractive production site brought Mr. Swarovski to Wattens to Tyrol, Austria. It was there that Crystal Worlds arose in 1995 in honour of the 100th anniversary of the founding of Swarovski.
The case of Swarovski shows how companies can move across industries from traditional sectors into another market and create out of industrial stories a meaningful destination for different audiences. Also in Lapland, we can find good examples. Marttini, which is well-known as a producer of high quality knives, has also operated within the market of souvenirs. Gold Prospector museum, too, was transformed from a gold panning site into a tourism site. And WoodJewel is attempting to combine crafting and tourism.
Defining your market: Arctic Snow Hotel
The idea of Arctic SnowHotel, which uses snow and ice as building materials, is not to offer accommodation and restaurant services. The product is more complex, deeper and more multilayered than that. It is about challenging oneself, survival and learning. Instead of positioning itself in the accommodation, activity programme or other traditional business area of the tourism industry, Artic SnowHotel has identified a new market, its own category, detaching itself from traditional competition.
From key service to a key partner: Ylläskey Ltd
Ylläskey Ltd is more than a traditional key service company. The company has been in the market for just three years, but it has been able to create – despite the recession period – a strong customer base within the destination and demand is continuously growing. The entrepreneur’s vision has been to develop a service concept that nobody else has been able to offer so far, and create added value to both cottage owners and tourists.
Through experiential knowledge, the entrepreneur has gained a thorough understanding of the customer journey and the critical gaps along that journey. Right from the start, the company has taken part in QUALITY 1000 – a Finnish quality programme for tourism companies – and developed the quality of cottage vacation rentals in close cooperation with the cottage owners.
In addition to key and cottage maintenance services, Ylläskey Ltd offers tourism information and cleaning services. The company is situated in the centre of Äkäslompolo village in the Finnish province of Lapland. The office is a cosy “living-room” that invites customers to come in for many other reasons that to simply pick up their keys. Visitors can get information about services and events in the village, buy activity programmes, read newspapers, use free internet or simply enjoy a cup of fresh coffee around the fireplace.
The most avid skiers can use the luggage storage service and still go skiing before returning home, though the cottage key has to be returned early in the day. The company also offers tourists sauna services in cooperation with Lapland Hotel “Äkäshotelli”. However, as a future vision, the idea is to offer these services around the year in the own premises of Ylläskey Ltd.
What is this about?
In the traditional approach to competition, markets are determined according to pre-given product categories or industries were products were produced. For example, we refer to restaurant services, activity programmes and accommodation services. This makes competition fierce. There is always someone who can offer the same product cheaper and sometimes even excelling a certain quality level. As product developers we can get rid of traditional competition by creating our own or a wider category, perceiving our business area differently and creating a fertile ground for sustainable competitive advantage in cooperation with different stakeholders. Now and then we need to look beyond the boundaries of our own company, network, region and even country, reaching different world corners, and thus becoming familiar with multicultural global operating environments.
The definition of business areas should become more appealing and be built upon market-based categories. So called post-modern markets, where meanings play a crucial role. These kinds of new market categories can help the product developer to transcend and break through the rigid boundaries of traditional global business areas. For example, product developers can position their products (and even entire businesses) in the market of care, wellness, hope, romance, freedom, traditions, prestige, big questions or change.
Open the product developer’s workbook (link on the right). It will help you to apply the content of this page to your own case.