How to stay competitive
Most businesses come into being because an entrepreneur has identified a niche in the marketplace - and in the early months or years there may be relatively little pressure from competitors. But your very presence in the marketplace invites competition, and before long you find yourself in a tightening market with competitors, large and small, snapping at your heels. How do you stay ahead of them?
Markets rarely afford you the opportunity to rest on your laurels. The key to remaining competitive is knowing the principal drivers in your marketplace and developing and positioning products and services accordingly.
In essence, this means keeping one eye on your customers or clients and striving to delight them, and keeping the other eye on your competitors and striving to outshine them.
Successful businesses know their customers, understand their present needs, and successfully anticipate their future needs. Customers and clients are brought into active partnership with a goal of total customer satisfaction. Their level of satisfaction is constantly measured and their complaints and suggestions taken seriously.
Leading edge businesses strive not to meet their customers' expectations, but to exceed them. At the very least, this means excelling on quality, delivery, and price, often in that order.
But many businesses these days regard these as the minimum requirements for surviving in the marketplace. To gain a competitive edge you need to continuously introduce innovative products or services customised to meet specific customer or client needs.
As your market niche becomes crowded with competitors it becomes harder to maintain your differentiation. When this happens you have to continuously reinvent your market niche through innovation:
- Create a corporate culture that encourages and rewards innovation
- Whenever you introduce a new product or service make sure your development team are already working on the next one
- Keep one eye on new technologies, developments in legislation, etc. and learn to exploit them to gain a competitive edge
- Constantly strive to improve speed to market
- Do not reveal future developments to the marketplace any sooner than you need to - keep your competitors in the dark for as long as possible
To drive innovation, you need a constant stream of ideas:
- Listen to your customers - their complaints as much as their suggestions
- Talk to your suppliers about their future developments
- Monitor your competitors' future plans
- Encourage your employees, especially those in direct contact with customers or clients, to suggest innovations
- Facilitate public visits to your premises and listen to the feedback
- Visit other businesses, even those in different sectors, to encourage lateral thinking
Know your competitors
One thing is certain - if you are successful in developing products or services that delight your customers or clients, competitors will appear like stars on a clear night. Therefore, the more successful you are, the more adept you will need to become at monitoring your competitors and anticipating their next moves.
First make sure you know who your competitors are:
- Direct competitors - businesses that compete with you head to head
- Indirect competitors - for example, a nightclub that might tempt customers away from your restaurant
- Potential competitors - companies that might move into your market in the future
Assign people to monitor them constantly, and gather as much information on their activities as possible.
SWOT the competition
A useful tool for staying ahead of your competitors is a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis. First analyse your competitors' strengths and weaknesses in areas such as price, added value, customer service, location, management expertise, reputation, convenience, skills base, advertising, and marketing, and compare them with your own. Try to find ways to turn their weaknesses into your strengths.
Then look at how well placed they are to respond to various threats and opportunities. These are usually factors outside their control such as developments in technology, changes in legislation, or new entrants into the marketplace. Look for ways to turn their threats into your opportunities.
Never take your eye off the ball as far as your competitors are concerned - and never underestimate their potential to wrong foot you. Whether you are watching them or not, you can be sure they are watching you!