I have often heard from Startup Founders mention during their pitches that they have no competition. It was so amusing and tragic at the same time. I am sure that the Investors who were listening to the pitches would have chuckled at this as well and probably felt a touch sad at the naivete of these founders.
To conclude that there is no competition, one must have skipped the basic market research or been looking at only one direction, that’s staring at their faces.
Needless to say that it is critical to define the customer right before one can talk about competition.
Well, who is a Competitor?
A competitor is one who is vying for the same customer’s wallet or attention.
Let’s understand this with a sterling insight shared by one savvy entrepreneur. I remember a comment by the CEO of an online jewel store who said that his competition is not just the brick and mortar jewellery shops or other online shops but also iPhone.
An iPhone as a competitor to a necklace???
That’s really weird. But let’s consider a situation where a person wants to buy a gift to his girl friend or wife on a special occasion and has a budget of about Rs.75,000. He can buy her a necklace or the latest model of iphone for that amount (in a simple case). Thus the iPhone has crept in as a competition to a piece of jewellery.
Please observe that if the target audience of the online jewellery store was someone who wanted to spend say Rs 5 lakhs on a necklace, the iPhone would not feature as a straight competitor at all. So it is extremely critical to define your target customer first.
Another way of looking at a competitor is a product or service which is solving the same problem in a similar or different way.
South West Airlines (SWA) was charging only $15 between Dallas and San Antonio when the fare of its competitor Brainiff was $62.
One of the SWA shareholders approached the then CEO Herb Kelleher and asked “Don’t you think we should raise our prices just 2 or 3 $?”.
Herb responded “You don’t understand. We are not competing with other airlines , we are competing with ground transportation”. He wanted people who were otherwise driving from Dallas and San Antonio to switch to SWA.
If you think that competition is either non-existent or is only the one that’s staring at your face, you will get a huge breakthrough by reading this.
So if a competitor doesn’t confront you in openly in a sales situation, it does not mean that he doesn’t exist. Being unaware or ignoring subtle competition can be very expensive.
You may want to avail of ExSell Consulting Service to decipher your real competition besides getting your fundamentals in place so that you are on the growth path at all times.