Advantages of Competition in Business
October 14, 2021
Competition might be a scary subject for some. It might bring to mind the everyday effort put into staying ahead. But competition should be seen as more than just a struggle.
The Federal Trade Commission (FTC) fact sheet on how competition works says that "competition from many different companies and individuals through free enterprise and open markets is the basis of the U.S. economy." So, what you thought was the source of your worries and stress is actually what sustains your business and the economy and helps it grow.
It's all about perspective, and we want to help you see competition from its most flattering angle so that you can make the most out of it. So let's break down all the advantages that competition has to offer your business.
Why Is Competition Good for Business?
When looking at competition from the point of view of the consumer it is easy to see how it can be beneficial. Competition will always guarantee a wide range of products, prices, and you can always look for the one that has the best value at a lower cost. But on the flip side, competition also benefits businesses in ways more concise than simply being the "basis of the U.S. economy." Here are six ways competition can be advantageous for your business.
- Innovation
Competition will always keep you on your toes and make you come up with better products and more efficient processes that can result in savings both in human and material resources. This, in turn, will help you increase your profits.
However, sometimes it's your competitors that come up with better processes and products. In that case, you can learn from them and improve your own products and processes. Competition and innovation go hand in hand and can give your business a much-needed boost.
- Differentiation
The constant struggle to differentiate from your competitors is a blessing in disguise. Trying to differentiate from your competitor and adjusting your strategies is the engine that drives innovation, and we already mentioned how innovation is good for your business.
Yet, you are not the only one looking to differentiate yourself, trying to get better products at better prices so that customers buy from you instead of your competition. Your suppliers and manufacturers are also looking to differentiate themselves, trying to come up with the most attractive offer. So, thanks to competition, your business can choose the best manufacturer and supplier with the best prices to increase your gross profit margin.
- Increase in Consumption
Being the first to develop a new product and create awareness around your product and brand is not easy. And being the first doesn't mean you will end up being the biggest.
Competition has always played an important role for products like air conditioners or even smartphones.
When various companies started offering these products and competing with each other, they started helping the market of those products grow. More people started seeing these products as a necessity, and the overall consumption increased, thanks to the synergies resulting from competitive efforts.
- Core Market Comprehension and Penetration
Being dependent on your customers choosing your products or services over your competitors is a great incentive to understand your core market and market penetration to develop effective strategies to increase your market share.
Competition can also work as a compass to help you choose growth avenues that are likely to be profitable based on the understanding of target markets.
- Creativity
In order to create better products and processes, differentiate yourself from the competition, and come up with better strategies to increase your market share, you need to be creative. Competition pushes you out of your comfort zone and creates the right conditions for your creativity to bloom.
Creativity is your ticket to position your business in the right niche with differentiating elements to your products and services that will guarantee success.
- Customer Service and Satisfaction
Another great advantage of competition is the incredible value placed on customer service and satisfaction.
Your potential customers have so many options on the table that having a great customer experience plays a massive role in whether or not they pick your products or services or spread the word recommending them.
For businesses that have products with little differentiation (like coffee shops), providing excellent customer service can be a differentiator that doesn't involve a huge investment but can considerably increase profits.
Competition made us aware of the power that excellent customer service and satisfaction can have to help a business grow.
There are more advantages to competition in business, like this
10 Ways Competition Can Improve Your Business article shows. But, what that article doesn't show is how you can embrace competition and enjoy all the benefits without getting crushed by your competitors.
After all, the stress and anxiety we mentioned at the beginning does have a source, and it's that the risk of losing to your competitors exists, but we can help you make sure you always keep abreast of your competitors, and here is how.
How To Stay Abreast of Your Competitors
To always stay one step ahead of your competitors, you need information about your business's external environment, gathered ethically and analyzed to present you with actionable insights. What you need is
competitive intelligence.
Every
Peak Innovation competitive intelligence service engagement is led by one of our highly experienced principals. We operate with a flexible, scalable staffing model leveraging subject matter experts as needed. We enable clients to generate profitable growth through the practical use of research, innovation, and technology. Whether your firm is a start-up or a Fortune 500, Peak Innovation is here to answer your toughest marketplace questions.
We also provide
marketing data analytics,
product and service innovation, and
M&A pipeline development services. All you need to ensure you make the right decisions to help your business succeed and stay abreast of your competitors is one phone call away. Contact us at
(844) 300-7325 or fill out the form on this website for questions about our services or to schedule a time to speak.
