Competition: Wasteful Energy or Useful Synergy?
October 16, 2024
In the world of business, competition is often viewed as a challenge to overcome. Whether verbalized or not, beating the other guy to the punch is always front of mind. However, when approached with the right mindset, competition can be a huge motivator for growth and innovation. Understanding the relationship between competition and business success is crucial for any entrepreneur looking to thrive in today’s marketplace. Here are a few lessons learned from my time as an entrepreneur, and how I used them to help shape my business model.
1. Understanding Competition
The common definition of competition is rivalry between businesses in the same industry striving for market share and customer loyalty. While that is true on its face, I discovered there’s more to it. When it comes to customer acquisition and overall customer experience, you should consider multiple industries your competition. The company offering investment advice today, if their customer engagement and experience is excellent, can easily pivot to provide ancillary services such as life insurance or tax advice tomorrow. Why? They’ve cultivated trust and brand loyalty in their products. When you create trust and brand loyalty, your clients are more apt to continue their relationship with you. Your core business model must be customer centric. They will tell you what they want, when they want it, and how they want it.
2. Enhancing Customer Experience
Looking at the world of coffee, Starbucks and Dunkin are two major titans that compete aggressively for customer loyalty. Both companies offer a solid core product, but they use customer experience to drive revenue. They battle back and forth trying to create the best in store and online experience. Starbucks offers a premium atmosphere and personalized service, while Dunkin emphasizes a cozy atmosphere while keeping things speedy and convenience. Each company continually refines its offerings based on consumer feedback and competitive pressures, resulting in better service and products for customers. Making the customer feel special and appreciated at every transaction keeps them coming back.
3. Identifying Market Trends
Coca-Cola vs Pepsi serves as a case study in using competition to identify and capitalize on market trends. Both companies closely follow consumer preferences and emerging trends, making it easy to adapt their marketing strategies and product lines accordingly. With the new rise in more health-conscious consumers, both brands have expanded their products to include low-calorie and healthier beverage options. This adaptability, driven by competition, ensures that they remain relevant and appealing to their target audience. Being able to get in front of trends or creating trends is even better.
Competition is a valuable part of business that drives innovation, enhances customer experience, and identifies market trends. It also drives out the dinosaurs who either can’t adapt fast enough or refuse to adapt, think Blockbuster, Blackberry, Kodak… the list can go on and on. You must look at competition as an opportunity to learn, adapt, and grow. By embracing competition, you get the win-win; first place and the lion’s share of the market or you get valuable lessons that you can use to make your business better.
