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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