By Lindy Earl
While you know your product and service stand apart from others, it’s important to know your competition. Please, don’t pretend that you don’t have competition. If you think you don’t have competition, then you don’t understand competition.
Who has competition? EVERYONE. Even if you don’t have direct competition—maybe you are the only bank in your town—you have indirect competition. Anything that keeps people from buying your product or service is your competition. Not only is Pepsi in competition with Coke, but with water. Yep, we have seen this play out strongly in the past few years as soda manufacturers have added bottled water to their product lines to keep up with market demand.
In addition, keeping with this example, Pepsi and Coke are also in competition against snack foods. For instance, if a customer is buying from vending machines and the person buying has a limited amount to spend, they may choose crackers or a candy bar over a soda. Bam. Competition.
Another example: In terms of entertainment dollars, opera might be in competition with football, if a couple can afford tickets to only one event. You might not see them as competitors, but the mighty dollar does.
Before you can move any further with understanding your competition, you first have to understand what product you sell. Like the example above of sports arenas and opera halls both selling entertainment, what is the product you sell—efficiency, convenience, or something else?
My favorite example of a company that completely understands this concept is minor league baseball. If you ask some of the minor league managers what they sell, they’ll tell you entertainment. They don’t sell sports or baseball. Further, if you ask them their number one competitor, the answer is not another sports team, but television. They know the biggest challenge they face is getting their customers off their couches and out of their houses to drive to the ball field and spend money to watch a game live. They take this very seriously, and don’t just provide a sports game in a nice venue, but entertainment for the entire family—races for children between innings, dancers, announcers with games and prizes. The entire event is designed to keep you entertained the entire time, so that you’ll enjoy yourself enough to return again, and tell your friends and neighbors as well.
So, what do you sell? Once you really understand this, you can find your competition, but don’t limit competition to similar items.
How do you learn who your competition is? Some formal approaches would be to check out the Internet, the library for public information, and journals and newspapers. Some informal approaches would be to drive around and see where people are spending their time and money. Ask the people who do buy from you where they were buying before, and what made them change. Don’t immediately hire someone to perform research for you, because some of that information can be gleaned with observation and common sense.
If the gas station with the lowest price is always jammed, and the high priced but nicer/cleaner gas station is empty, you can discern that people are buying gas based on price without investing in a survey. If the opposite is true, and people are lined up at the expensive gas station, then it may take some work to learn why. Do their customers like the expensive station because of its cleanliness, or its location, or maybe the choice of items in the attached store (where gas stations make half their money).
Once you know for sure what you’re selling, and why people are buying from you versus their other choices, then you can begin to really understand who your competition is. From there you can keep an eye on your real competition so you can take an offensive or defensive position when necessary. This little bit of knowledge will help you in big ways.
Lindy is a Speaker, Consultant, and Business Author, currently living in Atlanta, GA, and available to answer your questions anywhere in the world. She is The Business Coach to companies with 50 – 100 employees, Entrepreneurs, and Start-ups. Focusing on Communication, Leadership, and Corporate Culture, you will be more successful with Lindy as your in-house Consultant.
