Levels of Competition
As far as competition in the marketplace concerning products and services go, it is not so simple as to say that companies A, B and C are our competitors. One must be aware that competition exists at different levels. This is something often overlooked when marketing strategy is being planned, but by adding some simple facts into your marketing planning might save you trouble later.
Of course, there is a global competition for market money. In a recession, companies invest less in machinery and equipment, the family chooses to repair the car instead of purchasing a new one, people renovate their house instead of looking for another. Remember that both companies and individuals spend their money differently depending on the economy. It sounds easy, but it is a lack of branch forecasting that brings many companies into bankruptcy. It is quite clear that we must closely monitor the market situation if we are to have a successful marketing campaign, your campaign needs to follow your customers reality.
The company’s products or services are designed to satisfy the needs of the customer. This need can usually be satisfied in different ways. A person can cook their own meals or go to a restaurant; a company may choose to take the train instead of flying to a conference, etc. Hence, there is a competition on the level of need. This necessitates a clear understanding on part of the marketer: in what level is my product or service competing? Is it a product that could replace another one? Is it a complement? Is it a completely different way of doing something but with similar results?
The company’s product or service can compete in a particular segment: A company’s transport-service in comparison with another one’s. In the end we can talk about competition in a product area. This solves the customer’s business needs with a similar product but it is not always easy to see for a marketer preparing a campaign as we are often too limited in our pre-decided view of our product or service. Step outside your marketing role, think of the product or service you are offering as a customer would.
Remember to always analyse the information you have at hand: Is it up to date? Is it covering the necessary fields? Have you considered the way in which the customer views the competing products? Perhaps you might find an unexpected possibility for your marketing?
Start by looking at your business sector as a whole. Competition may come from different directions. Is the firm operating in an industry where growth is high and where new players enter the market at short intervals, eg. in the IT sector, or if industry is mature and well established with set players? Are there barriers to enter the market? How may the multitude of layers work to your advantage?
The rate of change is now high in all areas. Competitor’s weakness today need not be the same tomorrow – so keep a close eye on your competitors.
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