How to Get Ahead of Your Business Competition and Become the Market Leader
In a perfect world, there would be tons of business ideas that would just come up from the top of your head which would be perfectly unexploited and waiting for you to capitalize on.
There would be no competition and no market leaders preventing newcomers to have a share of the market
However, sadly, this is not the perfect world. And, if you want to build your business, no matter how great your business idea may be, you need to be prepared to upset the natural order of things. Don’t get me wrong. It is very important to have a good business idea that is fundable. You also need to establish a great business plan – these are the fundamentals of every business
But, under no circumstances are these all that matters. There are a lot of other things too, that you need to take care of.
In this post, I will show you how you can take down the market leader and eliminate market competition – step by step.
Step #1. Identify Your Competitors
“You cannot defeat your enemies until you know who they are.” – Anthony Horrowitz in his spy novel “Alex Rider, Crocodile Tears”
If you actually want to defeat the big businesses, you first need to know who you are up against. Here’s how you go about recognizing your competitors – ask yourself, do they satisfy the same customer need as you do?
If that’s a yes, you need to beware. Don’t go for a narrow view of the competitors you may have. That can result in serious strategic blunders later on.
For example, if Ford thinks Japanese car brands that use gasoline are its only competitors, they shall be very wrong. However, they do realize electric cars are also their competitors. Heck, even public transport may be their customers, for the simple reason that it satisfies the customer’s actual need, which is to avail any form of transport from one place to another.
Guess why Yahoo got reduced from a billion-dollar company to pretty much nothing?
They failed to analyse their actual functions and thereby failed to stop their competitors from their roots. These are crucial business mistakes that need to be nipped at the bud.
This applies to your startup a lot more because the big businesses are terrific good at analyzing the market for competitors and thus, you got to strike while the iron’s hot and have to execute fast.
While most businesses compete with others that have a close similarity in the customer base – for example, iPhone competes with Google Pixel and not with Redmi, the fact of the matter is if you don’t compete with businesses which have a similarity with your customer base, there’s a great chance, other businesses are going to soon target your customer base.
The meteoric rise of OnePlus and Huawei proves my point.
It’s better if you score your competitors on a scale of how close their customer base resembles yours. That way you will know who’s breathing down your neck and those that can be left alone for now.
Step #2. Identify the Strengths and Weaknesses of Your Competitors
You can’t beat your rivals until you know their strengths and weaknesses. There’s a classic way to analyse how your competitors fare in a niche.
Suppose you have more than one competitor. Then, first, you need to see how much market share each has.
After that, you need to conduct a survey. Ask customers who buy products from the niche market, which company comes to their mind when they first hear [the name of any such products]. This shows the visibility of the brands of your competitors. This factor is called the “share of mind”.
Follow up with another question as to which company from whom the customers would prefer to buy the products. This shows how close the brand resonates with their customers. The brands that resonate most with their customers are said to have the highest “share of heart” with their customers.
It is proven that the brands with the highest share of hearts will eventually win over more share of minds and market share and it is these brands who are toughest to compare against. It is better to face business with high market share but declining share of hearts, than that with a growing mind share or heart share but little market share.
Here’s more on how to analyse your competition.
Step #3. Strategizing for the Offensive
It’s very clear. If you are a newcomer in the niche, you have to displace the leader. For that, you can’t sit tight and just focus on expanding your customer base. Of course, you could focus on sub-niches, which I will get to in a bit, but you need to be ready to attack the other businesses.
But, before you begin, you need to consider whom you should attack and what can be the possible gains for you in each case scenario.
You could immediately go for the market leader. That’s an extremely risky thing to do, but the pay-offs could be well beyond your imagination.
The relationship between AMD and Intel is a perfect example of this. AMD first started out making low-budget chips whereas Intel dominated in all the different types of processors in the market. While AMD has suffered big losses, it has quite some wins under its belt, the most recent being the Ryzen processors which are destroying Intel’s more costly processors in one test after another.
This way, AMD is gaining more heart shares and thereby more market shares. Even if you can’t displace the leader, you may be able to get a large portion from the leader’s market share.
Canon had in a similar way gobbled up a large portion of Xerox’s market share when it introduced its desk scanners.
You could attack medium-sized firms that are losing market shares and are underfinanced. That way, you can easily gain market share without much risk.
I find this to be a win-win scenario because; they usually shall be unable and underfinanced to fight back against your attacks.
Or, you could go against small businesses based in sub-niches – Let’s give a website as an example. When Brian Dean of Backlinko first started out, he focused on the sub-niche of building links instead of going head-on against the giants in the SEO industry.
As he progressed and increased his branding, he got into other sub-niches such as SEO, list building, conversion rate optimizing as well as YouTube SEO.
That’s a perfect example of how you defeat market leaders by starting small and working your way up.
Now, just a piece of warning – there are some competitors who use several extremely risky and unsustainable tactics in the market place such as investing in overcapacity or using investor’s money to destroy other competition in the market. These competitors usually harm both themselves as well as the entire industry when doing this.
It is better to attack them to reduce their resources and preventing them from using these risky and dirty tactics.
Step #4. Going for the Offence
This is the moment you all have been waiting for. All the strategizing and waiting culminates into this – the juncture at the road where you get ahead of your business competition.
There are several methods of attack you can choose from and the first one is going to be that which most big businesses employ, which is-
A Frontal Attack on Your Opponent
Here, you have to go overboard in the aspects of how much the leader’s advertising expenditure, price point, product quality, and distribution capability. Or, you could undercut the competition by selling similar quality products at a lesser price.
I don’t think I need to stress that this requires a heavy amount of capital and lots of investor funding. Therefore, unless your startup has a lot of financial backing, don’t attempt this. It’s extremely risky and is a form of “Red Ocean thinking” – seeking bloody, head-to-head battles with competitors.
Reliance Jio, one of India’s telecom providers jumped from obscurity and pretty much destroyed its competitors’ market share by using this tactic. They provided free sim-cards to convert customers to their company and also offered free 4G internet service (with 1GB high-speed data every day) and pretty much free-everything for almost a year.
The other competitors were shocked and by the time others in the marketplace such as Airtel and Vodafone lowered their price to match that of Jio’s, it was too late and they had lost huge proportions of market share to Jio.
Anyhow, if you don’t have the financial backing, then you might want to-
Flank Your Opponent
Here you attack the competitor where they don’t have a stronghold. For example, if the market leader has yet to reach a geographical location or offer some form of service, you exploit that first to gain the first-mover’s advantage.
The idea behind using a flank attack is to supply unmet market demands – simple and basic economics!
When Woodland was new, it successfully exploited the gaps in the market left out by Liberty shoes and Australian shoe company Bata by providing tough and adventure oriented outdoor shoes.
I don’t quite support this tactic as it involves thinning your resources and it has a high degree of risk. You use your resources to attack your competitors’ weak points on several fronts. However, if your competitor has better resources, he can completely destroy you.
Sun Microsystems tried to use this tactic against Microsoft by licensing its Java software to hundreds of companies and millions of software developers for the development of electronic gadgets. However, we all know how the story ended, don’t we?
I don’t want to discourage you or anything, but NEVER try this against an opponent unless you can manage greater resources than the opponent.
Heublein destroyed its competitor Wolfschmidt by using this tactic and further cemented its Smirnoff vodka which enjoyed a huge share in the American vodka market.
Bypass Your Competitor
You know why companies spend tons of money on R&D. They want to avoid any battles whatsoever and win over the market by innovation. This is classic blue ocean thinking. In my post on types of entrepreneurs, I had outlined that “the artists” type of entrepreneurs are the best in terms of blue ocean thinking. So, try to cultivate the personality traits of the artist type of entrepreneurs.
Nothing beats innovation. Google became king and defeated billion-dollar MNCs by this simple strategy. They made a product which could not be competed against.
True, for a time, search engines like Cha Cha, founded by MIT research scientist Scott A. Jones, was trying to compete with Google and even James Wales planned to bring a search engine that would use human volunteers to rank pages in SERPs. They thought that ranks given by humans must be better than Google because, after all, who understood queries by humans better than humans?
And, Google innovated again. They created Rankbrain – a machine learning AI that ranked pages better than the humans who made them. Now, Google’s pretty much unbeatable. In simple terms, you have to outsmart your competition.
While technological innovation is a part of the bypass attack, it is not all. Entering niches related to your own is another form of bypassing your competitors. Pepsi has used this tactic against Coke by rolling out its Aquafina brand of bottled water in 1997 before Coke could launch its own Dasani brand.
Google also used this strategy by making mobile software – Android before Microsoft ever could. In fact, Bill Gates considers it to be his biggest regret and says that they had all the resources to make it big in the mobile software industry – if only they had realized this opportunity before.
There’s one more way to pick at your competitors and that’s called vaporizing. Some businesses use this tactic by announcing products that never materialize so that their opponents spend their resources preparing to compete in those segments.
In the meanwhile, you prepare your resources to choose any of the above forms of attack to destroy your business competition.
Now it’s your turn.
- How do you plan to deal with your business competition? Let me know in the comments.
- And, if you like this post, share and spread the word!
About the author:
Adhip’s the founder of WinSavvy where he shares lots of cool stuff trying to make you a better entrepreneur and boost your marketing skills as well as take your startup to the next level! He has been featured in several cool websites such as Addicted2Success, Hubspot, FitSmallBusiness and Manta. Subscribe to his blog and get a free Startup Checklist (70 Tips) to take your business to the next level!