Before you jump into this article, we’d like you to cue “Eye of the Tiger” in your internal stereo system. Competing, in any realm, takes fierceness, optimism and the will to win. Keeping with the “Rocky” theme, have you noticed how the opponent is always an undermining creep? It’s never another nice person, with an Adrian of their own. And so it is when your competitor is of the low-cost, low-price variety. They may seem to offer the same thing you do, but do they really? If you lower your prices and engage in a price war, the result is lowered profitability for everyone involved. And, if you ignore your rival, you have no protection against that sucker right-hook. So, what can you do to compete? Come to your corner and let’s get you ready to get in that ring.
You could drink a dozen egg whites, but knowledge is power in this case. Before you decide on your strategy, do some solid research. You need to understand where you stand in relation to your competition and run an analysis of market needs. Do you and your low-cost competitor serve the same segment of the market? If not, then stop reading this article and go eat a waffle. But, if you determine the low-cost competitor is now serving/or will eventually serve the same segment you do, it’s time to get in there and jab, kid.
- Know Yourself.
Some say competition is a illusion. There’s only one you. They don’t have what you do. So, what makes you different? What makes you special? It’s when you find this that you are able to capitalize on a significant and sustainable competitive advantage. You don’t hear fans of Rocky Balboa chanting Ivan Drago’s name, after all.
- Read The Crowd.
Now, understand your customers. What do they want? What do you feel they’re willing to pay for? Excel in those areas, and market with them in mind. Making the customer your main squeeze creates extra value. If you could get to know your customer base better, do just that. Invest in customer research, win/loss analysis, and customer advisory boards. Visit them at the pet store, so to speak.
- Float Like A Butterfly, Sting Like A Bee (Diversify).
Never sell yourself short. Keep your costs commensurate with what you need to thrive. But, work to understand the overall value of your offering in order to differentiate your pricing across distinct market segments. Your product may be better than that of your competitor’s, but may exceed some of your customers’ needs. Rather than lowering the price of your product, if possible, consider developing a lower-frills product that will compete head-on, at a lower price point. Just make sure not to jeopardize the livelihood of the rest of your product offerings.
- Tag Team.
What if you created a low-cost subsidiary, or teamed up with a partner already offering a low-price product? Both are strategies that seek to make you more competitive. In this pairing, the low-cost subsidiary uses a separate brand name, and exists for the sole purpose of competing with the low-cost competitor. The subsidiary’s customers expect fewer features and/or service levels, which justifies the lower cost. If you take this approach, make sure to treat it as a business that seeks profitability like any other. The subsidiary should be able to compete in the market with its parent, in addition to the other suppliers in the market.
Now, go knock ‘em out. Think in terms of solutions. Be so good your customers can’t help but choose you. And never confuse being under-cut, with an upper cut. It’s the thrill of the fight, Tiger.