Does Your Competition Set Your Agenda?

I hope that most people reading this article are running successful businesses. And I hope that all of you have some competition. It's one of the basic laws of the business universe that when people have a need, companies will respond with products and services. The greater the need, the more companies will come flocking.

And if your market is a healthy one, chances are that some, if not all, of your competition are actively competing with you. Effectively this means that they have the potential to take away some of your sales, and so are worth keeping a close eye on.

Watching your competition makes good sense. You need to know what they're up to, what they're changing, their new features and ideas, and even their failures can be used to your advantage.

However there is a range of different levels of monitoring - the reasonable, the gray and the plain wrong.

It's reasonable to keep an eye on your competition. To check their website, products and documentation, monitor their forums and to see what's happening to their client list.

Then there's the grey area. These are activities that aren't illegal or immoral, but may make some a little uncomfortable. Using software to monitor their website and forums for changes, sending "fake user" emails to get a better idea of different features, or perhaps viewing the /stats directory under their website. You may be surprised by how often the last idea works.

The next level up (or down) are the activities that are just wrong. Actively undermining and disrupting their efforts, trolling in their forums, stealing from their booth at an exhibition, hacking their systems, DOS attacks and more. Obviously you wouldn't even consider such tactics, but it goes without saying that some have no such qualms.

The question for many is how much is reasonable. You obviously have to know what your competition are doing, but there's a difference between keeping an eye on your street and watching, recording and logging the comings and goings of all your neighbours. More importantly, obsessively following your competition and trying to mirror their every move will guarantee that at best, you're permanently two or three steps behind them. This makes it impossible to keep up, let alone beat them.

Pricing is a good example of this. No business can afford to ignore the price of similar products, and there are three basic options: cheaper, the same price or more expensive.

Cheaper means that the focus of your competitive efforts is the price. Aside from the risk that your product may be perceived as inferior, some of your unique benefits may be overlooked or diluted by the lower price.

Pricing at approximately the same level means that you effectively go head to head with what the buyer will get for their money. It's all about benefits and features. But if price isn't one of the more important criteria for the buyer, then this strategy may not be a good fit, and differentiating your product may be more effective. Consider two cars that are being sold for around $15,000. If the two are reasonably similar in almost every respect, but one has a better sound system and more powerful air conditioning for an extra $500, which do you think you would be more likely to buy?

The third option is to price what you sell higher than your competition. In this case you may have to justify why your prices are higher, but it's worth noting that you will have a head start. The potential buyer will most likely assume that your product is better simply because it costs more.

On the SharewarePromotions website, I recently wrote a blog entry comparing Ask Jeeves to Google, and noting that they were starting to look unnervingly similar to each other. Both in terms of appearance and results. A search engine that looks like Google cannot possibly hope to become Google. Offering better quality results, faster searches, less intrusive ads and better features might persuade people to switch. Offering the same as their competition cannot possibly hope to achieve anything at all.

Keeping a close eye on your competition isn't important; it's vital. But differentiation is a lot more effective than duplication. Offer unique advantages, and sleep well at night, knowing that your competition are watching and imitating you. Be seen, be sold.