Tuesday 1 July 2014

Entrepreneur Know Thyself – How to Keep Ahead in the Market


Whenever I ask entrepreneurs to name their competition and they reply with `we don’t have any` I sigh silently and die a little inside. Having no competition is usually not a sign that you are a visionary genius. It’s most often a signal that others have already thought through your idea and discounted it.  Competition is actually the evidence that you are on the right track.

But competition doesn’t have to look, feel and smell like you, it can come in many forms. Substitutions of your goods or services, or sheer inertia in the market are forms of competition for the attention of your customers.  The important thing to realise is that competition exists, in whatever form, and that it has to be dealt with in order for your venture to secure funding and succeed in the marketplace.
To be a successful entrepreneur it’s essential to know well your enemy.  And to know them before you have picked off all low hanging fruit customers and growth comes to shuddering halt whilst your better prepared competition makes hay in the rest of the market you thought you had to yourself.

But if you haven’t already done so how might you get a grip exactly what’s happening in your current and potential market and define the competition?
SWOT up
First you could start with a SWOT analysis.  Don’t just identify strengths, weaknesses, opportunities and threats for your own business; honestly consider these factors for your competition too. Remember also that strengths and weakness are internal to your offering and under your control. These enable you to take advantage of and deal with the opportunities and threats that appear in the market which aren’t.
The point of this ultimately is to identify the key differences between you and current and potential competitors.  To figure out what you and they do really well, allowing you to focus on a strategy based on differences that enable you to gain competitive advantage. 
If you are planning to launch a host of new products or diversify into new markets, the chances are your like competitors are too. In this respect the Web is a great tool for gathering general competitor positioning information per se, but what is often more useful is to look very closely for warning signs that things are on the move. Such things as new patent applications, blog musings that belie an interest in new markets, changes in emphasis in brand positioning or communications that emphasise strengths that may be attractive to your customers.
Expect the unexpected
This is all fine for firms that obviously compete directly in the same way for the same customers.  But dangerous disruption rarely comes from expected sources.  Those retailers who viewed Amazon as simply an online bookstore quickly felt the heat as Amazon used its core distribution competency to enter their markets. 
Companies that do not move fast can quickly get caught in the perfect storm.  Take the case of  Britain’s established supermarkets, particularly Tesco - which only a matter of months ago was seen as the undisputed king of UK retailing - and Morrisons.
They have both been suffering recently from an onslaught from like competitors - discounters Aldi and Lidl - and changing consumption patterns as consumers shift back from shopping from out of town superstores to convenience stores and increasingly go online.  Now all too will soon have to face competition even in their core food businesses from Amazon as it is currently expanding its online grocery offerings in the US and has made no secret either of the depth of its pockets and the size of its ambition.
And it gets worse. In its latest power play in the US Google is rolling out Google Shopping Express where Google vehicles deliver non-perishable groceries from local retailers big and small. The big idea is to cooperate with retailers rather than competing with them, with the aim of getting people searching for products on Google rather than going straight to Amazon.
Google competing with Amazon for grocery business?  Who'd have predicted that? Neither, I suspect, a few years ago did many IT companies, including Google, envisage that they would soon be competing with Amazon as it seeks to dominate the supply of cloud capacity. Such is the nature of the digital world in which we now live.
So you need to think broadly and expect the unexpected. That means assuming every business that could impact upon your profits is a competitor. Not just companies that sell associated products or services to your own who could be thinking about taking a natural step towards offering exactly the same things as you, but those that have the core competencies and networks to engage your partners and consumers in ways they prefer.
This, of course, makes your total competitive landscape large but conducting a really thorough open-minded market scan is key – including mapping out the threat level of each competitor and looking at timescales within which they may try to do everything from grabbing your market share to fundamentally disrupting your business.
See yourself as your customers see you
Of course every business needs a unique selling point (USP) that can be summarised in an `elevator pitch`. This is where you have to be really honest with yourself.  I found often that the business owner’s perceptions can be very different from those of its customers.
So I’d start by asking them what they think are the top three reasons they do business with you and then figure out if these are genuinely different from your `like` competitors.  Then build on the top answer and make sure this fundamental differentiator is emphasised in every communication that comes out of your company.
It’s said talent borrows but genius steals. On that basis using the work of others to fuel your own innovation is a great way to challenge your thinking in order to remain competitive. It worked wonders for many Asian companies post-War and Xerox probably still rues the day it showed a young Steve Jobs and his team around the Parc Labs.  Pick the elements you like best from a competitor product or service and improve or add to them in a way that addresses a clear customer need, works for your business and that ultimately results in a better overall product or proposition. 
Even if you you’ve got to this stage and convinced yourself that you have a great product if your pricing is inappropriate it won’t sell well. Look at exactly what your competitors are offering and at what price and whether their customers think this is reasonable. Customer feedback on websites is invaluable for doing this.  Don’t forget perception of value is all - it may even be that you are under-pricing, rather than over-pricing. 
Lastly, to paraphrase Napoleon, once you know your enemy never interrupt them when they are making a mistake. Except, of course, if your lack of marketing self-awareness has made you your own worst enemy.

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