The question of identifying competition is one I’m often asked. Most business owners get into a business because it is unique. They truly believe what they have as a product or service is like nothing else on the market. As a result, they believe they have no competition.
This is a belief I would caution you against. The definition of competition is not necessarily someone who provides exactly what you do. Yes, you could be talking about a competing product or a competing service that you can use for comparison to rank yourself against and get ideas. But that’s not necessarily the competition.
You’re in business in order to get customers who will be willing to pay for your product or service. Every customer whether they are a business or an individual has a limited budget.The question is why would they spend it with you rather than something else?
That is how we define competition – by looking at who is competing for the money that a customer will pay you. Who would that customer spend that money with rather than with yourself?
The other way of looking at it is to say if your customer doesn’t take on your product or your service, how would they fulfil the function that your product or service would otherwise deliver?
Spend some time to understand where your competition is.
There are three ways of identifying your competition.:
- The standard way, which is common substitute for your product or service.
- Look at where the money that would be spent on your product would otherwise be spent.
- Find out what would the customer do if they did not have access to your product or service?