The Two Types Of Competition In Business
Whenever I’m running a sales workshop, one of the questions I like to ask the audience is what are the two types of competition in business?
The answers I generally get back are the other types of businesses they are directly competing with for their potential clients.
If you’re a Marketing Agency that helps businesses find leads, they assume it’ll be other Marketing Agencies.
Perhaps you sell high-end fashion – the audience will assume it’ll be businesses selling a similar kind of product.
These aren’t incorrect. However this would be one type of competitor. What we want to look at, are what are the two types on competition in business.
Let’s explore it further now.
The Two Types Of Competition In Business
Competitor 1 – Your Direct Business Competition
So the first competition is as we answered above. These are businesses in your direct niche, targeting the same audience and potential clients you’re targeting.
How do you compete with them?
There’s a number of factors you need to look at.
If you can’t compete on price, can you compete on adding extra benefits or a service?
Perhaps you shouldn’t be competing on price in the first place. Maybe you can add some extra value that they can’t; whether it be your personal expertise, or something you can give your client that they can’t. Sometimes a big mistake people make to compete in business, is to have a price war (which can be a quick race to the bottom).
What is your USP – or Unique Selling Proposition? Learn more about creating a USP here.
In regards to the first type of competition outlined in this paragraph – we’ve also put together an article here to help you stand out. Check it out for more info.
Competitor 2 – Competing Attention
The second type of competition that business owners generally forget to think about, is what is competing for your potential clients attention?
For example, if someone has to pay some urgent bills, which means they can’t afford your product or service right now – what can you do to help compete with this other interest? Perhaps you can allow instalments, or buy now pay later?
If you’re a business that’s located in a place where people will need to travel a bit to get to you; then your competition may be the friction that person feels for having to travel out of their way to get to you.
In this case, you may want to compete with this friction, buy putting in place some kind of added benefit such as travel or something included in your price, which helps overcome this potential objection.
What I’m trying to help you see here, is to not just think about competition from a direct competition point of view, but also from a competing interest and attention point of view.
By learning more about the two types of competition, you’ll have a higher chance of succeeding at serving your potential clients.
Related article: How To Fix Your Business – 10 x Steps To Guide You
The next steps, is to understand the first type of competition. These are your direct competitors.
What are you doing differently? How are you priced differently, and what can you offer that they can’t?
Some businesses just can’t purely compete on price, because the competition may buy products cheaper than you do (because they’re bigger, and have a higher turnover). What can you do instead that they can’t?
How can being small or medium sized, work to your advantage?
Secondly, what friction, or competing factors are competing for your attention? Write these out, and discuss this with your team. What can you do to alleviate these other competing interests?
I’m interested in your thoughts. Feel free to share them below.
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