A lot of people are scared of competition because they fear they will lose business. Thoughts such as “what if they are cheaper?” or “what if they offer better quality products or services?” tend to creep into the mind of business owners when someone new enters the industry. While these are valid concerns, increased competition is not all bad. As a matter of fact, the intuitive business owner can actually grow market share despite the arrival of a new player in the industry. Here are 5 lessons businesses can learn when the threat of competition is an issue:
1. Focus on your SWOT
Taking stock of strengths, weaknesses, opportunities and threats is a common practice at the start of a business, but emphasis may wane as the business grows and becomes comfortable in the market. The introduction of a new competitor is an opportunity for you to revisit this handy analysis tool to reconsider your position and compete better in the market. Both internal and external factors may have changed since the last SWOT analysis so this helps you position yourself with a view of the current and future business environment.
2. Bring out the unique characteristics of your business
You are going to want to stand out from your competition and to do this you need to know your unique selling proposition (USP). Knowing what makes your business different allows you to focus on the core business functions that give you a competitive advantage. This x-factor ensures that even if your competitor offers similar products or services you have an opportunity to give your company an edge in the market.
3. Know your target audience
When competition arrives you get a chance to really know and understand your target audience. When consumers have options those that choose you over your competitor are that much more valuable. Finding out why those consumers choose you and knowing the type of consumers you want to attract will help you tailor your products and services to your target audience. Obviously you should do market research before new competition arrives but it doesn’t hurt to analyse your performance in the eyes of your target audience, taking into consideration the new competition, and tweak your offerings to better suit their needs.
4. Do not neglect marketing
Staying relevant becomes a little more difficult when others start competing for your target audience’s limited attention and limited disposable income. At this point effective marketing becomes more important than ever. You need to reach your target audience and make them aware of not only your existence but the reason why they should choose your business over the alternatives. Expect your competitors to invest in marketing as well so you will not only be competing with products and services but also marketing messages.
5. Partnership opportunities exist
As much as you may like to be independent sometimes you just can’t do it all alone. To be more competitive you may have to make strategic alliances. This does not necessarily mean collaborating with a direct competitor since you can also partner with other small businesses that provide complementary products and services. Improving relations with a supplier or streamlining the supply chain management are all ways of using business relationships to become better equipped to handle competition.
Competition in business is inevitable and almost always inconvenient. This is no reason to panic when new competitors arrive though. You can actually learn from your competitors and as an established business you already have a relationship with your target market. Use these factors and these 5 lessons to survive in an ever more competitive global economy.