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Competition is an integral part of entrepreneurial activity and is the rivalry between companies on equal terms in order to gain more profit. Competition promotes the development and creation of new products that will interest and benefit customers. This competition is often unfair, so it is important to have the tools to counter the devious approaches of competitors. Every business owner looking to succeed must learn to be proactive in order to react quickly to the actions of the other side.

How competitors are useful  

Competition is the engine of progress, it encourages product improvement and allows you to sell your product even at a high price, with customers being satisfied and coming back again. Your rivals in the market are a kind of stimulus, pushing you to develop and achieve more, so it is important to consider such factors when analyzing the business environment:

  • Fresh ideas and innovations.
    Studying competitors allows you to understand why customers buy their product and how it is similar to yours. This helps to improve the product/service and give the customer something more useful and valuable.
  • Economic component.
    It is important to pay attention not only to your competitors’ products, but also to their distribution channels, advertising format and interaction with their customer base. This way you can understand which methods of communicating with consumers are most effective.
  • Bestsellers.
    Every company has a flagship product that is its landmark and sells best. During the analysis, it is important to look at your product and your competitors’ bestseller, find their commonalities and differences, and then use the information to bring a more marketable product to the market.
  • Cooperation and communication.
    It is important for a business owner to realize that competitors are not his/her enemies and it is necessary to build a friendly relationship with them. This can manifest itself in providing some assistance, joint projects and sharing experiences.
  • Planning and forecasting.
    Having built a good trusting relationship with competitors, you will be able to get information about what directions other companies have chosen for the development of their activities. By understanding the vector of their movement, you will be able to complement and adjust your strategy.
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Most competitive industries  

In 2024, the most competitive sectors of activity are e-commerce, education, catering and some types of services. Based on current trends, commercial rivalry is particularly strong in areas such as:

  • Marketplaces and dropshipping.
    Trade in various types of goods through large online stores has long occupied a separate niche among the most successful activities. The struggle between marketplaces is conducted mainly through such tools as breadth of assortment, quality of service, prices, convenience of delivery. Dropshipping is more convenient for new entrepreneurs, because it allows you not to store goods in a warehouse, and send them directly from the supplier to the buyer.
  • Beauty industry.
    Beauty industry in recent years is rapidly gaining popularity among entrepreneurs – new beauty salons and cosmetology offices are regularly opened. Competition in this area is based on the qualifications of masters, the level of service, pricing policy and overall quality of services. The number of fitness centers and gyms is also growing very actively – a healthy lifestyle is in fashion, so services in this area are becoming more and more in demand.
  • Foodservice industry.
    Opening small outlets selling fast food or coffee shops is very popular among aspiring entrepreneurs, but competition in this area is very high, because of which most of these businesses close down pretty soon. Cafes and restaurants are also highly competitive, especially in large cities – their success depends mainly on the level of service, location, concept of the institution, cuisine and atmosphere.
  • Education.
    During the pandemic, online education services have become in great demand. At the moment, there are a large number of platforms where experienced teachers conduct a variety of training courses. Competitive advantages here are formed due to the level of qualification of teachers, convenience of the platform, as well as the quality of content and cost of services.
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What is a competitive strategy and how to create one?  

A competitive strategy is a long-term plan to strengthen your market position and achieve sustainable superiority over your rivals. It is based on identifying your strengths and capitalizing on them to deliver a product of high value to your customers. Creating a competitive strategy consists of a number of important steps:

  1. Industry analysis. Attention should be paid to those factors that have the greatest influence on the formation of the chosen area of activity and its profitability. It is important to assess the level of competition, the degree of influence of suppliers and customers, potential threats and other factors on which the success of your activity depends.
  2. Finding the target market. For successful product realization it is important to understand who your customer is, what their needs, preferences and characteristics are. Analyzing this will help you better understand customer expectations and allow you to customize your product to meet them.
  3. Competitor assessment. Conducting a comprehensive analysis of competitors and their strategy is carried out through special tools, such as a competitive matrix or SWOT-analysis. It is important to identify the weaknesses and strengths of your product, comparing it with other similar offers on the market – this will help to correct the shortcomings.
  4. Selecting a competitive advantage. As a result of the previous stages of analysis, one or more advantages of your product will be identified – this will give insight into how to present the product to customers. Leading can be low production costs, product differentiation or focus.
  5. Realization of competitive strategy. After the launch of the enterprise, it is extremely important to monitor the results of the formed strategy in order to understand how effective it is. In the process, the original business development plan will definitely change, which will improve performance and adjust the strategy.
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How to choose a competitive strategy  

Depending on its position in the market, a company can implement one of two strategies:

  • offensive – the company creates a new product or technology, which allows it to form an exclusive offer;
  • defensive – the company operates in an established niche and seeks to maintain its position by optimizing the ratio of investments and results.

It is also possible to choose one of the universal approaches formed by the classic of competitive strategies Michael Porter:

  • Costs – this scheme involves reducing the cost of your goods in order to gain an advantage over your competitors. It is relevant for those companies where pricing becomes the main tool, and the product itself is simple to manufacture, standardized and there is no possibility of adapting it to the consumer.
  • Differentiation is an opportunity to stand out among competitors due to the uniqueness of the product, quality of service or operational efficiency. This approach protects the company from having to change the product, increases customer loyalty, has a positive impact on profitability and reduces customer sensitivity to the cost of goods.
  • Focus is the concentration on a narrow audience or a limited market segment, which allows you to stand out among competitors. This strategy is effective for companies whose competitors cannot master a specific niche or whose target audience has non-standard needs.
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How to differentiate yourself if your product is ordinary

At first glance, it may seem extremely difficult to differentiate yourself from your competitors if your product has no clear advantages or distinctive differences. In fact, you just need to emphasize those aspects of it that will help you stand out from the rest. This can be done in the following ways:

  • Focus on service. Individual approach to the customer, interest in their needs and characteristics, and availability of different options for product delivery and communication with the audience.
  • Quality and value-added services. High quality products can give you an undeniable advantage over your competitors, and this can be maximized by offering your customers an extended warranty or after-sales service.
  • Branding and positioning. A company with its history and mission inspires trust among customers. It is also important to position your product as the best choice.
  • Cost and pricing. Buyers do not always favor cheap products, so you can focus on creating value for the product as a higher quality or prestigious product.
  • Specialization. Focusing on a narrow market segment allows you to work with a limited audience, closing its needs with a product adapted to the specific needs and specifics of customers.

Opening your own business, you should take a responsible approach to analyzing the market and try to build friendly relations with competitors from the very beginning. If the initial choice of strategy was wrong, it is important to remind yourself that the path of business development can be adjusted depending on circumstances, and the main key to the success of any entrepreneur is flexibility and quick reaction to market fluctuations.