With new businesses opening all the time and consumers getting more and more demanding, it's inevitable that you will have to compete with similar ventures for business. So how do you get and maintain that competitive edge?
Before you start looking for ways to stand out in the crowd, analyse your competition and what they are doing. This will give you an idea of where you need to make adjustments. Here are a few strategies to help you stay on top of your game.
Setting the right price
Pricing your goods and services is a constant balancing act, with trying not to price yourself out of the market or going so low that you can't make a worthwhile profit.
- Competitive pricing works best if you are mass-producing products that are sold in volume. For example, you can use bulk orders to negotiate discounts from suppliers and other service providers
- Generate enough volume to justify your price cut
- Low prices will not work if your customers don't know about them, so run marketing drives
- Reverse the usual pricing principles by first establishing what the price has to be, then see where you can lower production costs, bargain with suppliers, cut waste, etc
While you want to be competitive on your pricing, don't be tempted to compromise on the quality of your product. Cheap and nasty does not create loyal customers.
Good quality always wins
Some customers are willing to pay more for value, so find out what they value. Is it performance, exclusivity, latest trends or personal service?
- The level of quality must justify the higher price and live up to expectations
- If you're moving existing products up-market, do it in stages
- How do customers know that your product is superior? Find an industry expert, celebrity or satisfied customers to endorse your claim
- Punt the product. Customers care about how you will improve their lives, save them time/money or impress their neighbours. They don't care about thicker steel or 24-hour call centres
- Pay attention to detail such as labels, packaging, how your shop and even how your staff are presented
Competing in niche markets
Niches work well for small businesses because they are generally too small or too specialised to attract large competitors. The key, then, is to know your niche better than anyone else.
- Small is fine, but it's got to be big enough to support you
- Research your target market. How many customers are there? How much do they spend? What is unique about them?
- Become a niche expert: Follow every trend; lifestyle, economic factors, growth, new technology, etc. What could wipe out this niche?
- Keep tabs on your competition: How do they differ from you? Are their promotional tactics different?
- Re-evaluate often: Niches can be volatile, so check your marketing approach periodically, such as advertising strategy, promotional methods and pricing
Saving the customer time
- Speed is an issue in product almost every industry. Consumers want immediate action
- Use just-in-time systems: Avoid warehousing and make a product or initiate service only after the order comes in, then move fast to fulfil it
- Cut out the middlemen: Try to distribute directly to the end user
- Test the market: Develop several prototypes in limited quantity and sell in competition. Manufacture the most successful one in large quantities. This gets product onto shelves quicker
These are just a few of the ways to set yourself apart from your competitors and create a loyal customer base. If you put your mind to it and adjust the tips above to suit your industry, you'll soon start to gain the upper hand.
Copyright © 2016 Business Partners Ltd. All rights reserved.