When your competitors “zig” do you “zig” or”zag”?

How to respond to a competitive attack!
In a tough economic climate, with a smaller market pie to share with your competitors, some of your competitors may be looking to achieve growth by taking a slice of your market! One of the easiest ways to steal clients is to simply offer them a better price. If your clients are businesses, they will be focused on keeping their costs down and margins up, so a reduction in price can be tempting. If you are operating in a mature industry and selling a physical product such as a computer, television or phone, it can sometimes be hard to convince your customers to pay more for the same product offered by a competitor.

Do you zig or zag when under attack?
So your competitors are waging a war against you and using price as their weapon of choice. How do you respond? Do you drop your prices and zig with them? Do you take the high moral ground, ignore their behaviour, and stick to your original strategy? Or do you zag by developing a “competitive attack” strategy that addresses the issue and supports your overall strategy? Do you find yourself listening to sales staff continually complaining about a key competitor’s behaviour? Developing a “competitive attack” strategy can change conversations and re-focus staff on your strategy and help them to move forward.
Start a new conversation.

Book a meeting with your core management team to brainstorm a “competitive attack” strategy to respond proactively to the situation.

1. What do you know about your competitor? List what you, as a collective, know about the company. Do they have a big or small business model? Do they have a strong product range? Are they good at marketing? How skilled are their sales force? What margins are they achieving? What level of service do they deliver? Are they a private or publicly listed company? Can they make changes to their business quickly or slowly? Consider how the answers will impact the behaviour of the competitor company?
2. What game are they playing? As a team, consider what strategy your competitor is adopting. Has the company reduced prices to improve their short term cash flow? Are they seeking to grow sales by taking a slice of your market? Have they dropped their price to reduce the number of competitors in the industry? Have they dropped the price on one product brand to increase the overall value of their client base - by buying new customers and then selling a larger range of products to them? Why do you think they have launched a competitive attack?
3. What are their strengths and weaknesses? What are their top three to five strengths? What are their top three to five weaknesses? Now write a list of your key strengths and weaknesses.
4. Develop your “competitive attack” strategy. Develop a strategy around your competitive advantage. Focus on you biggest strength, that your customers love, where your competitor is weak. What activities can you undertake that leverage your competitive advantage? What else can you do to add more value to your customers? If your competitor is larger than you, you may still need to match their prices, so the conversations are no longer about price. If so, what else can you do to replace the lost margin? Prepare a list of activities you need to undertake as part of the strategy.
5. Consider their response. If your “competitive attack” strategy is effective it will reduce your competitor’s sales. So they are likely to respond in a way to weaken your new strategy. Brainstorm ideas on how they might respond so you can be a step ahead of them.

Whilst being informed about your competitors, their brand positioning and strategy are important, at Sustainable Marketing Services we generally recommend not focusing on your competitors to the point where you lose focus on your own business strategy. Create your own unique brand positioning and develop a marketing strategy around your competitive advantage. The more energy you focus on your competitors, the less energy you have to focus on your own strategy.

So when your competitors “zig”, how will you respond, will you “zig” or “zag”?

Sustainable Marketing Services is an award-winning Brisbane digital marketing agency with a long history of delivering sustainable success for our clients.

Book a complimentary meeting on 07 3446 5837 or via email us here.