Challenge #1. The first few years were a struggle but things have started to take off lately. Sales and profits are up and the customers know were to find us.
Now, just when things are looking good, a new competing store opens right down the street! We built the business and now that things are looking good, somebody wants part of our action. Not exactly what you had hoped for, but not the worst thing in the world either.
New competition is not always bad for business. It’s probably a sign that the market for your products is growing, at least somebody else thinks so. New competition often creates an increased awareness for the type of products and services that you sell. Some businesses consider their competitors to be their best advertisement!
Challenge #2. You’ve trained and developed your staff for a number of years. The business is running so smooth you are thinking about taking a little well deserved time off.
Late Friday afternoon, two of your top people turn in their resignations. You taught them the business and you counted on them. Then you find out they are setting up a business to compete with you.
Your first reaction is anger. You’re ready to cut prices and teach them a lesson, but that may not be the wisest course of action. You need to remember that you are in business to win, not to beat somebody else.
Challenge #3. The partnership’s practice has grown over the years. A stable client base and a solid reputation has been established.
Several of the junior partners aren’t satisfied with the growth opportunities however. They join one of the more senior partners and decide to establish a new practice. Breaking up the partnership is bad enough, but now you must fight over the existing clients.
It’s tempting to want to bad mouth the rebels, after all they caused this mess. Before you start throwing dirt however, remember you’re liable to get your hands dirty if you do.
These are just three of a number of unexpected competitive challenges that are encountered by businesses on a regular basis. Devoid of emotion, these competitive challenges can usually be managed in a constructive manner. If you become consumed by the competitive challenge however, the challenge can create a crisis.
The best competitive response is to redouble your efforts at running your business well. You need to pay attention to your competition just as you would pay attention to any significant external development in your market. However, don’t let your competition run your business.
They cut prices, you cut prices. They add a new product, you add a new product. A preoccupation with beating the competition is a prescription for mediocrity. Focusing on filling the needs of your customer is the basis for a winning strategy.
It used to be said that the first two Chevrolets sold each year were bought by Ford and Chrysler. Perhaps that was part of the myopia that caused the American automobile industry to lose its command of the market. It was preoccupied with its immediate competitors while losing sight of the needs of its customers.
There are a number of alternatives for building a successful competitive strategy. But the good competitive strategies are all built on a market orientation. That is an orientation focused on the needs of the customer. Think not in terms of what product or service that you produce, but rather what economic benefit you can deliver. The correct standard for comparison for your product should be your customer’s needs, not your competition.
Higher quality at the same price or a lower price for the same quality. Either alternative can form the basis for competitive advantage depending on the needs of the specific customers involved.
Better product information, more personalized service, extensive advertising, improved packaging are all factors that can be incorporated into the building of a successful competitive strategy.
The critical issue is to identify the basis of competition that is important, not to you, but to your customer. Once you have identified that basis, move to excel at it and then ruthlessly exploit it.
Nothing sends a chill up the spine of a business owner like an unexpected competitive challenge. However, the long range impact of many of these challenges proves to be insignificant. Don’t allow the challenge to become a crisis by paying more attention to the competition than you do to your customers.
Because it’s your business, focus on satisfying your customer’s needs to crush a competitive challenge. There’s probably enough business to go around. If there isn’t, you’ll be sure to get yours.