Creating a competitive environment
Maintaining a competitive advantage has always been an important ongoing process for businesses.
Over the past few years, not only due to the pandemic, but also due to the rapid development in technology etc, businesses have had to adapt. Furthermore, the rapid changes have caused consumer needs and wants to also develop and alter meaning that businesses have had to spend more resources such as time and money, updating their understanding on the best ways to satisfy their consumers in an ever-changing environment.
However, in today’s market environment, companies should look to be what is known as market centred, which means they should not only look to understand their consumers but also understand their competitors. By understanding their competitors, businesses can gain market share/consumer loyalty by identifying any gaps in the market.
Creating a competitive advantage can be confusing and some businesses may struggle to understand where to start including what information they should be gathering and how this can help them become more competitive.
Businesses must realise that their previous competition may not be the same as their current competition/future competition so should not rely on previously gathered data but should look to collect relevant and up to date data on a regular basis to be aware of any important changes.
Below are five tips to help businesses develop a competitive strategy.
Understanding the consumer is one of the first lessons that a business owner should take on board. However, by understanding the competitor, businesses can ensure that they are developing products/services that are wanted and needed by their target market and will be able to investigate the mechanisms the competitors are using to promote these products and services.
Once a business knows their competitors, they can then look at their competitors’ objectives and how the business can differ to help them become more competitive. Can the business differ in terms or quality, price, delivery times etc? What are the financial structures of the competitors i.e. do they have investors, grants, research and development support? This is important as if a business wants to compete, they may struggle to do so if they do not have similar resources available to them.
Once a business is clear on who their competitors are including their objectives and financial structure, they can then start to focus more on their strengths and weakness. Competitor strengths can be lessons for a business, something they can learn from. Strengths can be a variety of elements such as social media presence, customer service, delivery times etc. However, by looking at a competitor’s weakness, a business may find an opportunity or a gap that they can use to their advantage. Again, these can be a variety of elements such as lack of social media presence, poor customer service or long delivery times.
Businesses should look to their own strengths and see if they are able to fulfil the gaps identified. However, they should also look to strengthening their own weaknesses to avoid competitors trying to use weaknesses to their own advantage.
It is important that businesses do not just collect this information once and assume it will be relevant on an ongoing basis. If a business wishes to stay competitive, they need to be continuously collecting this data. Businesses must use the information gathered to their advantage by ensuring the correct departments are notified of the findings meaning that it can be used in the most efficient way possible – to create a competitive advantage.
Deciding who to compete with is very important. Businesses may not want to go in full force against the competitor with the largest market share. These competitors may have more access to resources and even a stronger brand recognition which will make it very hard to compete. On the other hand, although competing with the smallest competitor may take less time and money, it may provide little competitive advantage as there is usually little to gain.
Market research can be seen as time consuming and costly, but when done correctly the benefits can be large. Taking a step back, understanding the marketing environment and the changing competitor and consumer environment can support businesses to grow stronger in the long term.
Dr Charlotte Doyle