There's no reason to go to battle with your competition; you'll benefit more by cultivating a constructive relationship.
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| It's All in the Definition
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Here at Trendlines, we often assist our clients in identifying and learning about their competition. Sometimes clients say to us: "We are a new technology, we don't have any competitors." Not true — there are always competitors. It's just a matter of definition.
Over the years, Trendlines has developed a working definition of competition that helps us and our clients to stay focused on this essential issue:
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| | Broadly construed, a competitive product or service is anything that is acquired instead of a proposed product or service. This is the case without regard to whether the proposed product meets all or only some of the desired needs or expectations of the user. Anything used in place of a proposed product is a competitive product.
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In other words, competition is where the money that could be used to purchase your product is now being spent. When a company's human resources department decides to send employees a bouquet of flowers for their birthday instead of a gift certificate to the local bookstore, flowers are competing with books. The point: How is your target market currently satisfying the need you hope to fill?
Many entrepreneurs have difficulty seeing competition in this broader sense because they tend to view competing products as those that have the same (or similar) features. While features are important and help you define your niche, or market space, focusing exclusively on product functionality can be limiting when developing a marketing strategy—when identifying the correct competition is essential.
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| Who's Afraid of a Little Competition?
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Benefits of Competition
According to Philip Kotler, there are actual benefits of competition.
- Helps increase total demand
- Shares cost of market and product development
- Helps to legitimize new technologies
- May serve less attractive segments
- May lead to more product differentiation
- Reduces antitrust risk
- Improves bargaining power vs. labor or regulators
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Many believe that competitors are there to compete against. Wrong. Competitors exist to make your business better — if you let them. Competition is a primary driver, motivating companies to develop next generation technologies, improve customer service, spread product awareness, and manufacture the new improved widget. Just think what your playing field would look like if the other team didn't show up. If there's no competitors, there's no game. Remember, good business is a game, not a war.
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| First-Mover Advantage?
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Even first movers could do with a little competition. Although their playing field is level, first movers carry the burden of educating their target market as to the need for their product. First movers must demonstrate why the market needs their product and prove their product's advantages. This usually involves appropriation of substantial resources that could be shared with competitors. Since the market is a new one, there is room for all to succeed.
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| A Quick Pass
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Even when the game is well underway, with all major players lined up in their appropriate niche, a sudden marketing offensive by one player hoping to upset the alignment may benefit all. A major marketing campaign by Pepsi not only attacks Coca-Cola, it gets everyone drinking more cola products. While Coca-Cola's percentage of the market may drop a bit, the total market increases and Coca-Cola's sales rise as well as Pepsi's — everyone benefits.
A pertinent local example is the introduction of McDonald's into the Israeli marketplace in 1993. Until then, Burger Ranch was the lone player in the fast-food hamburger franchise business — a humble market competing with falafel and shwarma (traditional Israeli fast-food favorites). McDonald's made a grand entrance with much fanfare. A year later, Burger King joined the parade and today Burger Ranch reaps the rewards, having seen its business quadruple since 1993. "We may only have a modest piece of the pie, but that pie has grown considerably," notes Sivan Bar-Sabar, VP of marketing for Burger Ranch. Israelis now consume many times more hamburgers than in the early 1990s. And Burger Ranch could never have done it alone.
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| Smooching with the Competition
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Once businesspeople understand that competition is not something to be feared—but, rather, desired—they can address their relationships with competitors in a positive and productive manner. Notice how at trade shows, where directly competing companies are all lined up one next to the other (for visitor convenience), there is quite a lot of camaraderie among the exhibitors. These marketing professionals know that there is nothing to be gained by filling the air with negative tension when lending a helping hand benefits all.
Since your market space is shared with competitors, all will profit if the atmosphere within the space is positive and productive. Trendlines recommends a few guidelines to follow in all relationships with competitors:
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| |  | Refrain from badmouthing and discrediting competitors; instead emphasize your solutions and advantages.
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Keep communication lines open to your competition. Don't be afraid to congratulate them when they do well. You never know when you'll need each other.
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Look for opportunities to cooperate. Do you have a product or service that is not core to your business and may be a more natural fit for your competition?
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A parting piece of advice: Keep in mind that in today's global and dynamic business world, today's competitor might some day be your strategic partner.
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The Trendletter team welcomes your comments.
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Kippy Flur
Consultant
The Trendlines Group
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