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Competition in Business
Use Change Management Tools to Learn How to Adapt Quickly to Competitive Actions
Competition in business is always a challenge. Understand, and use, the definition of strategic planning by using business and sales plan examples. And use change management tools to adapt to competitive actions.
Understanding your competition is important: whether you are starting a new business, operating an existing business, entering new markets, or launching new products and services.
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Competition in business can be a major stumbling block to growth and success.
To develop a strong competitive strategy, it is necessary to conduct a competitive analysis.
One of the best methods of dealing with competitive activity is to learn how to adapt and change quickly.
Use change management tools to learn managing change techniques.
Managing Growth and Change
A definition of strategic planning includes an understand of markets, customers, competition, and your business capabilities. Once you have that understanding (through research), you need to build strategies to handle your competitors.
As a small business owner, you need to develop a comprehensive strategy to deal with your competition (for example, you might want to include a pricing strategy; or perhaps, an alternative competitive strategy to cutting price; or a value chain analysis to assess your competition, and so on) and to operate in highly competitive markets. Even if you are the market leader today, the threat of losing that position tomorrow, or into the future, is very real if you do not have a solid plan in place.
Review sales plan examples to see how, when, where, what and why businesses change their plans to deal with competitive activity.
Writing a marketing plan includes doing a competitive analysis section. You need to assess your competition in business and try to predict what your competition might do in the case that you add new services, lower your price, raise your price, move closer to their markets, hire some of their staff, and more.
To analyze your competition, you must find out as much as you can about them: (do this for the top 3 to 10 competitors; you can analyze fewer if they hold big market shares; or analyze up to 10 if the market is buying from many).
Competition in Business: Focus on Analysis
Create your competitive analysis: Gather the following information:
- Who are your competitors? Identify your Top 3 to 10 (representing up to 80% of market share). List them by company name, business owner, address, etc.
- Who are your indirect competitors that don't necessarily sell the same products or services but their sales can affect your sales (e.g. if you sell motorcycles, bicycles and cars can be your competition)?
- What share of the market does each competitor hold? Get as close as possible. Is their position stronger or weaker in the market this year, compared to last year, compared to 3 to 5 years ago?
- What do you believe to be their strengths, weaknesses, opportunities and threats (SWOT)? What marketing tactics can you use to minimize their strengths and opportunities and maximize their weaknesses and threats?
- What are they doing in the marketing mix side: how are they handling marketing mix product, price strategy building, marketing mix promotion, and place or distribution (the forgotten mix in the 4 Ps of Marketing)? How effective are they with this program (rank them)?
- Do they have a website?
- What's their advertising frequency? Can you estimate their advertising/promotions budget? How do they advertise: television, radio, newspaper, trade magazines, direct mail, point of purchase?
- If their price advertised; is it higher, lower or about the same?
- What are their product/service features, advantages, and benefits (their product positioning, product differentiation, or product life cycle)?
- Compare their marketing mix approach to yours. What are their strengths and weaknesses?
- What is unique about your product or service compared to theirs? What is unique about your business compared to theirs?
- What about your customer service: is it better, worse or the same as your competition?
- Do you share customers? Or are your customers 100% yours?
- For indirect or new competitors: what is their barrier to entry into your direct market?
- Is physical location important in your market? Who has the 'best' location?
- Is brand recognition important in your market? Who has the 'best' brand?
Competition in Business
Sources of competitor information:
- Website (if they have one); internet searches to see if the name(s) comes up;
- Annual Report (if they are a public company) - compare profitability of their business (and other comparable business performance measures) to yours;
- Their promotion and advertising program; try to get copies;
- Shared customers;
- Your sales staff; often they know a lot about the competition in business that they face;
- Your suppliers; often they supply your competitors; if they don't they may more freely share information about them;
- Trade shows; you can pick up promotional material from their booth, ask others about them;
- Trade associations; you can meet them directly, or find out more about them;
- Trade magazines; check out the back issues for announcements or news on your competition;
- Other media; newspapers, magazines, books, television, radio;
- If they have a physical storefront open to the public, go in. (Yes, that makes many people squirm but you're not doing anything illegal.) Check out their displays, see how they handle customers, how does their physical space look (clean, tidy and well organized)?
Once you've completed a thorough competitive analysis for your marketing plan, keep it up-to-date.
Understanding your competition in business means reviewing your gathered data on your competitors try to determine what their business strategies and growth objectives are; do your competitive intelligence work regularly. Continually assess progress they might make, against your own business progress. Assess the size of the market and try to determine if it will support the competition - if not, someone will go out of business. Make sure that it's not you.
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Marketing and Life–Cycle
Marketing is a requirement for all businesses: without marketing strategies and tactics your business will struggle to survive.
Not all marketing activities are planned: you might be building your brand recognition through a social media campaign (that's marketing); you might be conducting market research to analyze your competitors and/or segment and target your potential market or to develop the most desirable features, advantages and benefits of your products or services (that's all marketing).
Marketing is pretty all–encompassing; and a challenge for many business owners. The additional challenge is recognizing that the different stages of your business life–cycle: start–up, mid–cycle, mature or late–in–life.
During start–up you need to develop your marketing strategies to grow sales; for example, you might want to use a market penetration pricing strategy to build sales quickly.
During mid–cycle, you need to grow your customer base (often through lead generation) and that need requires different marketing strategies, such as cold calling on prospective clients, email marketing, newsletter and blog sign ups and distribution (all to grow your list of prospects).
During the mature cycle, you need to build your marketing efforts around your brand; your competitive advantage can be in your reputation, history, and identity and on what differentiates your business from your competitors.
Marketing your products and services is not something that you do once (such as a marketing plan) and then never change or do again. You need to be continually researching and building your strategies and tactics to be ahead of the market, and ahead of your competition.
The market is constantly evolving; ever more rapidly with the impacts of globalization and technology. You need to invest resources into marketing to ensure that you build and sustain your business.
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