Magazine article Management Today

A SECTION FOR ENTREPRENEURS: Crash Course - Handling a New Competitor

Magazine article Management Today

A SECTION FOR ENTREPRENEURS: Crash Course - Handling a New Competitor

Article excerpt

As a small company, you've heeded the advice to 'find a market niche - and dominate it'. But there's a nagging worry. Sooner or later, someone will notice what a profitable little segment you've carved out. So how will you cope with a serious new competitor?

PREPARE A BATTLE PLAN. 'You should never be surprised by the arrival of competition,' says Mark Ritson, assistant professor of marketing at London Business School. 'It's not a question of responding; you should already have modelled the possible scenarios and discussed which options you will take.'

RAISE THE ENTRY BARRIERS. Building your brand is the most effective barrier to entry, says Ritson. If it's strong enough it may smother competition at birth. Your brand gives you a clear position from which to defend your market confidently, and generates customer loyalty, which will help you fend off a new rival.

GATHER MAXIMUM INTELLIGENCE. Set up a continuing programme to garner intelligence on existing and potential competitors. This will let you spot the Exocet before it arrives. Arthur Weiss of competitive intelligence specialists Aware suggests using your salesforce to this end. 'They should not just be selling, but constantly listening to customers' concerns,' he says, 'and they are often the first to pick up rumours about new competitors.' Also monitor media, trade shows, seminars and trade associations - all can provide an alert of new competitor activity.

KEEP IT LEGAL. If you resort to subterfuge, make sure you remain within the law, otherwise the long-term damage to your reputation could outweigh the gain. Impersonating somebody else to obtain confidential information could land you in trouble. Recruiting from the opposition should also be seen as a last option: if they're disloyal to their existing employer, do you want them?

UNDERSTAND WHAT THEY'RE OFFERING. …

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