8 Reasons Why Your Business Needs Strong Competition

Image Credit:  throgers on flickr

Number one, cash is king…number two, communicate…number three, buy or bury the competition. (Jack Welch)

Marketers have a pretty combative mindset: in order for a brand to succeed, others (competitors) must fail. We are trained to see marketing as a war, competition as enemy, and our primary job as putting them out of business.

In reality you will never succeed in completely eliminating a competitor. No matter how good your offering, you cannot please everyone (nor should you try). There will be customers who will choose your competitors for various (rational and irrational) reasons.

Since competition is something we all have to live with, it’s time to look at the bright side of things.

Having strong competition is not all bad. In the right circumstances you might be able to make them work for you.

Your competition might become the reason for your success.

Let’s see why a strong competitor is beneficial to your business:

A motivator to do things better. Competition keeps you alert and focused on always improving your offering. In his book “Driven“, Robert Herjavic believes that “a business that is not growing is dying”.

Without the challenges competition brings to the table, your company will probably become stagnant, and the motivation to grow will probably be lacking.

A benchmark you can use to highlight the superiority of your offer. People like to compare before they commit to a purchase. Comparison shopping makes them feel confident that they made the right choice. It also helps them justifies the choice to their peers.

If your offer is superior then your customer’s habit of shopping around will help you get the business.

Many brands use competitive benchmarks to highlight their product superiority.

Competitive benchmark

A reason to charge higher prices. The general belief is that more competition leads to lower prices. This is the case if customers perceive the competitive offerings as being similar.

But if your company has the ability to offer a superior alternative that can be easily quantifiable then you can definitively charge a higher price. It comes down again to bench-marking against your competitor’s inferior product.

Dyson vacuum cleaners justifies their premium price through product innovation: the vacuum cleaner that doesn’t loose suction. Of course there are other reasons that explains the price tag: elegant design, bag-less operation, to name just a few.

A classic example of using the competitor’s inferior technology (ordinary vacuums loose suction) to charge a premium price.

A source of new product ideas. Most new products are improvements of existing, competitive products, rather than the result of a breakthrough idea.

Apple’s iPhone was positioned as a superior alternative to existing smartphones. Steve Jobs used Blackberry in his launch keynote to highlight the phone’s superiority.

Competitive products are a great source of new product ideas. The options are many: your version can improve functionality, design, accessibility, or be cheaper. All these possible because there is competition.

A reference point for positioning your brand. The whole process of positioning a brand starts with studying the competition. Re-positioning a competitor as inferior is a commonly used strategy. Avis’ “We Try Harder” campaign against Hertz is good illustration of this strategy.

The reason for your customers’ loyalty. The concept of brand loyalty does not exist in a non-competitive environment. Loyalty implies the ability to choose and is preceded by comparison, trial, satisfaction, and getting the feeling that the brand provides the best overall experience.

A partner in achieving economies of scale. A supply partner that also services your competitors will be able to achieve economies of scales and pass the savings to you. Personal computer manufacturers such as Dell and Toshiba, use Intel and AMD processors instead of developing their own.

Intel, in return, is able to invest in research and product development while lowering the price for existing models, due to its large client base that allows the company to be highly profitable.

A partner in capturing a new market segment. Your company’s weaknesses are probably your competitor’s strengths. In case you identified a segment none of the players can target alone, you should consider a strategic partnership with a competitor that is able to complement your offering. Two companies should be partners in creating the pie, and competitors in dividing it.

A bitter fight with your competitors might not always be a good idea. Your own success might be dependent on how well your competitors are doing. In many cases, a strategic partnership without stealing each other’s customers might have a positive impact on each player’s revenue.


  1. […] like in the real business world, competition can be a great motivator in a gamified application. A competitive environment usually generates […]

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