Chapter 07 - Dealing with Competition

 


“Competitors” are one of the external stakeholders of any organization. They do not involve directly with the business operations of a company but can have an influence on a company’s business activities in terms of price, quality, service, customer experiences etc. Therefore, businesses need to frequently analyze their competitors and their activities to take proactive measures to defend their pressure on our business activities.

Competitor analysis defined as “Identify key competitors; assessing their objectives, strategies, strengths and weaknesses, and reaction patterns; and selecting which competitors to attack or avoid” (Kotler et al, 2018. p542). It is very important to analyze our competitors to gain competitive advantages over them and to take defensive actions to prevent the threats arise from competitors. On the other hand, we as a strong business can create competition towards them by implementing competitive marketing strategies which “strongly position the company against competitors and give it the greatest possible competitive advantage” (Kotler et al, 2018. p542). Competitive advantages can be gained over quality of the products or services, pricing strategies, promotional activities, exceeding the expectations of the customers by providing a superb experience to the customer, corporate social responsibility etc. Before implementing any kind of strategy, a company needs to identify its competitors and their activities. The company can use Porter’s five forces as a tool to measure the competitors in the market.

 

Porter’s Five Forces

  • Rivalry among competitors
  • Bargaining power of customers
  • Bargaining power of suppliers
  • Threat of substitutes
  • Threat of new entry

 


Porter’s five forces is a common tool that is used by most of the businesses to understand the behavior of their competitors. It is a good tool not only to understand the competitors’ behavior, but also to understand the overall picture of the market. Most of the time this competition takes place within the same industry which has many players in it. For example, in the banking industry there are a lot of banks in a country which provide the same kind of services with a lot of benefits. Only the difference will be the quality of the service and the experience which customers gain from the banking service. To deliver that level of service, banks do immense work behind the scenes to show that they are differ from their competitors.

 

Apart from this tool, organizations can use benchmarking as a tool to identify their competitors and take necessary actions to defend them. On the other hand, company could explore the details of successful competitors to follow their strategies to re-organize the company’s strategies, if the company failed in their business process. The company can find the best organization in the market which followed the best practices in their business and reached the success and examine their business strategies and measures which lead them towards success. Then determine the functions or processes to be benchmarked with key performance variables to measure. Measure the performance of the best company with their performance variables while measuring the performance of the own company. Then the marketers can identify the performance gaps between two companies. Based on that company can take suitable actions to bridge the gap.

 


By following the above-mentioned tools, any business organization can understand their competitors’ behavior and they must do it periodically since the market is highly volatile and competitive.

Example

Banking industry

What if a competitive bank clone one of our bank’s products?

This kind of things can happen in any industry due to the technological advancement and the high competition in the market. Today, most of the customers transformed from their traditional banking transactions to digital banking platforms which provide more convenience to the customers. As a result, a huge competition has created in the industry and all the banks are trying to attract more customers for their digital banking platforms.

With the intention of introducing new experience in digital banking to our customers, we introduced our new digital banking platform which has lots of attractive features. After few months, some of the banks in the industry have introduced same kinds of apps to their customers highlighting the main functions we introduced. With these sudden changes in the market, the bank decided to hold a promotional campaign to increase the users of digital banking facilities. At the same time, bank has decided to enhance the functionality of the app by introducing new payment gateways to different aspects like, insurance payments, selected schools’ fees, utility bill payments, customs clearance payments, investments, applying for personal loans etc. And the most important thing is, bank increased the safety and security measures for the customers’ sensitive information in bank’s data base. Because the bank has huge number of customers and most of them are using digital banking platforms. On the other hand, the bank advertised the product continuously on TV, social media, and some newspapers also to keep the customers informed about our product with special features which differ from our competitors. And the branches visited some offices, factories, schools etc. to educate our customers regarding the use of our digital banking platforms with data protection. And they made trust in customers’ minds towards us to do banking with us securely.

 

 

 

References

1.     1. Kotler, P. & Armstrong, G. (2018). Principles of Marketing, Seventeenth edition. Pearson.

2. Avgeropoulos, I. (n.d.). Marketing Planning: Dealing with Competition (PPT) Chapter 7 - Dealing with competition.pptx (sharepoint.com)

 

 

 

 

 

 

 

 

 

 


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