Best attack strategies
When faced with strong competition, it can be tempting to launch an all-out attack across multiple fronts. However, this can be unfocused and ineffective. Instead, it’s best to identify where your rival is under-performing and conduct a more focused, strategic attack.
Common strategies include intensive marketing to highlight the higher qualities of your product, price discounts, introduction of lower-cost products, launching higher quality products, expanding product variety, new innovations, and improvements in customer service. To fund these strategies, or as attacks in their own right, businesses may also look to compete with their rivals on wholesale or manufacturing prices, transport costs and labour costs.
In all cases, it’s essential first to identify your competitor’s strengths and weaknesses.
Never criticize your competition
Criticizing your competition can scupper a deal and is generally a bad idea.
It can be tempting to highlight a weakness or failure of a competitor when making a deal, as a way of trying to strengthen your own position. However, even if your criticism is valid, reasoned and justifiable, it might not be in your own interests to make it.
Firstly, the mere act of criticizing can make you look negative and uncooperative. This can lead to mistrust and the breakdown of the deal. Secondly, it can prompt your competitor to fire back criticism at you – and their criticism might be more convincing to anyone viewing the situation from the outside.
Should you cut prices?
When dealing with competitors, the prices you cut and the prices you protect will very much depend on what your competitors are doing well, and your strategy for competing. If they’ve slashed prices, one response may be to avoid a price war and instead protect quality and customer service.
There are, of course, certain minimum levels below which your spending should not be allowed to drop. These will be different for every business, but will include the base costs of employing the minimum number of staff and operating at a minimum profit margin.
Identify latent competitors
Latent competition can be much more difficult to identify than obvious competitors, but this makes it even more important. They are businesses that may steal your customers from a new and unexpected angle. In many cases, your biggest threat will be from new technology and new ways for customers to consume products.
For example, back when HMV, Virgin Megastore and Woolworths were all competing to sell music CDs on the high street, iTunes was their latent competition, offering customers a new way to get music.
Identifying these competitors requires imagination and foresight, but if you can anticipate the next revolution in your sector, you may be able to take advantage of it – and stay ahead of the game.