You might be thinking about competition all wrong. Competition breeds success. It’s a trite, unscientific example, but take something I recently did as at least a small snippet of anecdotal evidence. Meerkat launched a few months ago, and as an avid Tech Crunch Report listener, when I heard about it I shrugged my shoulders, not really giving the channel much thought. Then Periscope launched. Now I was listening. These SV guys must be on to something… Since I am fairly preoccupied with all things social media, I knew I better get on what appeared to be a rapidly growing bandwagon. (I now have accounts on both channels, but deleted the Meerkat app because it seems to be, in many ways, inferior).
The example implicates something both physics and business buffs alike will know about: “Critical Mass.” For your business to be successful, critical mass is key. In order to profit from anything, you need a large population of people to “need” your product or service, a.k.a. the Total Addressable Market (TAM). By being surrounded by other companies that also provide a similar product/service, more and more people believe they “need” it (whether they do or not).
Consequently, many entrepreneurs and marketers will often say that they look at their competitors to see what they’re doing so that they can do it, too.
This is where many businesses really get it wrong. It might seem simple enough to think that in order to replicate a competitor’s success, you simply need to do as they do. FALSE. You can more appropriately think of competition in two ways: 1) do what they do, but improve upon it in a way that makes you more marketable OR 2) Let them have that portion of the market, while you build something they either can’t/won’t replicate – giving you each your own separate niche markets.
1) Do what they do – but do it better. This is pretty standard when it comes to certain things. If your competitor is suddenly selling blue widgets and you don’t carry blue widgets, a good thing to do might be to start selling blue widgets – BUT sell better blue widgets. Your impulse might be to sell blue widgets at a lower price, but beware of starting a price war in which no one wins (except maybe the customer and your bankruptcy lawyer).
Of course, that’s an extremely simplified way to look at “doing it better.” I see it all the time in my industry, which is somewhat of a niche market. A provider of the same service will attempt to duplicate a brochure or ad of mine (even stealing the exact same copy!), and the only time it really concerns me is when they do a better job of it than I do. When they do a poor job of duplicating my efforts, they make my organization look even more appealing when compared to a (seemingly) less capable one. If imitation is the highest form of flattery, than poor imitation is the quickest way to improve your competitors’ business. If you can’t improve upon what they’re doing, why be the consumer’s second choice?
2) Let them have it. Let’s look at our blue widget example again. Say you’re company A, and you sell red and yellow widgets, just like Company B. Suddenly, Company B starts selling blue widgets, which are more expensive. You could start selling blue widgets to keep up with them, but you can only match their price. Instead, you can let them have the market share of blue widget buyers. Thus, you decide you will now “specialize” in red and yellow widgets by becoming the expert in the red and yellow widget field. You solely repair red and yellow widgets. You have the go-to blog for red and yellow widget owners. Your branding is red and yellow. When someone comes in your store or to your website looking for a blue widget, you’ve perfected your pitch about why red and yellow widgets are superior. When they still want the blue widget, you happily provide them directions to Company B. That’s because you know, when they are looking for a red or yellow widget (or one of their friends are), they’ll remember Company A is the red and yellow widget guy.
The moral of the story: Keep an eye on the competition, but only do what you can be the best at.