Back in the day, knowing who your competitors were, was easy. If you sold paint, your competitors were other companies who sold paint. If you sold accounting services, other accountants would be your competitors. But the world isn’t that simple anymore. Sure, your main competitor will still be from your core industry, but there will be a whole host of others.
As businesses and industries are shook up by financial turmoil, by digital transformation, by changes in consumer behaviour, and by technological and business innovation, new players are becoming very competitive very quickly. There are even some old players who see these opportunities, and not only act on them, but take the category to new heights. But what if you’re just a company minding your own business? Who are your new competitors, and how do you deal with them? Here are five competitors you didn’t know you had to look out for:
1. The Digital Transformation Players
Hotels had pretty much the short-term accommodation market sewn up. Until Airbnb. The taxi industry was happy with their monopolies around the world. Until Uber. Borders was a huge bookstore chain. Until Amazon. You get the point. New players who come in and disrupt industries by doing things simpler, cheaper and delivering a better experience for the customers, are killing it in today’s market. And they’re not going anywhere. In fact, we will see more and more Digital Transformation players come into more and more markets. To quote Aaron Dignan, co-founder of Undercurrent: “Is the dominant company in your category a digital company? This is not a yes/no question. It’s a ‘not yet’ question.” And the only way to meet the competition from Digital Transformation players, is to consistently deliver a better experience for your customer. Whether it is better service, better prices, better quality, better branding, better platforms or better customer retention program, depends on your business, your industry and your strategy. But drive the change, you must.
2. The Share of Wallet Competitors
It’s easy to think of competitors as anyone selling the same or similar thing as you. But the truth is that’s only part of the story. Since most consumers have a finite amount of money, it means that they can only purchase a limited number of goods and services. So if they spend money on one thing, they will have to spend less on others. Most people, the 99%, have to consider purchases when it reaches a certain level. Of course for some that level is low (“can I afford some good food today”), for others it is higher (“should I buy a new luxury bag, or should I take that vacation”). Especially within products and services that are not strictly necessary to uphold life, these considerations are made every single day. These “Share of Wallet” competitors are harder to identify and much harder to fight against (you can’t just lower your price). So what is the solution? How can you make sure that their hard-earned money falls into your pockets, rather than to another business? There is no short answer to this one, but the difference between success and failure is marketing, building consumer preference, creating a sense of urgency and devising smart sales tactics.
3. The Share of Time Competitors
Similarly to “Share of Wallet”, “Share of Time” is just as important. In fact, share of time applies to everyone, regardless of how rich or poor they are (even though, there is a big difference in how much spare time people have. Some have to work two jobs). The truth is we only have 24 hours a day, 7 days a week and 365 days a year. That’s not going to change. So we have to carefully select what we spend our time doing. Going to restaurants, taking up a gym membership, having a massage, learning to play an instrument, going to concerts, traveling, cooking at home and so on. Consumers make these decisions every day, and only a select few companies end up getting their business. The rest are left in the cold, and can only hope that other consumers are making a different choice. So what to do? The solution is similar to “Share of Wallet”, but sense of urgency is even more important. Also, since most of “Share of Time” products/services are experience-driven, that experience has to be great – from consideration, through purchase and post-experience.
4. The Share of Customer competitors
In marketing, we usually talk about “Share of Market” and “Share of Voice”, but in reality, the only thing that matters is “Share of Customers”. The business that holds the customers, holds the winning formula – if they can innovate and expand their relationship with the customers. Having a high “Share of Customer” allows brands to create new products and services and deploy them fast. Through up-sell and cross-sell tactics, they can leverage their existing relationships with the consumers and create a broader engagement across products, services and even categories. Virgin is a famous example of a brand who knows how to capitalise on cross-category opportunities, selling everything from flights and train transport, via wines and gym memberships, to financial services and phone plans. Of course, over-expansion has its drawbacks, step too far out of the category, and the brand can become irrelevant or difficult to understand. And that’s exactly the opportunity if your company is on the other end of the spectrum. By staying focused on one product/service or a limited portfolio, singular brands can keep their branding consistent, relevant and simple – but only if they innovate in terms of products or in terms of marketing.
5. The Non-Brand competitors
The “non-brand” or “private-label” competitor is neither new or surprising to most companies. But there is a change in the way private-labels are produced and sold. The the days of bargain-basement designs and inferior quality are long gone. Today, many private-labels have great design (sometimes better than the brands), high quality products, and they provide a similar experience to the brands. Private-labels are still weak in Asia compared to the rest of the world1, but that may change as retailers are consolidating, traditional TV-based brand marketing is becoming less effective and people become more aware of the qualities of private-labels. And with new consumers coming into the marketplace, we will surely see more change in the region. In the US, Millennials are driving growth in private-labels, especially in the healthy and or alternative food section2. A great example of how private-labels are thinking is Target’s Simply Balanced products in the US, a competitively priced line of organic, heath conscious products with a strikingly simple and modern design. The best way to meet private-label competition is innovation. Private-labels rarely create anything, they copy ideas from the major brands. But while that’s great for the budget-conscious, it is not great for consumers who are more adventurous. People in Asia love new things and new ideas, so the brands can continue to innovate with new products and services (even short-term products), in order to stay ahead of the game.
These 5 groups of competitors are out there already, and more are coming around the corner. The only way to stay safe from being annihilated by new competitors is through innovation, building experiences and staying focused on customer relationships. In fact, by doing these things well, and understanding the opportunities that lie in these five areas, you can prepare your brand for the future better than anyone else, whether they are new competitors or old. As always, it really comes down to you. What are you going to do about it?
Erik Ingvoldstad is the Founder & CEO of Acoustic.
Follow Erik on Twitter @ingvoldSTAR, follow Acoustic at @AcousticGroupSG
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