How to Understand Your Competitive Position: 3 Ways

You need to consider which factors are going to influence your business. On which levels can you compete on? And if you can’t compete on those levels, can you compete on a different level? (And if not, perhaps you need to consider another business model or niche.)

Here  are  three  aspects  to  consider  in  helping  you  decide  whether  you  can compete or not…

1.  Pricing Influence
Perhaps the most common way for businesses to compete is on price. Undercutting works, but may not be the best tactic. Although this may sound counter intuitive, sometimes increasing the price can also increase the number of sales.

Take a look at not only how much your product costs, but what influence your product has on your customers. If your product can save your customers a lot of time and effort in doing something, what value are you going to price that?

You  must  educate  your  customers  about  why  your  product  costs  the amount  it  does.  Break  it  down  and  spell  out  exactly  what  the  benefits are. Being the cheapest may just give you low profit margins and poor quality customers. By charging a premium, you can give a better quality product and/or service as well as make a better product.

With a higher profit margin you will have more to spend on marketing and advertising, allowing you to dominate more easily. You  will  also  attract  better  quality  customers  and  leave  them  much happier for having done business with you.

Remember, one simple way to increase your price point is to create an authority status for you or your company. Alternatively,  maybe  you  have  found  a  way  to  undercut  the  current competition. Many business have succeeded by finding ways to out price their competition while still providing a quality product or service.

If  so,  make  sure  you  explain  why,  so  that  people  will  understand  how you are able to beat everyone else and not cut corners. (Otherwise they may be skeptical.)

2.  Quality

How easy is it for another company to come in and copy what you have done—to  replicate  your  business  model? You  must  think  about  this  in the beginning, and assume other companies will copy you.

How  can  you  differentiate  yourself  and  make  yourself  stand  out  from future copy cats? Your  brand  plays  a  big  part  in  this.  If  your  customers  believe  the experience they have with your product has certain benefits, they’ll be more likely to stick around when new players come in. Think about how you can dominate the industry.

As well as copy cats, be aware of companies who come in with alternative products. Yes, price will be important for a percentage of customers, but not all. The features and/or quality will become more important here.

(And a quality product is more likely to stand the test of time against a cheap and cheerful product.) What  type  of  position  do  you  wish  to  hold  in  your  market?  Which strategic  benefit  will  your  product  have? And  which  strategic  benefits will other companies have, that you won’t?

3.  Marketing
In business you need customers. Your ability to get customers will be largely dependent on your marketing ability. Good marketing will not only help generate new prospects, but also to pre-sell them. Ironically this pre-selling is best done through education, not selling.

Teach prospects through your marketing why your product or service is best. For offline businesses this is where the internet can provide huge potential.  It  is  also  where  information  products  can  provide  a  lot  of opportunity for backend products or services.

The sad truth is there are many great products out there that never make a cent. They are well priced, offer great value and are even in demand. Yet they fail to thrive simply due to poor marketing.

On the opposite side there are plenty of average or poor quality products that  do  well  simply  because  of  a  good  marketing  department.  (Don’t become one of these.) Think about the power each of these factors has. How can you structure and  improve  your  business  so  you  maximize  the  potential  of  each  of these key areas?