“A horse never runs so fast as when he has other horses to catch up with and outpace.”
Ovid, The Art of Love, AD8
Recently someone who wanted to start a consultancy in a particular discipline and came to me for advise on competitive strategy. I reminded her that when a company chooses to enter a market it also chooses its competitors. She wasn’t sure who her competitors were. In fact she knew very little about them, but she wanted to be a market leader in short order.
“When a company chooses to enter a market it also chooses its competitors.”
Hooley, Piercy, Nicouland (2012)
It is axiomatic that you choose your competitors wisely. Here are three of the steps to choosing good competitors that we discussed. And I’m sure you will allow me to state that in framing my discussion I was influenced by some of my favourite marketers who are cited below.
- Identify whom to benchmark against
- How long it take you to become an overnight success?
- Why are your competitors successful? What are their strengths? What practices can you copy and improve?
- If marketing resources such as brand reputation, relationships with customers and competitive positioning are really the foundation of differentiation, where do you stand?
- Why are some competitors not successful? What are their weaknesses? How can you avoid and overcome the pitfalls?
2. Look for competitive maturity
- The competitively mature company understands the market it is operating in and enhances, rather than destabilises, the environment.
- The good competitor can help promote the industry’s stability by understanding the rules governing the market and by holding realistic assumptions about the industry and its own relative position.
- Good competitors are unlikely to engage in aggressive price competition that can be a zero-sum game. Instead they
- Good competitors are unlikely to engage in aggressive price competition that can be a zero-sum game. Instead they would rather expand the market.
3. Know the goals of your competitors
- What are the time horizons of your competitors?
- Are they pursuing normal profits, or are they seeking to make a killing in the short term and exit when things get tough?
- Are you entering an industry where both entry and exit barriers are low? If so beware!
Good luck my young friend. If you transfer the brilliance you displayed as a student to your business, you’ll be a millionaire soon.
Herman D. Alvaranga is a marketing and sales strategist and founder of the Caribbean School of Sales Management.
References: Marketing Strategy and Competitive Positioning, Hooley, Piercy, Nicoulaud (2012), Marketing Management and Strategy, Doyle and Stern (2006)