Who’s Your Competition?

Do You Know Who Your Competitors Are? Are You Sure?

Are you confident that you know who you’re up against, or do you just THINK you know? There’s a common affliction among executives, especially entrepreneurs who are working on the next great thing to claim, “We don’t have any competition.” And even when there is an awareness of competitors, the view can be myopic.

Maybe your product IS the coolest thing since sliced bread, but that doesn’t mean you don’t need to watch your back. As the saying goes, “Just because you’re paranoid doesn’t mean they’re not out to get you.” Competition is everywhere. So stop and think for a minute, do you really, truly understand your competition?

Competition is Choice

Assessing your real competition comes down to taking stock of choices. What choices do your customers and prospects have when tackling the problem you solve? The answer is not only other companies that do what you do. It’s also other ways to solve the problem. Let’s look at the example of a carpet cleaning business:

Tom cleans carpets. So do 32 other companies in his town. So he has 32 competitors, right?

Well, what about all the stores that rent carpet cleaning machines? Isn’t Tom competing with Lowe’s and Walmart and Kroger and every other store that offers heavy duty machines for homeowners to use?

Then consider the home carpet cleaning machines. Certainly the DIY market cuts into Tom’s business. If Ann owns her own carpet cleaner, she’s probably not calling Tom very often.

What about people who just never clean their carpets? Are they competition…or just lazy?

And don’t forget alternative flooring. People selling hardwood or tile are probably pitching customers right now on the fact that the maintenance is easier and less expensive than regular carpet cleaning.

The Long View

Taking a broader view of the competition is important to understand the true dynamics of your market. If it has been a while since you looked at the competitive landscape, you might be surprised by what you find. Here are a few considerations to keep in mind when sizing up the players in your space:

  • Direct Competitors – These are the companies that are in a head-to-head battle for your customer. They do what you do, in a similar way, at a comparable price. For Tom, the 32 other carpet cleaners in his town are direct competitors.
  • Indirect Competitors – Companies that solve the same problem, but in a different way. In our example, cleaning machine rentals and home carpet cleaners are indirect competitors for Tom.
  • Alternative Solutions – This the choice that averts the need for your solution, like choosing hardwood instead of carpet.
  • Intertia – The choice to do nothing at all. People who never clean their carpets could be Tom’s customers, if he could just convince them of the need.

If you’re feeling complacent and confident that you know all your competitors, consider for a minute the impact of Apple on the demand for music CDs. How are print magazines doing in these digital days? Think further back…what happened to all the carriage makers after the car came along? Every industry, no matter how solid, can be disrupted by new technology.

Get Ahead of the Game

You may not be able to stop the change, but you can be ahead of the curve by staying on top of competitive forces in your industry. Don’t settle for simply watching your direct competitors to see what they do. Limiting your competitive strategy to monitoring or following could be the death of your business.

To stay vital, take a long view. Look at the horizon, constantly thinking about what could be next. Is someone working on a better way to solve your problem? Is someone developing a way to make the problem go away? Or to prevent it altogether? Those are the people to watch.

Here’s a Challenge

Take a fresh look at your competition, using the ideas I’ve outlined here. Then tell me…Did you discover an aspect of your competitive environment that you had previously overlooked? What was it? How will this new knowledge help your business?

Image by andrea.rose


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