Competition...

Starting & Operating a New Small Business		 Return to Class Sessions Page
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Seeking A Competitive Advantage

The flip side to describing your customers and studying their behavior is to identify your competitors and to study their relationship to your business and its demand. Competitors have their own strategies. Competitors react to your strategies.Competitors take away your demand. Sometimes you are not even aware of who is taking away your sales or why your sales seem to be difficult to maintain.
 
Where does your demand come from?
non-users become users

current users buy more
take sales from competitors

A look a competition historically.
Early 1900's through the war years - Production oriented
1960's - Marketing Based
1970's - Manufacturing Based
1980's - Quality Based & TQM
1990's - Customer Service Based
SOURCE: Total Customer Service: the Ultimate Weapon by Davidow & Uttel; Harper Perennial
 
Where does your competition come from? There are obvious sources of competition from business like yours selling products or services like yours. But there are less obvious sources, some of which have little or nothing to do with your business and its products and services. And, with technology, there are sources that extend geographic reach to allow some businesses to compete with you without proximity and without you realizing they exist. Knowing your competition will allow you to develop better business strategies and respond to business challenges.
Sources of Competition
We'll start by looking at 3 types of competition based on needs filled & similarity of the product/service offered:
  Need/Wants Filled Product/Service Offered
1) Direct same similar
2) Indirect same dissimilar
3) Generic same un-alike

The next type of competitor can come from any of the first three categories but may be hard to identify because of the technology they use that allows them to enter your geographics market area.

4) Extended

  • Internet and Websites
  • Television Cataloging, auction shows and Infomercials
  • M.O.T.O extended through digital printing
    (Mail Order Telephone Order)
Competition also results from sources and businesses that have nothing to do with what you sell but compete for your customers none-the-less.
  Income
5) Unrelated

competition for the same $dollars

  • Gross Income
  • Disposable Income
  • Discretionary Income
6) The Consumer

The Customers Behavior

  • D.I.Y. (Do It Yourself)
  • Postpone
  • Do Without

As a business owner, it is up to you to identify your competitors and to develop business and marketing strategies to:

  • gain competitive advantages
  • create USP's (unique selling propositions)
  • react to competitors
  • prevent competition
  • gain brand loyalty
  • actively market to targeted customer groups