One of the most important aspects of running a successful business is knowing as much about your competition as possible. Not only is it important to develop a competitive analysis that shows you your competitors strengths and weaknesses, it’s also a good way to keep up with any changes in the market.
Most business owners believe that all competition is a bad thing, and will only result in losing clients and even revenue.
This is not the case says Preetesh Sewraj. Sewraj, CEO and chief innovation analyst at Product Of The Year for South Africa – one of the world’s largest consumer-voted awards for product innovation. According to Sewraj there are benefits to competition that many business owners overlook.
Sewraj shares five new ways business owners should be thinking about their competition:
1. Your competitor is not necessarily evil
Most people demonise their competitors in their mind and this cannot be further from reality. Your competitor is someone just like you who is trying to do the best that they can do, probably with similar resources to you. Unilever and P&G are strong competitors globally and while their staff may compete strongly with each other, both companies deliver great products that help consumers around the world.
2. Even if your competitor is not evil, you still have to take every opportunity to beat them
I once worked for a Brazilian who is today on the board of one of the leading global FMCG companies. His advice was that you should not be afraid to think of your competitor as a loser if they are not doing well and losing in the market.
Be prepared to use all opportunities to ensure that you are ahead of your competitor or face potentially being the losing entity in the industry that you compete in.
3. A good competitor also helps by growing the market and reducing the marketing spend
Yahoo was a fantastic company but Google has used every opportunity to ensure that they are ahead. Today Yahoo is a shell of the company it formerly was because it had a competitor who looked at every opportunity to beat them.
4. You might not really know your competitor
We live in a world where disruptive technologies and ideas are constantly changing the landscape in which we play. While you may think you know who your competitor is, you may potentially be ignoring a number of competitors from outside your industry who may enter, disrupt your industry and take your customers from you.
A perfect example is Blackberry who failed to recognise the threat posed by the Apple iPhone – a product from a company that had no prior experience in the mobile phone industry.
5. Your competitor is actually your friend
Healthy competition keeps you hungry and prevents complacency. Without your competitor, you will find that your desire to innovate and compete stagnates over time. A good competitor also helps by growing the market and reducing the marketing spend you require to entice new users into your category. The recent growth in the frozen yoghurt category is a great demonstration of this. While Wakaberry is top-of-mind, the reality is that the category gained acceptance thanks to a number of different brands launching in this category.
6. It is no longer about your competitor but your competitors
Many people still believe that they can focus on a single competitor, but in a world of e-commerce and aggregated platforms for consumers, you need to focus on the activities of a range of competitors and their activities.
This also means that you may need to choose to constantly upgrade your offering to incorporate all of you competitors products or realise that you need to specialise in one aspect to succeed. Even if you are clothing retailer in a mall, such as Edgars, your competitor is not just Truworths or Woolworths, you also compete with online retailers such as Zando who do not even market themselves in the area that you operate in.