BUSINESS

The Right Strategy to Avoid Unfair Business Competition

In general, unfair business competition is still often found in the business world. Unfair business competition must be avoided because it can hamper business growth from time to time.

To be able to avoid unfair business competition, you certainly have to do the right strategy.

But before that, let’s first explore the definition of business competition below!

Definition of Business Competition

Business competition, or what is also known as business competition, is a phenomenon of competition or competition between business people operating in the same field.

The purpose of business competition with each other is to increase business revenue by increasing sales and market share.

If you are in the business market, then you should be familiar with the strengths and weaknesses of your own business, as well as those of competitors.

One important thing about business competition is that it is always present in the business market, so there will not be any area of ​​business without competition.

However, you may find that some areas of business are less competitive due to a lack of competitors, while others are more competitive.

However, overall business competition in the market is always there.

Types of Business Competition

When we talk about business competition; then the next question that arises in our minds is what kind of competition exists in the business world. Here are the different types of business competition:

  • Live Competition

As the name implies, direct competition means that your competitors are in the same line of business and they offer the same products and services.

Direct competition is often something that comes to our mind when we talk about business or competition.

Direct competition can include many things that competitors are targeting, ranging from price, services, certain features, selling points, and much more.

  • Indirect Competition

Indirect competition is another type of business competition where your competitors offer the same product or service, but they have different marketing and business objectives and they adopt different business strategies to target their market.

In other words, they use different types of marketing strategies to sell their products or services.

  • Substitute Competition

Substitution competition is the most difficult type of business competition to identify among competitors because they use the same resources of your product or service, but they offer something else.

A businessman must remember that it is the customer who determines the overall competition.

For example, notebooks and gameplay are two products and the target market is children aged 12 years. They both use the same intellectual creative resources, but the products are different.

As a business person, you need to understand your customers’ needs and preferences (what they want), as well as what competitors can target.

In the same way, you should target those needs first, then about what can be replaced with something new and interesting to grab market share.

The Importance of Business Competition

Some business actors often perceive business competition, especially unfair business competition, as a negative thing.

But actually, business competition is also quite important in business, this happens because:

  • Competition makes businesses delve deep into the actual needs, wants, and demands of customers and makes businesses more interested in serving them better than their competitors.
  • Competition makes a business realize its true strengths and weaknesses.
  • Competition drives businesses to focus on more than just offerings, especially in terms of marketing, branding, customer service, and customer retention.
  • Business competition keeps companies alert and encourages the habit of continuously innovating and making better products.
  • Business competition can indirectly educate businesses about the intricacies of how the ordinary market works, how to position brands, how to produce efficiently, and how to market sales effectively.
  • The competition gives consumers options to choose from when shopping.

Fair Business Competition and Unfair Business Competition

Actually, business competition in the business world can be divided into two types, namely healthy business competition and unfair business competition.

Judging from the name, we can conclude that fair business competition is a good thing because it can encourage business growth.

On the other hand, unfair business competition is a bad thing because it can hinder a certain business. Then, how can we distinguish between unfair business competition and healthy business competition?

In the following, we have presented the general characteristics of the two types of business competition.

Characteristics of Healthy Business Competition

  • Consumers have many options in the market. More options or choices in the market usually result in higher product quality and lower prices.
  • A successful business can expand and change its product mix based on customer demand. Businesses can move their operating facilities, expand existing facilities or change their technology base.
  • Businesses that are not aligned with customer demands, laws, or business practices will fail over time. They will be replaced by new businesses that are formed to fill gaps or expand businesses that are more customer-friendly.
  • Unprofitable business operations can be closed to avoid bigger losses.
  • Businesses that offer outdated products (not adapting to the times) will eventually be left behind.
  • Businesses with poor service will be abandoned by consumers.
  • When demand is high, prices will rise. When more suppliers enter the market, this can keep prices reasonable.

Characteristics of Unfair Business Competition

  • In unfair business competition, consumers have limited options or choices in the market, either through monopoly or cartel.
  • Successful businesses are limited in their ability to expand or adapt their offerings.

This may be because local government regulations prohibit them from moving to larger stores or adding to existing factories.

  • Local governments can prevent businesses from closing their facilities.

This kind of thing had happened in France, where the French government at that time issued a regulation requiring companies to continue to pay several years’ wages to workers when factories closed, resulting in decreased factory productivity in some areas. This kind of thing is very thick with unfair business competition.

  • The next characteristic of unfair business competition is the existence of local regulations or national laws restricting new business entrants to the market.

Take the New York City case, for example, limiting the number of taxis, causing each taxi license or permit to be worth a hundred thousand dollars. It also makes taxi fares skyrocket.

On the other hand, licensing rules for many professions that don’t actually require a license are another burden, as found in Louisiana.

Flower barbers, interior decorators, and many other occupations raise wages by 10% because licensing rules limit the supply of skilled labor.

Strategies to Avoid Unfair Business Competition

1. Do market research before launching a business

Before you start a business, it’s a good idea to study market conditions first. Business is indeed very closely related to opportunities, and to identify opportunities, business actors need to conduct market research.

If entrepreneurs start a business without understanding the market, then this can have a bad impact on business development later.

In conducting market research, simply identifying needs and talking to customers is not enough. An important part of the initial research is understanding the competition.

Start with a few questions like “Which other company provides a similar product?” “Are they a small company or a large company?” “How long have they been in business?” “How is their business doing at the moment?” “Is their business successful?” “If it doesn’t work, why?” etc.

Understanding competition is very important because, by understanding competition, business people will get a broad picture of opportunities.

Sure, the customer may want the product, but the competitor may already have a better offer.

While quite important, the fact is that business founders rarely spend enough time doing market research and really understanding the existing competitors, thus becoming an obstacle to the development of a successful company.

2. Get to know past and future business competitors

When entrepreneurs think of opportunities, it’s best not to think only of the present moment. Entrepreneurs are expected to know about competitors who have failed in the past, and about potential competitors in the future as well. S

as a real example, people have worked a lot on Artificial Intelligence and Virtual Reality before and the efforts were not quite successful.

Later, many startups tried to start a business in this field again and it proved that this time things were different.

Recognizing past business competitors, whether it was a fair business competition or unfair business competition, is very important, because investors want to know what is actually different now, what conditions were not there before, and why this time will be different.

Similarly, it is also important to think about who else will enter the market. This is a much more difficult dynamic to predict because, in the business world, prediction is very difficult.

Although it is very difficult to predict potential competitors, it is still not impossible to do.

3. Find out your competitive differentiation

After conducting market research and studying current, past, and future business competitors, entrepreneurs also need to pay attention to what competitive differentiation they have.

In this case, business actors can ask several questions such as “What is unique about the products offered?” “Why and how is your product different?” “Why is this difference important enough for you to win the unfair business competition?”

Entrepreneurs with experience in a specific market usually have unique insights and are able to provide differentiated offerings.

Good differentiation is usually related to the product, marketing, or sales advantages. If you already know product differentiation, then business actors no longer need to worry about unfair business competition.

Product advantage is created when your product is substantially different in how it performs from competitors’ products.

Sales excellence is usually based on your experience and a deep understanding of the customer.

Peter Thiel defines competitive advantage as a secret or set of secrets, something you know or believe to be true that no one else knows.

The secrets help you execute better than your competitors and ultimately win.

4. Pay attention to your competitors, but don’t worry too much about them

Most businesses spend too much time worrying about competition every day.

They may be so focused on their competitors that they forget to prepare their own business strategy.

If a business actor follows every news from every competitor, then he will most likely experience an unstable emotional state.

In the end, what matters is not what your competitors do, but what you do.

You have no control over your competitors’ product releases, sales, and PR, because all you can control is your own business.

Focusing on creating the best products your customers will love is your best defense against unfair business competition.

Instead of reading the daily news about the unfair business competition, make a review every few months of the two competing businesses or products.

This way you can track what’s happening without the stress of being too focused on keeping up with your competitors on a daily basis.

5. Provide great customer service.

Providing great and memorable customer service is a great way to build loyalty among customers and differentiate yourself from the competition, thereby avoiding unfair business competition.

Prioritize hiring employees who have a full understanding of not only your products and services but also the brand that the company carries as a whole.

Don’t rush into the customer service team recruiting process.

The customer service team must always be courteous and respectful. They must always be responsive to customer questions, have a good problem-solving approach, and always seek customer feedback.

A customer-centered company supported by reliable staff thereby increasing the level of customer satisfaction. It is very important to increase team morale because employees need constant motivation to outperform others.

6. Utilize Technology

The last strategy to avoid unfair business competition is to utilize technology.

Actually, the use of technology is very important to support business operations as a whole, so that your business can still outperform healthy business competition and unfair business competition.

One of the best ways to take advantage of business technology is to use applications such as accounting software that is often used in companies and is available in the form of an Android accounting application.

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