8 Ways to Survive New Competition

They are going after your customers. Are you prepared to take them on?

For small, independently-owned businesses, new competition only means trouble. Whether it’s a superstore counterpart or another local merchant out to takeaway your customers, local businesses will certainly feel the impact of competition.

However, as unwelcome as it may be, new competitors also present a silver lining that may prove advantageous to those who can capitalize on the hard-to-find opportunities created by the growing competition.

If you’re struggling to survive against your competition or are looking for ways to thrive in their midst, here are some ideas that can help you succeed in your business strategy:

1.       Analyze your competition.

When dealing with new competition, learn and understand them entirely. Visit their stores, profile their products and offerings, and study their approach to the market. Gather as much information about them and evaluate it.

Do they have weak points that you can capitalize on, or are they taking advantage of your shortcomings? Is their approach better than yours? Are they implementing new ideas that you can use for your own business? This information is critical in building the backbone of your own competitive strategy.

2.      Redefine the “rules of the game” and differentiate.

Compete on your terms. Instead of going head-to-head with your competitor on their turf, force them to compete on yours. If you compete against a large retailer in terms of price or product selection, you’ll be at a disadvantage. Instead, find out where you’re good at, develop your niche, and differentiate. Even if you’re competing for the same customers with the same products or services, there will always be points of difference. Your task is to find these differences and play it off.

3.       Implement small modifications to your business.

Oftentimes, small modifications, rather than complete innovation work best to making your business more competitive. Take Dunkin’ Donuts, for example, which despite minimal changes to operations still thrives amidst fast-growing rivals Krispy Kreme and Starbucks, increasing sales by 9%, last year.

The same applies to small businesses. So begin with something small such as extending your business hours longer than the traditional 9-5 or opening shop on Sundays to take advantage of the hours your competitor is closed for business. Offer to provide a special service as part of your customer’s purchase such as including free delivery or assembly to give them added value for their money. Be creative about it.

4.      Develop a marketing-oriented approach.

Choose a marketing strategy and apply it to your business. After developing your niche to differentiate yourself from your competitor, make sure that you communicate it to your customers. It’s not enough to be unique; you must also market your uniqueness. Re-introduce yourself with a grand re-opening and publicize your business, come up with a new slogan, or organize a store sale. Pull-out your customer database and call your customers or send them a greeting card to inform them of your new services.

5.       Don’t get involved in a price war.

As much as possible, avoid competing with price, especially if you’re going against large retail chains. As market intelligence firm BIGresearch reports, customers buy not only because of price alone, but a combination of quality, price, and good customer service. 

However, if you do decide to beat your competitor’s lowest price, make sure you can afford it. And always keep in mind that your competitors can still do the same, so establish a price floor and don’t go below it. Otherwise, you’ll end up paying your customers for their business.

6.       Band together with other local businesses.

There’s strength in numbers. Work together with other local businesses for a common goal. Build a local business organization and team-up for promotions and marketing. If there is a local business whose services are complementary to yours, partner to refer customers to each other.

7.       Value your employees.

The last thing you want for your business is to have your employees jump ship to your competitors. Make sure that they are treated well and paid competitively to minimize costly turnovers. Periodically re-train and evaluate them to improve their performance.

8.      Interact with your customers.

There is a wealth of information available from interacting daily with your customers. Take the time to talk to them and ask about their needs and other benefits they would like to receive from you. If they have tested the competition, ask what they liked about it and what benefits they offer that they are not receiving from you. Work on providing these needs and benefits through your business.

As a value-added, it also gives you extra points in terms of customer service. Faced with new competition, it wouldn’t hurt to go the extra mile with customer service if you want to retain your customer share in the market.

--©Copyright, 2006, John P. Hayes, Ph.D. See my site at Hayes Worldwide.