Professional Documents
Culture Documents
SOLUTIONS LOG IN
Industry
competition
includes
businesses that
sell a similar
product or
service. So if
you’re starting an
education tech
app, your industry is education technology and your competitors are other businesses creating
education tech apps.
All businesses have competitors, and in some cases, industry competition is so erce that
companies have to ght for the business of potential customers. This is why some players have
a negative view of competition.
A competitive matrix can be a helpful tool for thinking through who your competitors are and
how your product or service is di erent from theirs.
Despite the negative implication of the term “competition,” the very state of industry
competition can have a major in uence on business strategy. Don’t make the mistake of
assuming that you don’t have industry competition if your product or service seems truly
unique. Every single business has competition, and if there’s really a market for what you’re
selling and you are on the cutting edge of something that’s never been done before, you’ll see
your industry grow, and new competitors will emerge all the time.
https://www.liveplan.com/blog/how-to-deal-with-industry-competition/ 1/9
6/27/2019 How to Deal With Industry Competition | LivePlan Blog
Keep in mind that strategically responding to competition in your industry isn’t just about your
Get business help HOME online from HOWaITcerti
WORKS ed Expert
FEATURES Learn CUSTOMERS
PRICING SIGN UP
marketing strategy or howAdvisor
you’ll maximize your market share. Your strategic plan
Morefor growth
should speak to competition among your suppliers, economies of scale, potential new entrants,
SOLUTIONS LOG IN
and substitute products that could threaten your viability.
1. Industry rivalry
The rst of the ve forces focuses on the intensity of the current competition in the
marketplace.
Industry rivalry looks like competitors within an industry jockeying for position, using tactics
such as product launches, advertising competition, and price competition.
When business owners feel competitive pressure or see an opportunity to improve their
current position, rivalry can become intense. Sometimes it can even lead to industry disruption.
Rideshare companies like Uber and Lyft are a good example of disrupting the urban
transportation industry. They have been able to leverage tech, a new pricing and delivery
model, and a latent resource—cars that are otherwise sitting unused by their owners—to
capture a huge share of the taxi market.
If barriers to entry are low (e.g. it costs little to enter the industry; there are few economies of
scale in place), new entrants can weaken the existing businesses’ position in the market.
If a company has a limited but powerful client base purchasing its product, they can often
dictate their terms and drive prices down.
4. Bargaining power of suppliers
https://www.liveplan.com/blog/how-to-deal-with-industry-competition/ 2/9
6/27/2019 How to Deal With Industry Competition | LivePlan Blog
If customers can drive prices down, suppliers can drive prices up. This force is driven by the
Get business help HOME online from HOWaITcerti
WORKS ed Expert
FEATURES PRICINGLearn CUSTOMERS
SIGN UP
number of suppliers, the uniqueness
Advisor of the supplier’s product, and how much it would cost a
More
company to switch from one supplier to another.
SOLUTIONS LOG IN
it becomes dependent on them and the suppliers, in turn, have
If a company has few suppliers,
the power to increase their prices.
5. Threat of substitutes
The demand for substitutes can reduce the demand for industry products and services. If a
company increases its prices, customers are more likely to switch to cheaper alternatives. This
can signi cantly reduce a company’s power within the industry.
The Nike brand rst became popular in 1972 when company founders Phil Knight and Bill
Bowerman invented “lighter weight training shoes that had an outsole with wa e-type nubs
for traction.” They saw the need for a shoe that would improve an individual’s athletic
performance. In 1979, the company launched its Nike Air technology and this strengthened the
Nike brand further.
Today, Virgin Airlines still o ers a ordable fares, full-service ights, and excellent customer
service. Instead of copying what was already being o ered by other airlines, Virgin o ered
something much better to air travelers.
https://www.liveplan.com/blog/how-to-deal-with-industry-competition/ 3/9
6/27/2019 How to Deal With Industry Competition | LivePlan Blog
Focus on the
Get business needs
help onlineof
HOME
your
from customers
HOWaITcerti
WORKS ed Expert
FEATURES Learn
PRICING SIGN UP
CUSTOMERS
Advisor More
Apple has developed several innovative products and created a network of services that
seamlessly work together. The company LOG
SOLUTIONS continues
IN to provide customers beautifully designed,
high-tech products that make working with electronic gadgets faster and easier.
Apple makes the customer experience central to the product design and development process
by incorporating participatory design to understand customer pain points and opportunities. In
addition, Apple has ensured that its computing and entertainment devices—the Mac, iPod,
iPhone, iPad, and iTunes—integrate to create a streamlined, intuitive system.
As a result, instead of developing your products into something that will address your
customers’ needs, you start looking at what your competitors are doing for their customers.
This will be detrimental to your business and you may end up losing customers to your
competitors. Instead, talk to your customers regularly—ask them what they like and what they
hate about your product or service, so you can use their feedback to improve.
In 2013, Nokia sold its handset business to Microsoft for $7.2 billion. At one time, Nokia had
been the dominant mobile phone manufacturer in the world, but by the time the company was
acquired by Microsoft, it only had three percent of the global smartphone market. Nokia
underestimated how dominant the iPhone and Android smartphones would become over the
coming years.
To avoid the same fate, never project future success based on current market conditions, as
market players, product innovations, and customer expectations can change in an instant.
https://www.liveplan.com/blog/how-to-deal-with-industry-competition/ 4/9
6/27/2019 How to Deal With Industry Competition | LivePlan Blog
behind.
Get business help HOME
online from
HOWaITcerti
WORKS ed Expert
FEATURES Learn
PRICING SIGN UP
CUSTOMERS
Advisor More
Some competitors may turn out to be good partners
SOLUTIONS LOG IN
In some cases, companies that used to be competitors have learned that collaboration can be
mutually bene cial. Sometimes this manifests as acquisition—one company being absorbed
into another—but it might also look like a strategic partnership where two parties retain
independence.
By looking at your competitors as potential partners and by creating strategic alliances, you
may open yourself up to more business and more success in your industry.
Iain Fox had been working in sales but found himself feeling “very unstable” in his job and he
was not enjoying what he was doing. In 2006, while on holiday with his wife, the couple played
miniature golf on a course next to their hotel.
While there, Iain told his wife, “Can you imagine doing this for a living?”
When they got home, Fox came up with the idea of creating a portable course that could be
used at parties and other events. He left his sales career, built the course, bought a van,
developed a website, and designed a logo. On March 2007, Crazy Fox Golf was born.
When he contacted venues such as pubs and leisure centers in his local area of Derbyshire and
Nottinghamshire in the United Kingdom, he received mixed reactions. But his persistence paid
o , and soon he started to get bookings. In the beginning, he did a bi-weekly event in a local
leisure center. When people started talking about Crazy Fox Golf, more business came in. This
led to an editorial coverage in the local papers which, in turn, brought in more business—this
time, through corporate events.
https://www.liveplan.com/blog/how-to-deal-with-industry-competition/ 5/9
6/27/2019 How to Deal With Industry Competition | LivePlan Blog
When Fox tried advertising in phone directories, business opportunities weren’t as frequent as
Get business help HOME online from HOWaITcerti
WORKS ed Expert
FEATURES Learn CUSTOMERS
PRICING SIGN UP
expected, but when he setAdvisor
up a Google AdWords account, the growth of his business
More increased
signi cantly.
SOLUTIONS LOG IN
Crazy Fox Golf has continued to grow and has provided entertainment for a variety of
corporate events for companies such as L’Oréal, Slimming World, and British Gas.
Fox started with a simple idea that seemed crazy to others but due to his persistence, his
“crazy” idea is now a booming business recognized in the UK and some other countries.
Competition is everywhere. Businesses come and go. But consider competition as a challenge
for you to improve your products or services. Analyze and strategize. A good strategy will help
you compete with other industry players and ultimately get you ahead in the game.
Editor’s note: this article rst published in 2016. It was revised in 2018.
Harriet Genever
Harriet Genever is a freelance writer and copyeditor, specializing in blog posts,
research articles and customer case studies. As the founder of her Australian-based
business, Write Beyond, she works with B2B companies and small business,
developing compelling content to attract customers and keep them engaged. With a
with clients and their customers when working on writing projects. She is also a true
Posted in Management
Management
https://www.liveplan.com/blog/how-to-deal-with-industry-competition/ 6/9
6/27/2019 How to Deal With Industry Competition | LivePlan Blog
GetGrowth
business help online from a certi
& Metrics HOME HOW IT WORKS ed Expert
FEATURES Learn
PRICING SIGN UP
CUSTOMERS
Advisor More
Goal Setting & Productivity SOLUTIONS LOG IN
Psychology Meets Business
Customers’ Stories
LivePlan Updates
Write for Liveplan
MODERN, SIMPLIFIED
BUSINESS PLANNING
LivePlan simplifies business planning, budgeting, forecasting, and performance tracking for small businesses and
startups.
ABOUT US
Who We Are
Media Relations
https://www.liveplan.com/blog/how-to-deal-with-industry-competition/ 7/9
6/27/2019 How to Deal With Industry Competition | LivePlan Blog
Careers
Get business help HOME
online from
HOWaITcerti
WORKS ed Expert
FEATURES Learn
PRICING SIGN UP
CUSTOMERS
Contact Us
Advisor More
SOLUTIONS LOG IN
Privacy and Legal
Sitemap
PRODUCT
FAQs
LivePlan Reviews
App Status
Help Center
What's New
FIND AN EXPERT
Expert Advisors
BUSINESS PLANNING
SOLUTIONS
For Accountants
For Consultants
For Educators
For Affiliates
For Enterprises
https://www.liveplan.com/blog/how-to-deal-with-industry-competition/ 8/9
6/27/2019 How to Deal With Industry Competition | LivePlan Blog
https://www.liveplan.com/blog/how-to-deal-with-industry-competition/ 9/9