Most businesses face some competition either directly from competitors who make a similar product or indirectly from companies that offer solutions to the same basic problem as your brand. But some businesses face more competition than others. The question becomes one of succeeding in a competitive market.
You don’t have to avoid highly competitive markets, but the added pressure from other businesses forces you to get creative with all aspects of your marketing and may require a little higher marketing budget. When you’re up against many other businesses doing the same or similar things as you, especially when some of them are much bigger or more established than your business, it’s tough to find your place. But there are also plenty of ways you can try to get ahead and position your brand perfectly, thus succeeding in a competitive market.
Succeeding in a competitive market
What is a competitive market?
In economic terms, we talk about market concentration or the level of competition experienced by firms in a market. Often, economists divide markets differently depending on the nature of competition in the industry, resulting in these 4 market models:
- Pure Competition is where there many firms offering an undifferentiated product. An example of pure competition is found in the commodities markets with unbranded products such as corn, lettuce, beef, etc. Since consumers don’t have a reason to prefer one product over another, we commonly see prices are flat across different products. Entering this market is challenging due to low profit margins that favor large companies that can control vast resources allowing them to make a small profit on a large volume.
- Monopolistic Competition represents most markets in the developed world where you have differentiated products (brands) sold by many different companies. Consumers have a preference for brands thus allowing for price differentials that favor highly prized brands. In monopolistic competition, you may find vast differences in the size of the competitors, their market share, and access to resources. Entering this type of market is fairly easy if you have something consumers value over existing brands.
- Oligopoly is represented in markets where a few strong companies have most of the market share for a product. For instance, in the mobile market, a few companies (Apple, Samsung, and Google) combine to control nearly all of the market for mobile devices. Again, prices are set by what the consumers are willing to spend and you may find price differentials across brands. Entering these markets is challenging as it takes a larger budget to create awareness and preference for your brand unless you offer something uniquely suited to consumers.
- Pure monopoly is fundamentally illegal in the US due to laws classified as anti-trust legislation, however, the US is fairly unique in passing these laws. Pure competition in the US is commonly only allowed when it improves access to consumers such as public utilities that serve all consumers, not just those deemed profitable, in exchange for freedom from competition. Even so, prices in these companies are limited by public oversight committees. Entering these markets is usually restricted.
The future of competition
When your goal is succeeding in a competitive market, you must first determine the nature of competition in that market, which we discuss later. But, you must also assess the potential for changes in the competition in your chosen market. Below, we see the Porter 5-Forces Model that outlines the potential for new competitors entering your chosen marketplace. The greater the profits available in the market, the more likely you’ll see new competitors entering the market to take advantage of these profits.
1. Get to know your competition
The first thing you need to do is assess your existing competition. It’s important to understand that even if you think your product or service offering is unique, you most likely have competitors. They might not do exactly the same thing as you, but they could still offer products consumers view as similar or products that solve the same problem even if they do it in a different way. Getting to know your competition means identifying their strengths and weaknesses objectively using competitive information, not your own impressions.
A great tool to help as you build an understanding of your competition is a perceptual map or product positioning map like the one below.
A perceptual map uses data from consumers to build a grid based on two key benefits provided by the competitors in the industry, preferably those benefits most critical for driving decisions. With newer computer applications, you can build multi-dimensional maps that compare competitors against multiple benefits, not just two. On the map, you locate each competitor based on survey results with the size of the competitors displayed relative to the size of the company on the map. Your goal in succeeding in a competitive market is to find a position on this map where you offer something different from existing competitors, assuming survey results suggest this as a viable option for consumers. If there isn’t a unique position that’s appealing, choose one where you won’t face a large competitor.
2. Understand your target market
As well as getting to know your competitors, you also need to know your target market. You need to know what problems they face, what messages might motivate them to make a purchase, how they decide which products to buy (we often talk about hot buttons as the one or two benefits that outweigh others in their decision-making by exciting them), and where you can reach them.
Developing market personas for your various target markets helps you reach them more effectively.
3. Work with experienced partners
A good marketing agency is vital if you want your business to stand out from the competition. There are lots of things to look for, but you might want to start with an agency that has experience in your industry. Top Marketing Agency Inc. worked with lots of businesses in the HVAC industry, so they have good knowledge of what makes those types of businesses tick so it’s a good choice if you operate in that industry. You’ll find lots of other agencies with experience in your chosen market. Even if it’s an emerging market like cannabis businesses, you can usually find marketing services offered by firms with expertise.
4. Humanize your company
One of the most popular ways to get more attention for a brand these days is to humanize it, showing that there are real people with stories consumers can relate to behind the corporate brand. However, getting it right isn’t always easy. Many businesses try this but can come across as trying too hard or aren’t very authentic. If you want to humanize your company, you have to go beyond simply writing your copy with a fun voice. You need to actually have real people communicating with your customers in real ways, instead of just focusing on sales at all times.
Image from Pixabay – CC0 License
5. Provide more value
People commonly choose the product or service that offers the most value. That doesn’t mean that it’s always the cheapest option, but that believe the product offers the most benefits they care about for the price. You can think of value in different ways. It could mean doing more of what you’re already doing for the same price or offering less but at a more affordable price. Since consumers value things differently, there’s room in most markets for competitors that offer a different value proposition designed to appeal to their target market while avoiding being generic in the mistaken belief that they can appeal to everyone without a clear position — being everything to everybody often translates into not providing superior value to anyone.
A caveat is in order here as your value proposition should never focus on price unless you provide a better value to consumers because you face lower costs due to your operation, such as economies of scale. Simply offering the lowest priced option is something easily copied by your competition, resulting in lower profits for everyone. Often the winner in this type of price war is the competitor who can best afford to lose money in the short run.
6. Keep your brand strong
When you first define your brand, you might have a clear idea of what you provide and who you provide it to, called a mission statement. But as you try to grow, you might start to dilute your brand with messaging that isn’t true to your mission as you get seduced by opportunities outside of your original mission or think you can better compete by being more like a strong competitor. You could end up like everyone else and still struggling to get the business that you need. Of course, if something really isn’t working out, it might be time to look at what you need to change. But simply following along with the crowd probably won’t help you, especially if you’re in a saturated market.
7. Find needs that aren’t being met
One of the best ways to get ahead in a competitive market is to identify customer needs that no one else (or your biggest competitors) sees. That’s because consumers buy solutions to their problems, not products so, as their problems change, they need unique solutions.
What do customers want that they’re not getting? This could be anything from higher standards of customer service to a more robust product or the right message before they decide to buy. It’s not always easy to identify these needs, though. It can take a lot of research and analysis to find out what consumers find frustrating and what’s missing from the currently available options.
Social media is a great source for gleaning an understanding of customers’ unmet needs. A robust social listening program is a great way to find a unique solution for an unmet need.
8. Be an expert
People often want to learn about the things they want and need. They want advice on what to buy, what services to use, how to save money and time, how to use different products, and more. Offering your expertise is a great way to stand out from the competition. You can share advice that doesn’t just relate directly to your products or services but is also relevant to your customers’ interests. Providing valuable content, whether it’s in the form of blog posts, a podcast, videos, or anything else, can draw in your audience and keep them engaged.
King Arthur used this strategy to compete against much larger flour companies. It created recipes, held contests, and shared images of baked goods as a way to generate attention resulting in increased sales.
9. Seek new promotional opportunities
Some businesses in the digital world get ahead today by being quick on the uptake when it comes to new sales and promotional channels. Getting onto new social media platforms quickly and exploring new opportunities for sales channels can help you to make a name for your business before other businesses even start taking notice. It’s possible that some of your attempts might not work out, especially if a social platform or sales channel turns out to be short-lived. But it’s better to take a risk than to miss the boat.
Succeeding in a competitive market is challenging, but you can do it if you put in some work to find out how to stand out. Try a few of these tips to get you started.
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