To survive and thrive as a small business, you need to be continually aware of your competitors.
Here’s an example: If you’re a service provider, Amazon could be elbowing in on your territory.
The e-commerce giant recently launched Amazon Home Services, an online marketplace that enables consumers to buy and schedule professional services, such as housecleaning, lawn care and plumbing, right on Amazon.com. Amazon vets the service providers, who compete for consumers’ business based on price, quality and availability, and guarantees customer satisfaction.
Whether Amazon Home Services will prove to be a useful new sales channel for home service providers — or a way for lowest-priced companies to dominate the market — remains to be seen. But one thing’s for sure: If you’re a plumber, contractor or landscaper, you probably never thought of Amazon as a competitor before.
In fact, there are four different types of competitors every business should consider in order to stay one step ahead:
1. Brand competitors market products with similar features and benefits to the same customers at similar prices. Take the entertainment industry, for instance. Movies that compete against each other for the same customers, such as the family-oriented movies Inside Out, Minions and Ant-Man, are examples of brand competitors.
2. Product competitors compete in the same product class, but with products that differ in features, benefits and price. For instance, instead of going to the movie theater, customers could turn to product competitors for family entertainment by watching cable TV, streaming videos through Netflix or using pay-per-view.
3. Generic competitors market very different products that still solve the same problem or satisfy the same basic customer need. In our example, attending a professional sporting event, going to an amusement park or visiting a bowling alley provide generic ways to satisfy the need for family entertainment.
4. Total budget competitors compete for the limited financial resources of the same customers. Movies in particular and family entertainment in general are discretionary expenses, so they have to compete for other uses of a family’s total discretionary budget, such as dining out, spa visits or shopping for clothing and accessories.
All four types of competition are important, but brand competitors rightfully receive the greatest attention because customers see different brands as direct substitutes for each other. For this reason, marketing strategies aimed at getting customers to switch brands should be a major focus in any effort to beat your brand competitors.
Check out our brief, Stand Out & Get Noticed, to make sure you’re doing everything you can to stand out from your competition in the online space.
About the AuthorFollow on Twitter More Content by Merrie Beth Salazar