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Got Competition? 6 Tips for Dealing with a New Competitor on the Block

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Got Competition? 6 Tips for Dealing with a New Competitor on the Block

By Caron_Beesley, Contributor
Published: January 12, 2012 Updated: March 5, 2012

Has someone opened up a competing business in your town? Are you worried that the town isn’t big enough for both of you and your business may be at risk? Not sure how to react to the new competition?

If you’ve been secure in your market as the go-to business for XYZ and suddenly find that your customers have another option, what can you do to fight back?

Remember, there are no quick fixes, but here are some tips for dealing with competitors and, quite possibly, collaborating with them!

1. Don’t Get into a Price War

Cutting prices to retain customers or distract them from “opening offers” from your competitors is a game you can never win and has a number of consequences, including the following:

  • It lowers the perceived value of your brand and product
  • Once you drop your prices it’s hard to put them up again
  • You’ll risk attracting customers who only care about price points
  • It puts you into the category of “follower,” as if you are being led by someone else’s business plan rather than your own
  • In most cases, only the business that can tolerate the lowest margins can win

There are instances when cutting prices does make sense, but it should never be a knee jerk reaction to new competition. Instead, consider the following strategies.

2. Zoom In on Your Niche

Face facts. You can’t expect to hold on to every customer. Accept it and focus your energy on identifying your ideal customer and developing a plan to win your share of that niche. In choosing to attract customers who need and value your services, you will secure your market share even in the face of competition.  For tips on identifying your niche, finding your target customer, and developing a marketing message that appeals to that niche, read 5 Ways to Find the Right Niche and Target Market for Your Small Business.

3. Assess Your Competition and Fill the Void

Get to know your competition. What are they doing differently? What are they good at? What are their weaknesses? The latter is important because it gives you an opportunity to step-in and step-up your game in these areas. If you can capitalize on your competitor’s weaknesses, you will chart a path for yourself and exploit a profitable niche for your business.

Start by reading media reviews of new businesses or check out online reviews. Websites such as Yelp.com, Google Reviews, Angie’s List, and local community discussion boards offer honest customer reviews and appraisals of businesses. Take a look at your competitor’s service offerings and even be a secret customer yourself.

4. Seize the Opportunity, Be Unique

Even if you offer the same products and services, you are never going to be the same as your competition. This is where opportunity lies.

Review what makes your business unique – often it’s a combination of you as business owner, your team, and all the other factors that differentiate you from your competition. Refocus your sales, operational, and marketing efforts to emphasize the unique customer experience that you offer.

This blog offers an action plan for doing just that: 6 Tips for Creating a Customer Experience that Embodies your Unique Business Value.

If you are facing competition from a bigger brand, remember that there is something very unique and marketable about being a small business – that personal touch, your agility, your passion, your business values, and so on. Use it to your advantage.

5. Stop the Bleeding

If you are starting to see customers leave your business in droves, then it’s time to review your business strategy. There has to be a reason why they are leaving your business. Identify what your customers are seeking that you aren’t able to provide. This will involve looking at all areas of your business – your location, your products, your staff, your brand, and so on. Use this information to refocus your operations based on what your customers’ need, not on what the competition is doing.

If your customers appreciate your services and need your products, they will typically remain loyal. Yes, many will check out the competition. But if you are doing everything right, there’s a good chance they will come back to you.

6. Once the Dust has Settled, Consider Co-opetition

What is co-opetition? It's the gentle art of cooperating with companies that might traditionally be considered your competition. Co-opetition means teaming up with complementary businesses to market your companies together. Done right, it can boost business for both of you. Rieva Lesonsky offers tips on how to do this in her blog post, Forget Competition – It’s Time for Co-opetition.

Related Resources

About the Author:

Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Comments:

This is so true and so important. Price war if extremely selective can be occasionally useful
in the business, The comportitor always apper, we need careful. This topic can help me about problems. Thanks for share
Personally I think the price is sometimes not important because they bring benefits.
If you’ve been secure in your market as the go-to business for XYZ and suddenly find that your customers have another option, what can you do to fight back?
Competition is within the air in business, this is normal and in order to survive you must be competitive. Definitely, having a unique selling proposition would do help, its just like making sense of encouraging your valued clients and prospective one to do business with you. This post is helpful, thanks for sharing. House and lot for sale
This is nice post and it is special for those who wants to compete in the unpredictive market and to get success.This post was edited to remove a link. Please review our Community Best Practices for more information about how best to participate in our online discussions. Thank you.
Direct competing business,potential competitors, alternative products, These make certain pressures to busines. So, you must special interest to these competing busines.
I think the most important thing is to understand your competitors
Thank you for the tip. I specially like the fourth tip. "Seize the oppotunity and be unique." I often find when stores next competition, the other stores usually have the promotion race, this reduces significantly the number of tourists!
This is a great post. You are right, a price war with a competitor is never the answer I agree with your post and besides doing things that really pleased me is to focus on the potential customer base is ideal for your business strategy that you have a stable customer source long, thanks for the post.

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