Today I wanted to share with you my thoughts on Competition and why I think it is good to have a competitor.
The Federation of Small Businesses has recently published their annual survey “Voice of Small Business” in which they ask small businesses how they have been and what are their plans for the future.
I will focus on what the business think about the competition.
36% of business owners in the UK consider competition an obstacle which makes competition the 3rd biggest barrier to growth. It is understandable and somewhat natural notion: imagine being the one and only business of its kind in the marketplace – consumers would have to buy from you. Wouldn’t it be beautiful?
Well, it wouldn’t as there would not be a free market anymore. Instead we would have a monopoly which is not good for anybody – not for the government (too much risk), definitely not for the consumers (no choice) and neither it would be good for the business itself! Why? Because it would not have a motivation to get better.
You need a competition to have a point of reference. A good competitor is a real treasure – instead of learning on your own mistakes, you can learn on theirs!
Take a classic example – Apple. Have they ever launched a product that would truly be first to the market and a breakthrough innovation? No. Instead they watch the competition very closely. They analyse the marketplace and the consumer needs in a smart and creative way and then come up with a product, which might have been already invented by someone else but this time, as launched by Apple, it is simply much much better.
Here’s an example.
Do you remember Sony’s walkman? A black, portable machine to play audio cassettes, launched in 1979? Wasn’t it a great invention? You could take your music with you while walking or working out. It was indeed a great invention. People loved it, consumers went crazy about it – finally they could listen to their favourite tracks everywhere and on-the-go!
Could it have been a better product though? Smaller maybe, lighter, yet with bigger memory so the user wouldn’t have to play the same record over and over again?
Yes, it could. And it did, eventually…
Apple tweaked the idea a bit and, in 2001, launched a product that addressed already recognized consumers’ need but in a much better way, giving the users more flexibility, more memory in a smaller, more ergonomic “body”.
Apple’s product launched at much higher price than Sony’s original. Yes, but with all the benefits in comparison to the competitor’s product, the higher price was well justified. The consumers could understand why they must pay more. Without the competitive reference point they would not be able to compare the products and see the benefits of an Apple’s proposition.
The key learning here is:
It does not matter what product you launch. All that matters is why you want to launch it. Watch the consumers and their behaviours and launch the product which addresses their needs.
Is there a product similar to yours already out there in the marketplace? Very good!
Make yours better!
Aga Jagiello-Johnstone is an Owner of Loff Consulting, Strategic Product Management and Marketing for Small Businesses.