To really have the edge in any contest or battle, you have to know your opponent. It may sound a bit grim to consider having this disposition but it really helps especially with regard to your own performance and status. In the business world, you face competition from day one. Business competitors are in every corner, checking you out and gauging you as well. It’s only natural for any entrepreneur to do this. It’s part of business intelligence and the sheer use of tactics. Defining business competition depends on your own take of the field. But the most common notion is that competition in business can be a killer. But business competition is essential if you are to bring out your best potentials or set up improvements.
Analyzing the Competition
Knowing your competitors will give you the edge in your business. In order to accurately do this, you have to engage in competitor analysis in which you will gather, organize, and interpret data about your present or future competitors. The following are only some of the reasons why you should study your competitors:
✓ Competitor classification
✓ Anticipation of the competitor responses
✓ Foresee initiatives of competitors
✓ Derive exceptional ideas from competitors
✓ Maintenance of your market-focus
✓ Recognition of opportunities and threats for a contingency plan
Analyzing your competitors doesn’t end. It gives you the power to strengthen your strategies and tactics in marketing. When you look at the competition, you have the chance to think about their strengths and weaknesses. This enables you to focus on your own strengths and weaknesses as well. You also get to place yourself in their shoes and prepare for possible moves that they may have in store for you. It would greatly help, too, if you take the time to study the products or services that your competitor has. Only then would you be able to know if you could surpass it.
The Four Business Competitors
Here are the four types of business competitors that you should always be aware of:
1. Direct competitors
These are competitors who offer the same products or services to their target market. Perfect examples are pharmacies in one street; fast food franchises, coffee shops in front of each other on the same street; department stores in one city or town; and theme parks in one state. Even if they are indeed offering the same services or products, consumers still have the prerogative to choose according to the factors that they consider such as quality, location, price, and type of goods or services offered.
Indirect competitors are the ones who may have a slight variation in products and services but they have the same target market. They aim to fulfill the same need but offer substitutes or alternatives. One example would be the need for dog supplies. You may end up entering a pet supply store and coming out with various products with different brands. These brands may be different from one another in terms of color or material but they answer the need for the grooming or recreation of your dog.
3. Potential competitors
A potential competitor is a company that might prove to be a rival at any given time in the future. They may become either direct or indirect competitors by then. Potential competitors may be brought forth by the following factors:
- To-be-released products or services that directly competes with your products or services
- Present products that cater to a different market but could easily be altered to target your consumers
- User habit changes
These are competitors that have the same target market. They quickly modify their products or services to directly compete with your products and services but only for a short period of time. They are able to do this without spending much or adding significant risks in production.
Priorities of Competitors
Part of knowing your competitors in business is to now their priorities. It’s pretty much like knowing their battle plans or the map to their treasure trove. These are only some of the common priorities that your business competitors have:
- Market shares
- Growth in sales
- NET income
- Flow of cash
- ROI (return on investment)
- Satisfaction on a personal level
Importance of Knowing What Consumers Need and Want
You should know what the consumers need and want. This is essential in knowing your competitors as well. When you exert effort in figuring out your target market, you should take the time to come up with more priorities that you deem vital in your success. These needs and wants should also be anticipated while addressing their current concerns.
Hindrances in Marketing
There are many potential barriers to successfully market your products or services. Every single one has a different level of difficulty that has to be dealt with strategically. Some may be resolved immediately while others take time. Here are some of the hindrances that you or your competitor may have in marketing:
1. High costs in startups
If the costs are high during startup phase, there may be some difficulty with finances along the way especially when profit is slow.
Protection for your products and services
3. Market saturation
A crowded niche in the market is extra challenging to penetrate than a lightly populated one.
It can be a large obstacle if there is insufficient know-how in engineering, marketing, manufacturing, and technicalities.
Strengths and Weaknesses of Competitors
Just like you, your competitors have strengths and weaknesses that have to be magnified and studied. If you do this well, you will be able to have an advantage. The following are four areas that entrepreneurs or company owners should concentrate on:
- Major costs in components
- Reasons behind failures and successes of various companies
- Major concerns that provide customer motivation
- The industry’s mobility barriers
The business world involves a highly competitive play strategy. You have to know what’s going on and what it takes to move a step ahead of the others. And, you will only do this by knowing and appreciating your business competitors.