Competition is not a bad thing. In fact, competition in business is a very good thing. It is the very first signal that a particular business niche is profitable. It is the very reason most companies are still in business. Do not be disappointed if you find that someone is already implementing your precious business idea. In this article, you will learn why business competition is good and how you can use it as a springboard to propel your business to greater heights.
Most times when entrepreneurs analyze their competition while carrying out a feasibility study for their business plan, they get turned off by the sheer number of existing businesses already implementing the same model. This leads some to just give up and start looking for something else to do. You hear them say something like, “Nnaa eh, people are just too many in that business.”
When Etisalat entered the Nigerian telecommunications market, we had MTN (the market leader), Globacom, and Zain. These were the ‘big boys’ in the telecom industry at the time and the competition among them was already very fierce. Yet Etisalat stormed into the market, warmed its way into the hearts of people with many brilliant marketing strategies and today, they have claimed their place among the elites and are reaping their profits. How did they do it? If you understand this, you’ll never be afraid of competition again, ever.
Here are some of the reasons why business competition is a good thing:
1. Business competition is a sign of profitability
Having competition in a particular niche is an indication that people are already making money in that niche. You don’t want to be in a market where you are the only seller. If that market is profitable, you can bet that some other entrepreneurs will see the prospects and latch on it. If there is competition, there is money.
2. Competition encourages innovation and new strategies
Cowbell was the first to come up with sachet milk and of course all other milk producers had to follow suit because it pulled more market. Every Nigerian is aware of the per second billing introduced into the telecommunication market by Glo and ever since there has been various tariff plans for Nigerians to choose from. Etisalat introduced the weekly data bonus which made every young Nigerian to buy an Etisalat sim card whether they needed it or not just to be able to enjoy the weekly bonus data. When there is competition, entrepreneurs think and come up with new ideas to win over the consumer.
3. Competition helps kick against monopoly
When a particular brand enjoys monopoly, consumers do not have a choice but to purchase and consume the only product in the market. This can lead to market exploitation but with competition in place everyone is fine. MTN did a lot of ‘shakara‘ in those early days and people had limited options, but not anymore because now, consumers have options so MTN had to adjust. They understand that any shakara on their side, people would just ‘port’.
4. Competition helps reduce marketing effort and cost
When you pioneer a new product/idea, it takes a lot more time, energy and cost to educate people about your product and gain their trust and acceptance. The first sachet noodles to enter the Nigerian market (if my memory serves me correctly) was the ‘2-minutes Noodle’. It took time for folks to understand and trust that brand. By the time Indomie Noodles burst to the scene, everybody already knew what noodles where and how to prepare them. So instead of spending huge advertising amount to tell people what noodles were, the company only needed to let consumers know why Indomie was better. This saves time and cost.
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Given the above reasons, how then do you handle and stay ahead of your competition? Consider these 4 important tips:
- Do your research and analysis: Look out for the weak points of your competitors and improve on them. I have a close friend who wants to start a laundry soap production company in Onitsha, Anambra State. The competition in this market is already very strong; the number of existing soap manufacturers in the region alone is enough to make anyone have a change of heart. But when I speak with him, he does not tell me how difficult it would be for him to break into this market. In fact, in his mind, breaking into the market is the least of his worries. He has done his thorough research and knows some major loopholes in the market, so he is confident that even among the hundreds of already existing brands, he has a good shot.
- Focus on building a brand: Your first task when you burst on the scene is not to make money. Your first task is to build a brand – a name. Companies make products; consumers buy brands. It is the brand and its serving that will persuade the customer to always want to ask for more meaning you are ahead of the completion. People still ask for Peak Milk, no matter the cost, because they have come to know and trust the brand. Without a strong brand, it would be very difficult to stand and compete.
- Innovate/think outside the box: Do what others have never done before. Be daring in your approach. Get creative and understand the needs of the customer and follow trends in a unique way where you cannot set one.
- Customer is king: Always try to win the customer but keep an eye on your competition. Sometimes just satisfying the customer will help keep your competition in check. The customer is the reason you are in business. Stay close to the customer by allowing a feedback channel thereby seeking to improve on your product and hence creating more satisfaction and putting more smiles on their faces.
Have you had any experience dealing with business competition? Did I miss any important detail? Let me know in the comment box. I look forward to celebrating your success. Whatever you do, prosper!