Business competition is the race or rivalry among business competitors that are competing in the same niche. The purpose of competing with one another is to increase 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 strength and weaknesses of your own business, and also with competitors as well.
The thing about business competition is that it always exists in the business market; 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 business competition in the market is always there.
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Types of Business Competition
When we talk about business competition; then the next question comes to our mind is what type of competition. There are usually three types of competition and three types of competitors which are as follows;
As the name implies; direct competition means that your competitors are in the same line of business and they are offering the same product and service. Direct competition is something which comes to our mind; when we talk about business or competition. Competition could be about anything which your competitor would target; price, service, particular features, sale point, etc.
Indirect competition means where your competitors are offering the same product or service, but they have different marketing and business goals and they are adopting a different business strategy to target their market.
In other words, they use different type of content marketing strategy to sell their product or service whatever you are offering.
Replacement competition is the most difficult competition to identify among competitors because they use the same resources of your product or service, but they offer something else. A business person must keep in mind that it is customers who define the competition for us.
For instance, a written book and the video game are two products and their target market is 12 years old kids. They both are using the same intellectual creative resources, but the product is different.
As a business person, you must understand the needs and choices of your customers what they want; what competitors could target. The same way you should target those needs first; and what could be replaced with something new and attractive to capture the market share. Evaluate it, and target.
Benefit of Competition in Business
Of course, competition is not something that you want as a business person; but this is what you have to face. Besides its challenging characteristics; there are some benefits of the competition as well which are as follows;
More competition in the market about a particular product would spread more awareness. The competition will make the customers more informed. Sale of the product would also increase because of the demand created by the information and awareness.
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.
Every competitor would try to differentiate itself from the crow of the product by adding some value to it. Consequently, customers would have more choices to choose from in the market.
Many customers are quality conscious when they have many choices to choose a product. Then they would always choose a product that is more efficient than the rest. Competition would also compel competitors to put more focus on quality.
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
There are many advantages and benefits for the customers, but it has some disadvantages as well. Such as;
Reduction in the Market Share
Competition divides the whole customer market into a few small parts; it become very difficult 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
Pressure on business means more pressure employees to deliver a result; that’s what the management 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
Competition has 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. Customers often 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.
Coke vs. Pepsi
When you want to buy a soft drink and visit the grocery store; either you choose Coke 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.
During the ‘‘Cola-War’’ in the 1980s, Pepsi & Coca-Cola experimented and introduced a new taste in the market, Pepsi pulled the whole market share towards it by winning the customers approval. Nearly 400,000 sent a complaint letter to Coca-Cola against the new taste; the company apologized to its customers 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’s has the price advantage, but better quality factor forced the marketers and companies to think about the quality of the product. However, McDonald launched its own Big Mac soon after this. Whoever won the burger war between both of these brands; customers would always choose the healthier product regardless of the 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.