It is lonely at the top, they say, especially for the leading companies because they are ahead of the race and have lesser competition. This is a myth. If you are in business, you can never be away from competition. Companies are always vying with each other to launch new products, upgrade established products, rework price points, improve promotions and expand the customer base. The legendary battles between Coke and Pepsi, Microsoft and Apple, Google and Yahoo have set precedents in how businesses look at competition and devise strategies to win in the marketplace.
If you are a small business, the competition is no less tough. In fact, it is a bigger challenge because you may not necessarily have the required financial muscle and marketing arsenal to beat your competitors. Therefore, what helps you race ahead of your competitors is careful competitive analysis, strategic planning and implementation of a well-devised growth plan.
Let’s look at how small businesses can be one up on their competitors without burning up all their resources on promotion:
- Competition Analysis
This is one of the most crucial aspects of your entire plan to rise above competition. There may be a number of companies in the same industry where you are operating but not all of them are competitors.
- Start by marking out those firms that are offering the same kind of product or service which you are offering.
- Narrow down the list of competing companies to the ones that are in direct competition with you in terms of your demographic, geographic and psycho graphic target audience.
- List out the companies that score over you in terms of
(1) Better quality of product/service
(2) More competitive price points
(3) Free offers or value-adds; if any
(4) Larger customer base
(5) Larger retailer/distribution/franchise network
- Carefully analyze their product/service offerings to check where your product/service is falling short and what more you can do to upgrade or improve the same.
- Give a close look at your costs and estimated margins to zero in on the best prices you can offer. Depending upon the nature of your product/service, you can decide what will work out to be best returns for you – higher volumes and lower margins or lower volumes with steeper margins.
- Improving your Product/Service
The next important step in beating competition is to have a winning product or service. It is no use pumping money into promotion if your product/service does not match up to customer’s satisfaction.
Study your competitors’ products/services in detail and work toward improving your own product basket or service offerings. Improvement does not necessarily have to be cost-intensive. Even minor tweaks or a smart repackaging can give your entire product range or service offerings a new appeal. Get some real hands-on advice from other business owners at your CEO club or CEO association. CEO peer groups are a great resource for conferring with non-competing business leaders on how you can give your product/service improvements without breaking the bank.
- Decide your positioning
Importantly, study the way in which your competitors have positioned their products/services. Look for a niche where you can firmly entrench your product or service. Serving a niche gives you a competitive advantage of building up a captive audience and enjoying steady customer loyalty, especially if you can sustain the quality and pricing of your product/service.
For instance, if you are in the restaurant business and you do have a sizeable concentration of immigrants in your locality, introduce some dishes or cuisine in your menu targeted at the local immigrant community with attractive pricing.
- Who doesn’t like freebies?
Free offers or value adds are always an appealing bonus for customers. Throw in a free offer, a special discount or a value added service offering for any special products or offers or during the festive season. Such offers, if strategically positioned, draw in new customers. You can get some good ideas on free offers from your CEO peers in your CEO club or CEO association.
- Expand your customer base
Don’t restrict reaching out to a larger customer base if your product/service allows for expansion. But before doing that, consolidate the existing customer base by providing better quality and a steady and reliable after sales service. Small businesses often fail to retain their existing customers when they cut corners on after sales service. Once you have built up a loyal customer base, spread your wings wider.
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