We are living in an era where global markets are volatile, customer preferences change rapidly, new competitors’ turn up overnight, new substitutes to our products and services are emerging.
There is a fierce competition, and it is increasing.
By April 2017, Automaker Tesla (market value of $49bn founded in 2003) has overtaken century-old automaker Ford (market value of $46bn founded in 1903).
Big players such as Google and Apple are suddenly diversifying and entering into the market and send the whole market into turmoil e.g. by providing built-in GPS in the Smartphone Google Maps and Apple Maps has a huge negative impact on the growth of Sat Nav companies such as TomTom and Garmin.
We always need to aware of the bigger picture regarding not only what’s happening in our marketplace but elsewhere as well.
Technological advancement has obsoleted or nearly obsoleted once thriving market such as Typewriters, Dot Matrix Printers, Pagers, Fax, Telegrams, Dial-up Modem. Also media storage devices such as Cassette, Floppy disks, VHS Tapes, CDs, and DVDs.
We need to be nimble so that we can respond to these changes quickly and effectively. Opportunity needs to be picked up by the head, not by the tail; otherwise, it will slip through.
So it’s critical to know what real business we are in. Consider this profound statement from the Harvard Business School Professor Theodore Levitt, “People don't want to buy a quarter-inch drill, they want a quarter-inch hole.” Meaning people looking for the solution to their problems. They are not interested in our products and services. If they could find better, cheaper, faster, easier alternative solutions to their problems then they would switch.
A company's competitors are companies who are trying to offer similar products or services to the same industry or a similar industry.
Sometimes your competitors are not what you think.
E.g. Traditional book publishers may think their competitors are local, regional, national or international book publishers. However, their real competitors are Amazon which has provided unparallel opportunities for self-publishing.
Blockbuster Entertainment, a video rental company once $5 billion company had 60,000 employees and 9,000 stores considered Hollywood Entertainment Corporation and Redbox as its competitor. But Netflix who provides streaming media and video-on-demand online and DVD by mail has effectively bankrupt Blockbuster and it ran out of business by 2014.
Interestingly, Reed Hastings, CEO of Netflix consider their biggest competitors is not YouTube, Amazon, HBO or Hulu but sleep. Netflix viewers who stay up late at night to watch a show from Netflix need to shut-eye.
Local taxi companies are now facing stiff competition from Uber, US transportation company connecting freelance drivers with passengers in 570 cities worldwide.
So it's critical we must consider competition from the customer point of view. So always ask your prospects and customer this critical question.
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It’s critical to know who your direct and indirect competitors are.
A prime example of direct competitors can be Coke and Pepsi, Hertz and Avis, Nike and Reebok.
To give an example of indirect competition consider family in London who want to visit Paris. They could choose any one of the following four modes of transportation.
So for the flight operator such as British Airway for their target market, i.e. London family who wants to visit Paris the direct competitors can be Virgin, RyanAir the indirect competitors can be train, bus coach, car rental companies such as Hertz & Avis.
US retail giant Walmart direct competitors can be Kmart, Macy's, Target, JCPenney, Costco but the indirect competitors can be Amazon, world’s biggest online retailer.
Another classical example is that of US rail industry. After an incredible growth of nearly 300% rise of rail track from 1871 to 1900, US rail industry suffered incredible 84% decline of non-commuter rail passenger travel between 1945 and 1964. The reason was a US rail industry assumed that they are in “rail” business but failed to understand that they are in “transportation” business. They ignore the growing development of road, air, and ship who provided the cheaper, faster, effective way for transportation.
The competitor with the better intelligence can overcome you. You need to have awareness about what is happening in the market, with competitors, and with customers.
You need to know
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You should look out for competitor strategies and take them on-board. Your competitors can become our greatest source of inspiration.
Understanding competitors may bring about other sales channels.
E.g., suppose you are a book publisher; consider Amazon’s strategy of selling eBooks as a substitute for the traditional paper book. Why not consider publishing your books on your website as eBooks and open up a new one-time or subscription based revenue stream.
You need to keep a tab on your competitors so you can learn from them and implement appropriately. You should try to benchmark your service against that of your competitors and try to leverage as a key differentiating factor between you and your competitors.
Professionals never bad-mouth their competitors. They respect their competitors. They even recommend their competitors’ products and services if they cannot help. This invariably makes a mark on the mind of today’s savvy customer.
Don’t think everyone is your competitor. Its narrow-mindedness. We are living in the era where collaboration not competition, is the way forward for the growth. Gone are the days when we think everyone is our competitor.
We can see collaboration exists everywhere in nature.
One of the most famous business collaboration which has lasted more than 20 years is between a tech giant Intel and Microsoft have greatly benefitted both of them in terms of sales, marketing, research, innovation and maintaining leadership.
Even thinking about the Idea of collaborating with a competitor can panic few. But if we think strategically, we could consider some kind of collaboration with our competitors.
A prime example is those of banks. Banks are lending and borrowing from one another to maximize the use of deposits as well as meeting their cash flow needs.
If the target market is totally different then there is no real competition e.g. there is a competition between Ferrari and Lamborgini but there is no competition between Ferrari and Hyundai as their target market is totally different.
Small and medium businesses could consider this strategy. They all have unconverted leads which are no use to them for whatever reasons as they cannot able to convert them into a customer. Sometimes those unconverted leads do not fit into their customer profile.
They could consider joint ventures with their competitors where they could share those unconverted leads with their competitors and vice versa.
You may need to take the first initiative by voluntarily sending our unconverted leads to your competitor. Taking such initiative would definitely get reciprocated. Over the time, you might be able to forge a win-win relationship so that in the future you might get leads from them.
Once you get some success based on mutual respect and trust, you can build more strategic collaboration.
Few of the examples of possible collaboration opportunities with our competitors can be.
I am very interested to hear what are your thoughts? Please share your thoughts in the comments below.
Hitesh Changela
CEO, Author, Enterprenuer
Hitesh Changela is CEO of CRM Ultimate Limited, an innovative software technology company, based in the UK. Hitesh has worked in the IT industry for more than 17 years, including over 6 years at Microsoft Ireland. He is author of three books already published on Amazon. Book, Workbook, and QuoteBook . Hitesh lives in London. You can connect through social share or send him email hitesh@hiteshchangela.com or call him on +447404303064.