Businesscompetition is the race or rivalry among business competitors that arecompeting in the same niche. The purpose of competing with one another is toincrease the revenue of the business by increasing the sales and market share.If you’re in the business market, then you should be familiar with the strengthand weaknesses of your own business, and also with competitors as well.
Thething about business competition is that it always exists in the businessmarket; you won’t find any field of business where there isn’t any competition.However, some fields are less competitive and the others are more; but businesscompetition in the market is always there.
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Types of Business Competition
Whenwe talk about business competition; then the next question comes to our mind iswhat type of competition. There are usually three types of competition andthree types of competitors which are as follows;
Direct Competition
Asthe name implies; direct competition means that your competitors are in thesame line of business and they are offering the same product and service.Direct competition is something which comes to our mind; when we talk aboutbusiness or competition. Competition could be about anything which yourcompetitor would target; price, service, particular features, sale point, etc.
Indirect Competition
Indirectcompetition means where your competitors are offering the same product orservice, but they have different marketing and business goals and they areadopting a different business strategy to target their market.
Inother words, they use different type of content marketing strategy to selltheir product or service whatever you are offering.
Replacement Competition
Replacementcompetition is the most difficult competition to identify among competitorsbecause they use the same resources of your product or service, but they offersomething else. A business person must keep in mind that it is customers whodefine the competition for us.
Forinstance, a written book and the video game are two products and their targetmarket is 12 years old kids. They both are using the same intellectual creativeresources, but the product is different.
Asa business person, you must understand the needs and choices of your customerswhat they want; what competitors could target. The same way you should targetthose needs first; and what could be replaced with something new and attractiveto capture the market share. Evaluate it, and target.
Benefit of Competition in Business
Ofcourse, competition is not something that you want as a business person; butthis is what you have to face. Besides its challenging characteristics; thereare some benefits of the competition as well which are as follows;
Awareness
Morecompetition in the market about a particular product would spread moreawareness. The competition will make the customers more informed. Sale of theproduct would also increase because of the demand created by the informationand awareness.
Price
The price of the product is a very important factor to attract new customers. Competition forces competitors toward economies of scale; which as a result lower the prices of the product.
Choice
Everycompetitor would try to differentiate itself from the crow of the product byadding some value to it. Consequently, customers would have more choices tochoose from in the market.
Quality
Manycustomers are quality conscious when they have many choices to choose aproduct. Then they would always choose a product that is more efficient thanthe rest. Competition would also compel competitors to put more focus onquality.
Innovation and Productivity
In the race of competition and standing out from the crowd; companies allocate a separate budget for research & development. As a result, competitors produce innovative products to stand tall in the market.
Disadvantages of Competition in Business
Thereare many advantages and benefits for the customers, but it has somedisadvantages as well. Such as;
Reduction in the Market Share
Competitiondivides the whole customer market into a few small parts; it become verydifficult for the individual business owner to have the maximum market share.No matter how good the product it’s producing in the market.
Business Face Pressure
Competition puts a lot of pressure on the businesses; because it’s very difficult to survive in such business environment where you consistently have to work on being effective. Everyday would make you feel like a new day.
Employees Face Pressure
Pressureon business means more pressure employees to deliver a result; that’s what themanagement requires when the very existence of business is in jeopardy.
Business Spends More
Competition doesn’t remain a competition anymore; it has become a matter of survival in the market. Competitors spend more and more resources in the market; business expense has increased a lot in the recent years.
Confusion among Customers
Competitionhas made the customers confused because a lot of similar products in the market;when it comes to choose one and make a decision about one product. Customersoften make the wrong decision in the confusion.
Business Competition Examples
Here we will look at some of the biggest rivals in the history of brands and businesses.
co*ke vs. Pepsi
When you want to buy a soft drink and visit the grocery store; either you choose co*ke or Pepsi. Their taste is almost the same, but you choose one. There are decades of marketing work behind it by both of these companies.
Duringthe ‘‘Cola-War’’ in the 1980s, Pepsi & Coca-Cola experimented andintroduced a new taste in the market, Pepsi pulled the whole market sharetowards it by winning the customers approval. Nearly 400,000 sent a complaintletter to Coca-Cola against the new taste; the company apologized to itscustomers and revert to its classic taste.
McDonald’s Vs. Burger King
McDonald’s and Burger King, both of these brands offer burgers to their customers. The question is what differentiates them and make customers to choose one. It started in the 1950s and 60s, a very famous period of fast food and cars, McDonald was selling its burger at 15 cents and Burger King came and started selling it at 37 cents.
McDonald’shas the price advantage, but better quality factor forced the marketers andcompanies to think about the quality of the product. However, McDonald launchedits own Big Mac soon after this. Whoever won the burger war between both ofthese brands; customers would always choose the healthier product regardless ofthe price.
UPS Vs. FedEx
UPS and FEDEX both are in the package delivery service industry, with the rise in e-commerce and online shopping, delivery service is getting a very important business like foot soldiers. UPS handles all the on-ground vehicles and transportation. FedEx, on the other hand, controls and operates world large cargo airline fleeting.
UPS manages all the shipments and transportation by itself, although it’s costly but it’s become a major strength of the company. FedEx relies on intermediaries and hires other third party contractor. However, UPS has a market worth of 94 billion US dollars, FEDEX has a market share worth 51 billion US dollars.
Business Competition FAQ
How to Beat Your Competition
There are several things a business should do to stand out from the competition, some of them are as follows;
Identify and solve the pain points of your customers. Solving the pain points of the customers helps you to win their loyalty, and they’ll start using your product or service whatever you’re offering.
Build your niche to have more room for your business. The precise function of the product is more valuable than being a general thing, it’d become your area of expertise and people would prefer your product.
Get the pricing correct. Setting up market competitive pricing is very important; they should also be relevant to the quality of the product.
Make innovation as your best friend. Keep innovating thing within your product over time, it’ll keep the interest of your audience alive.
Improve your customer service. You must keep on adding the features in your product; it is something which would keep the loyalty of the customers safe.
Is Competition in Business Good?
Competition is something which businesses usually don’t like, but competition is good not only for the customers but also for the business as well. Competition works against the monopoly of an industry. In the competitive environment, businesses would keep on introducing new product ideas in the market to win the market share. Power stays in the hands of customer if they like some idea of the product, then they’ll start using it. Other competitors would jump in and follow the same strategy; more competitors in the same field would bring economies of scale, which means lower prices. In the end, it is a win-win situation for both of them, businesses and customers.
