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Three circles for the bigger picture

It seems like some of the ‘marketing theory’ posts I’ve randomly done here from time to time are quite popular, so here’s another one to get you thinking: the “Three Circles Framework”. This can be a neat way of evaluating the bigger picture of our products and services.

Start with a simple two-circle Venn diagram representing our offerings and our customers’ needs. This is so simple I’m not even going to draw it. The intersection is the stuff we supply that customers want. The remaining two sections are what we supply that customers don’t want, and what customers want that we don’t supply.

That doesn’t tell us much that isn’t obvious, but now let’s add a third circle representing what our competitors offer. Now we have seven discrete areas:

The intersections are of course the most interesting parts. Area 1 will contain the products that our customers buy from us but our competitors don’t supply. Conversely, Area 3 will contain the products that our competitors are selling but we don’t supply. Area 4 are the products that we all supply, which is probably what defines a competitor in the first place.

The questions we need to ask include why we have products in 2? Are they just because our competitors do, or do they genuinely bring in customers to 1 and 4? Why do we have a free run in 1? Should we compete in 3? And what further advantages could we offer, in 4?

Once we’ve positioned our products and services in the various parts of the diagram, some interesting questions come to light.