When businesses of all types, especially small businesses, are faced with new and more competition, it’s important to do something better and different. The organization needs to establish and maintain a competitive advantage. In other words, to succeed a business must be superior or more favorable than its rivals. In fact, it’s wise to have multiple advantages. Chances are if your business does something better or different than others do, then your competitor will more than likely copy you. Obviously, it’s then no longer a competitive advantage.
Small businesses that feel threatened by large discounters can’t usually compete on price. The discounters maintain a price leadership strategy (a/k/a low-cost/low-price strategy) that emphasizes underpricing all competitors. You’ll need to develop your own strategy.
Then, what’s a small business supposed to do to keep up with the “big guys”? First of all, don’t compete head-to-head with them. Create a distinct advantage by selling different brands or offering other services. Be more efficient or more customer friendly. You can create a fun store or office environment or be more professional. The important thing to remember is that you must be different in a way that is important and advantageous to your buyer.
Your edge may be location, efficiency, or hours of operation. Perhaps it’s your distribution channels or personalized service. Take time to develop a competitive matrix (as diagrammed below). Across the top, list your firm’s name, along with your major competitors. Along the left side, list various areas of strength in your industry. Put X’s by each organization’s strengths. Your firm can fill those areas without checkmarks. They can become your competitive advantages, along with a few more unique ones. Remember to keep coming up with new differences, as your advantages get copied, or are no longer important to the consumer
|Areas of Strength||You||Competitor A||Competitor B||Competitor C|