How Do You React to Competition?

How Do You React To Competition by Jerome Gentolia: Venturestab

Photo by Juan Francisco Diez via Flickr

1. Competition is Good

While it is important to outshine your competitors, we must not forget that having competition has its advantages.

a. Creating an entirely new market alone is often difficult and expensive. The hurdle of educating consumers about a new solution to a problem costs a lot of money. An existing competition that already created an ardent group of product users and consumers could have a conferring benefit to you. Your competitor has already created a new market for you to capitalize and explore, making it easier for you to sell.

On his blog “Competition – The Pros and Cons” Fred Wilson wrote:

“But when your competitor spends heavily on marketing its offerings and identifying the pain point both your company and their company solve, that is good for you. It generates additional demand, and some of that demand will come your way. The marketing team, which is always trying to do more with less, loves that.”

b. Using competition’s existing data to your advantage. It is hard to create a new product if there is no data available to see how people react to your solution. Having existing data minimizes your risk in entering a particular market. Piggybacking off the work your competitors have already done could save you lots of time and money.

c.  Having competitor validates your business model.

d.  Having competitor that validates your business model makes it easier for you to raise money. Investors lean favorably to companies that have competitors than be the only participant in the market.

2. Avoid The “Slay The Giant Sydrome”

How Do You React To Competition by Jerome Gentolia: Venturestab

Photo by upside of inertia via Flickr

On his blog, “If You Try To Play Like Your (Bigger) Competitor, You’ll Lose To Them” Cem Sertoglu wrote:

“I think the point here is very relevant to startups who are challenging large incumbents with far more resources. You have to play a different game. If you attack your larger competitor replicating what they have, they always have a better chance of out-performing you. You have to find your edge and make sure you are playing your game, not theirs.”

Thinking that you can compete with the upper stratum companies like Facebook, Google, Amazon etc is a constant gnawing illusion, a precipitous path that leads to failure. Entrepreneurs that pitch the cliché “if I can only have 10% of the market” is an inflated adulation. Stay away from that mentality at all cost or meet an impending doom!

Find a competition you can win. Find a niche you can dominate. Select a competitive set within the market that you can dominate.

3. Avoid “Death by Differentiation Trap”

Avoid being too focused on differentiating yourself from your competitors. Remember that at the end of the day your focus should be on consumers not competition. Differentiate when you should but remember the key value of your company.

Alex Goldfayn, author of “Evangelist Marketing” wrote:

These companies have focused their marketing on smaller, peripheral features which differentiate them from the competition. So that instead of focusing their message on the 80 percent of the product or service that speaks to mainstream consumer interest, they instead focus on the 10 percent that makes them different from competition, which mostly matters internally. – Creating Consumer Evangelist blog “Death By Differentiation

The Right Focus

Product, customer and market are the rudimentary elements in any competitive strategy. These are the apotheosis of competition.

a. Make sure that you are not perceived as another alternative. Your focal point should be on how your solution is better. Your niche is appropriately differentiated when going up against the market leader. The customer outside your niche are over served and under fit by the market leader’s generic offering. Market leadership is determined by how consumers perceive brands in a category not by revenue or market share.

b. Focus On Value Not Features

April Dunford on “Startup Messaging: Should You Differentiate From Your Competitors” wrote:

“Competitors don’t always matter but competitive alternatives do and your marketing needs to address the value that you can deliver within that frame of reference. That is not at all the same thing as focusing your messaging on the handful of features that you have that other vendors in your space do not.”

All the evidence out there shows that delivery of the value proposition improves over time through new, innovative companies solving the same problem.

c. Focus on Execution – exceptional execution from an equally exceptional deft team can enter crowded markets and win. Google and Facebook launched long after their competitors and able to surpass and dominate the competition. When Google entered the ‘search” market it was already an established space with Yahoo!, Excite and Lycos.

It is not being the first; it is about being the best and different. As the saying goes “the pioneers take the arrows, the settlers take the land.”

d. Focus on Users and Customers: do not let the competition distract you. Time is better spent listening to users, and working on their feedback.

Remember competition is ineluctable, how you react to it is what matters.


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