Are you losing customer loyalty or competing increasingly on price? Perhaps it’s time to redesign your business model to solve a higher-level problem. I call this strategy “moving up the food chain.” Let’s look at two recent examples in the news.

Target is adding solution-focused advice and services for college students to help them answer the stressful yet fun-filled question, “How will I decorate my dorm room?” Like other chains, Target has the products college students need; it even built brands to address small-space needs with on-trend products. Its new additions will reinforce Target’s value promise – enjoy your shopping experience and feel confident about your purchases.

A newly produced YouTube series “will provide tips and tricks that college students can use while designing their own dorm or off-campus spaces. YouTube stars Todrick Hall, Mikey Bolts, Tiffany Garcia and Ann Le will each host a four-episode series that follows a real college student as they prepare for campus living. Veronica Valencia will make over each room and provide design solutions. The series will debut throughout July and August” on YouTube channels of Target and each YouTube star, according to a Target Press Release.

Target is also wrapping its product offering with:

• A college registry service to give relatives ideas for gifts
• A free-shipping subscription service for sending a monthly care package to a student. Unlike the candy-snack boxes that colleges promote to parents, moms can add the toothbrush they know their child will never purchase
• An “In a Snap” mobile app that makes purchasing from Target’s “Back to College” catalogue simple
• A price-match promise
• A 5%-off credit card

Walgreen’s is another company moving up the food chain. Initially it added in-store clinics for routine primary care. Then it elevated its rewards program with health-improvement services and solutions. Now called Balance Rewards, the program started offering points from step counting (using an Omron pedometer) in late 2011; connected health devices and apps were added a year later (e.g., activity, sleep, blood pressure, glucose, oxygen saturation and weight). 81 million active users are involved in the loyalty program’s purchasing and/or health improvement incentives. Now, according the Mobile Health News, Walgreens is “bolstering its rewards program by training some of its pharmacists and online customer reps in Stanford psychologist and mobile health expert Dr. BJ Fogg’s behavior change methodology, called Tiny Habits.” New program initiatives will encourage tracking of more activities, nudging better behaviors to become habits.

Walgreen’s combined efforts are a significant business model redefinition and position the retail pharmacy chain to offer primary care services to insurers, corporations, and directly to consumers. In fact, Walgreen’s could scale primary care services in ways local physician practices cannot. That’s an exciting prospect given our nation’s need for lower costs, greater access, wellness and better chronic care management.

Examples of moving up the food chain are many. Contrast Apple versus HP. In my own consulting practice I’ve helped a precast structural component supplier (Finfrock) become a design-build construction firm and a machined parts manufacturer (Acme) become the outsourced machining operations for its large equipment customers, just two examples among many more.  In each case, leaders elected to view the scope of their business as a core strategy decision versus a historical fact. Revenue and profits grew attractively. As Finfrock thrived, the precast industry consolidated and remains commoditized.

The key to success in expanding your scope is to address an unmet or poorly met market need. Finfrock reduced costs, time and risk on commercial building projects. Acme allowed its customers to focus resources on more strategic activities and investments. Ideally, focus on existing customers who already trust you and add solutions that leverage existing skills and assets. Experiment. Find what works. Then move forward to redefine the business you are in.

What business should you be in?