The rise of the Internet and social media has lowered the barrier to entry for new businesses seeking to enter the market. While this may be a positive thing, it also means that businesses need to do whatever they can to stand out in an increasingly competitive environment. Below are some tips that modern businesses should follow to get ahead of their competition.
1. Set Yourself Apart
Businesses need to find new ways of standing out from their competition. To do this, they need to identify their competitive advantage. Like the name suggests, competitive advantage refers to factors that puts a company in a favourable business position. A business is able to gain competitive advantage by recognizing the benefits it provides its customers, identifying its target market and identifying competitors.
First, a business needs to identify the benefits it provides over its competitors by answering questions such as the following:
- What are the features of the products or services we offer and what are their advantages?
- How do they benefit our customers?
- What are some things that we can do that our competitors aren’t?
An example of this is the newspaper industry, which relied on print media for hundreds of years. The advent of the internet resulted in the disruption of the industry, as news outlets moved their reporting to digital sources, which offered constant updates to consumers as news broke and reduced overall costs (ex: reduced dependency on resources such as paper).
Next, a business needs to know and understand its target market. Knowing the target market allows the business to tailor its product/service offering, adjust its marketing strategies and serve its customers better. An example of a company that has done a good job of identifying its target market is Apple. The target market of the company is individuals aged 18-45 that are in high earning households and who likely grew up around technology. Consumers perceive the Apple brand as a premium brand, which helps it stand out from its competition and allows the company to charge a premium price for its high-end products.
Lastly, businesses need to understand their competition. They need to collect as much information about their competition as possible, including strengths and weaknesses of their competitors, their product/service offering, pricing and overall marketing approach. Any business that fails to understand and adapt to their competition risks falling behind it. A good example of this is Blackberry- in the early and mid 2000’s, Blackberry had established itself as a dominant player in the smartphone market.
However, it failed to recognize other players in the space as a threat and did not respond appropriately to its competitor’s offerings. It also mistakenly believed that the corporate world would drive smartphone adoption rather than the consumer world.
When Apple introduced its first iPhone in 2007, it became an instant hit among consumers, who praised the phone’s superior technology features and innovative design. With users going to Apple, Samsung and other competitors for smartphones, sales of Blackberry products began to slip. With its lack of understanding of the target market and its competition, Blackberry fell fast behind its competition.
In “Competitive Advantage”, the now famous textbook that helped broaden the understanding on the topic, Harvard Business School Professor Michael Porter explored the three primary ways in which companies achieve an advantage: cost leadership, differentiation and focus. Cost leadership is achieved by providing reasonable value at a lower price than the competition (Think: Walmart or Costco).
Differentiation refers to providing better benefits than the competition. Focus is understanding and servicing the target market better than anyone else. These methods go a long way in helping a business stand out from its competition.
2. Tap into Weaknesses in Competitors’ Marketing
With rapid advancements in technology and the digital space, businesses need to use evolving and flexible marketing strategies. As customers’ preferences and lifestyles change, so should a business’s marketing strategy.
To be successful, businesses need to be able to articulate the benefit they provide to their target audience over their competition through marketing. They must seek to reinforce that message in every communication to their customers, including their advertising, public relations and digital marketing. If a business sees that its competitors are not advertising on a marketing channel that its target audience is using, it can gain a competitive edge by marketing on the channel.
For example, if a business has identified its target audience as Gen Z and Millenial individuals and notices its competition is not on social media, it can stand out from its competition by marketing on social media platforms such as TikTok and Instagram.
Another example is if Farm A wants to attract customers driving through the country and is close to another farm, Farm B, it might use a billboard as a way of attracting attention towards it. If Farm B does not have a billboard, then it risks losing potential customers to Farm A.
In the last example, if there are two real estate brokerages that are competing with each other, they might study each other’s marketing strategy. If one of them does not use a marketing list to generate leads, the other might be interested in starting one to gain a competitive edge.
3. Find Holes in the Industry
Every industry has holes that offer businesses an opportunity to offer something that the competition does not.
Businesses need to look at what they can offer that their competitors are not offering.
For example, in the early 1990s, Xerox noticed a general lack of recycling options in the industry. The company decided to launch a new initiative to take back used copiers as a source of material for new machines.
This was a huge win-win for both the company and its customers; customers no longer needed to worry about machine disposal as they could simply return their used copier at the end of their life cycle for store credit and the company saved several hundred million dollars annually by reusing the same material.
This also served as a brilliant marketing move- by offering something that no one in the industry did at the time, Xerox was able to stand out from its competition and garner a positive brand image by using sustainable practices.
4. Look to the Future
Companies need to be aware of new trends in the marketplace. They need to constantly search for new opportunities to capitalize on or challenges to brace for as advancements are made in each industry.
A good example of this is the rise of cryptocurrency over the last decade. This digital-based currency seeks to disrupt global financial systems by offering alternatives to current currencies.
Alternative (or ‘alt’) coins such as Bitcoin and Ethereum have steadily grown in value. Some big businesses, such as Microsoft and Tesla, have realized the potential in these alternate currencies and are now accepting payments in the form of Bitcoin. The technology behind cryptocurrency- known as block chain currency- is also now being used to encrypt digital files and offer a new form of ownership.
Just this past year, Christie’s Auction House, which is an auction house for art, started allowing digitally encrypted art, known as NFT art, to be auctioned and sold on their platform.
5. Innovation is Key
Big companies like Apple and Tesla have made their name from innovative practises. These companies have recognized the power of creating new opportunities, trends and opinions from new, innovative products and services. They understand that true progress is made when innovative products and services are introduced in the market, which spurs competition and stirs people.
Think of the massive impact the original iPod and iPhone had on the market, as they launched wave after wave of knockoff brands and inferior competitor products. By being the first on the market to offer any music users wanted to play, in any order, and the ability to use new smart apps in an innovative form factor, respectively, Apple was able to stand out from its competition and carve its own space.
Of course, offering truly innovative products can be expensive and often unachievable for smaller businesses due to the extensive funding required for R&D and product development, but that does not mean businesses cannot seek new innovative opportunities. A good example of this is disruptor apps such as Uber and Skip the Dishes, which caused massive disruptions in the ride share and food delivery industries, respectively. These companies were able to provide real innovation in industries that were stagnant for a number of years and in need for change.
So there you have it–some tips to get ahead of the competition. The only constant in life is change and nowhere is this more true than in business. Modern day businesses need to stay ahead of the curve by offering things that their competition are not offering and making changes to their product/service offerings and the ways by which they offer them.