Beating The Competition
What do you do when a larger competitor launches a ‘blockbuster’ product or an aggressive customer acquisition campaign? How do you defend your market space? Understanding the competitive landscape is a good starting point, but when your market share is under attack, you must devise a strategy to defend your position. To do nothing is to surrender.
Beating The Competition
For any business to compete in a world of increasing competition, as manager you must have a deep understanding of your competitors. In many ways business is like playing chess. It is no longer a one-move game. You move and the competition moves to cover you. They move, and you move to cover them. In chess you can play an offensive or defensive game and it’s the same in business. But do you play an offensive game when you are in a weaker position – no. Do you play a defensive game when you are in a commanding position – no. Despite this logic, many people play the wrong way because they do not understand the position they are in relative to their competitors.
Business, of course, is more than a game. It demands boldness and daring and involves risk and failure. One does not succeed in business by playing a one-move game – winning requires constantly moving to out position your competition. If your competitor can easily anticipate every move you make, your strategy is flawed at the very least because it is unsustainable. Whether you are defending or attacking, you must have some understanding of your competitors.
What you need to know about your competitor
An important part of developing a competitive strategy is to find out all you can about your competitors. But what specifically should you know about your competitors? Very simply, you need to know who your competitors are, what their objectives are, what their strategies are. Focus on comparing your products, prices, channels and marketing activities. In this way you can identify your strengths and weakness compared to a specific competitor and be armed with the knowledge to build stronger defences against any predatory activity.
More important is to determine what the market (your customers and theirs) thinks of both you and them. At the end of the day it is only the customers’ vote that really matters. If they chose one supplier over another then the reason for their decision is all that matters.
So what if you have a better product – if the competition is getting the business something in their overall offering is making them more compelling.
Locating the Information for Your Competitor Profile
Build a profile on each of your close competitors. Surprisingly, the information you need to build a competitor profile is relatively easy to find through company website, annual reports, news articles and marketing collateral . If you have been in business for a number of years, you probably have plenty of anecdotal information on your competitors that you can add to their profile.
You can also survey the market and find out what your customers and their customers are saying, what they value highly in your respective offerings, and what factors swayed them in their final decision.
A competitor profile allows you to:
- Build information on your competitors
- Use that information to make decisions
- Make those decisions quickly
- Implement decisions into decisive action
Strategies for Handling Aggressive Players
Suppose the largest player in your market becomes very aggressive (a price war, customer acquisition, advertising/PR activity or whatever). What do you do? Nothing and hope to ride out the storm because you don’t have the resources to compete? Whilst the status quo is always an option that should be considered it is often the one chosen because other options are not developed and considered. If we go back to the chess board, your competitor has just moved their queen into a threatening position. You have to respond.
The first step is to make sure your offering is different. You MUST stop customers making direct comparisons.
If you have ever wondered why telephone companies have so many different pricing plans? It is to disguise the fact that they are all selling an identical product (a Plain Old Telephone Service or POTS as they call it). If you cannot win the comparison battle, then do not allow it to happen.
There are many ways to make your product different. Like telephone companies, you can play with the pricing – introduce deferred payments options, discounts for bundled product offerings, extra frequent flyer miles, cinema tickets with every purchase. It doesn’t matter – just make the equation different from the big guy.
And of course product differentiation is even easier. If you are selling a service or a customizable product then there are numerous ways to differentiate it – particularly in comparison to the offering of a big player. Typically a higher level of personalized service is a winner for small players.
Unusual Sales Deals
If you are selling a commoditised product where it is difficult to make the product different then be innovative. For instance if you are selling refrigerators offer to deliver within 30 minutes of when the customer wants it delivered.
Whilst it does matter how you differentiate your product, it is more important that you change the rules of engagement with your competitor so that you are no longer playing under their terms.
Locking in Your Customers
Of course the best protection of all is to lock your customers in, so that they are not even looking around at other suppliers. Long term supply contracts, affinity or loyalty programmes, effective customer relationship management and plain old strong personal relationships have a vital part to play in your competitive strategy.
Mounting An Aggressive Strategy Yourself
Sometimes an opportunity presents itself when you get to be the predator. A larger competitor might be struggling. They might have had a run of product recalls or a lot of negative PR. The ‘rumour mill’ might be grinding away in overtime creating doubt in the minds of their customers. How can you capitalize on their pain? If you know your competitor’s strengths and weaknesses, you can attack where you have an advantage.
You could mount a guerilla style attack and cherry-pick their most profitable customers through selective value offerings and targeted marketing campaigns. If they are really in trouble there might even be an opportunity to poach key staff. Whatever you do be prepared for some kind of retaliation, After all, they didn’t get to be a large player without knowing how to defend their turf!
Whether you are the market leader or a challenger, finding out all you can about your close competitors will arm you with the knowledge you need to formulate offensive or defensive strategies. You will know exactly where to target your opening salvo and will have already plugged any holes in your defenses.