Running a successful business is all about outperforming your competitors. And it’s a never ending race. Whatever lull there is in your business, your competitor picks up from there. A biggie from yesterday loses its market and becomes a ghost organization today. Dealing with competition is very important if you are here to stay.
How do you deal with competition?
Identify competitors:
The Godfather wasn’t wrong when he said, ‘Keep your friends close, your enemies closer’. Your competition needn’t come from your peers. The advent of a new technology can wipe your business (and your peers) into oblivion. So, invest in research and make sure you are abreast of information on emerging technologies. Today, most retail chains are not exactly competing amidst themselves- they see that their sales dip with the emergence of online retailers.
Size up the opponent:
Analyze and find out what your competitor is looking for. Is he interested in expanding his market? Is he looking to maximize his profit margin? Assess his strengths and weaknesses. Look at his unique selling point, if he has one.
Classify:
There are players who are confident of their products/services that they do not respond to the price cuts or massive marketing from their competitors. These are generally well established business houses that have a loyal customer base. They are confident that they cannot be outperformed easily. There are others who fight back with similar price cuts and aggressive marketing. Look at the history of their competitive battles and track their strategies. Once you have classified the competitor, you can work on a strategy to outdo the competition and stay afloat.
Strategize:
Your research should indicate how your competition would react to your methods. Based on these findings, plan your defensive or offensive strategies to outperform the competitor. Attack strategies generally employed are as follows:
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Aggressive marketing/advertising- Even a loyal customer of years can sway towards a newer competitor if he ‘sees’ the new product enough. So, make sure your advertisements are visible to the target audience.
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Price discounts- Offer discounts and make sure you advertise that you are offering a discount.
Brand consciousness- several companies tend to segregate luxury markets and budget/economy markets. For example, a cosmetic brand might have a range of drugstore brand that is priced competitively and a luxury brand that is targeted at those who do not want to use the commoners’ brand. -
Widen product variety- A shipping company can offer just plain vanilla shipping services. Or, they can offer a little more and capture more market with the addition of services like packaging, tracking shipments, insurance on the shipment, promise of returns in case they fail to deliver on time. A customer gravitates towards the company that offers a bouquet of services than towards a company that offers just the basics.
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Reduce cost price- Tweaking manufacture processes and other factors can reduce cost price. This lets you price your product lower. A lower priced product is a huge seller in any market.
Play it safe:
Hitting your competitor below the belt might promise returns in the short run but your reputation might tank and it could hinder long term progress. So, remain ethical in whatever you do to deal with competition.
