Small Business Development Center
At Chemeketa Center for Business & Industry
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Category Archives: Competition

The Trouble with the Low-Cost Game

By Chemeketa SBDC

Don’t have enough customers so it’s time to lower prices, right? Well, maybe. You may be tempted to do this in your business, especially if a competitor has lowered prices. But you run the risk of lowering yourself right out of business.

Carefully consider other options; perhaps there are better ways to remain competitive. And if you need to lower prices, do so with a clear idea of where that might take your business.

• Review each step of your supply chain, from your vendors on through to your customers. Why are there not enough customers? Are you losing current customers because they’re dissatisfied? Chances are there’s more to it than your prices. Find the areas of weakness and shore them up.

• Find ways to cut costs where your competition can’t. This increases your margins and consequently your cash. If you need to cut prices as a last resort, you’ll be sitting in a better position. You may think you’ve cut costs to the bone, but take another look.

• Examine your business model. Are there strategic changes you can make instead of tinkering with pricing? Are your current offerings what the market really wants? You may have a problem with what you’re selling instead of how much you’re charging for it.

• See if you can raise prices in a complementary service or good if you need to lower them on a core good or service. A coffee shop might leave the coffee pricing alone, but slightly increase prices for pastries. This results in the same revenue per customer. On the surface it appears as if you are competitively priced, but you’re not paying the penalty for those low prices.

• Selectively lower prices for only some of your customer base, or for only a limited time as an incentive. Make sure that what you gain (in customer loyalty or in increased purchases of ancillary goods) makes up for the loss from the price reductions. Be strategic about this.

• Have a clear idea of just how low you can go, if you choose to engage in a price war. Know your limits. Remember that smaller businesses will lose this arms race much faster than larger and better capitalized businesses.

 


Keeping Tabs on the Competition

By Chemeketa SBDC

Want to know what your competitors are up to? It’s important to keep tabs on them so you know what your customers know. It doesn’t have to cost you a lot of money nor time, and you’ll learn a lot.

Your first step is to clearly understand your own company’s goals and strategies, and where you stand in the marketplace. Then, and only then, can you understand how you stack up in comparison to competitors. Get a handle on your own business, then choose a handful of competitors to monitor.

Figure out what really matters to you, and hone in on those factors. Watching competitors often involves paying attention to their motivations (what is driving them?), their revenues or profits (as much as you can tell from the outside), how management is behaving and making decisions, and your assessment of their capacity to meet their goals.

Create a system to gather information and store it (folders in a shared drive that are accessible to anyone in your company for instance). And establish a regular time to analyze the information, perhaps quarterly.

Gathering the intelligence is easier than ever, and thanks to the internet, can be largely automated. Here are some common sources to check in with.

• Your competitors’ websites are a first stop to find out what they’re up to. Make a practice of scanning them. And then look into a free website likewww.WatchThatPage.com that monitors specific pages and sends you an email alert when they’re changed.

• News sources can give you information. Google your competitors, and sign up for email alerts on news.google.com.

• Check public sources like the Corporations Division to see changes in ownership. You can also access unpublished information through a Freedom of Information Act request.

• Ask your employees what they know; you might be surprised what they can tell you. They talk to customers all the time and pick up lots of tidbits along the way.

 


Competition is Good

By Chemeketa SBDC

Do you sometimes wish your competition would just go away?  That you could be the only business in town that does what you do so you don’t have to worry about gaining or keeping customers? What if I told you that having competition can actually make your business stronger?

Whether it’s directly or indirectly, business owners almost always have to compete for their customers and then to retain those customers. And in an age of online shopping, the competition is both local and global. But, believe it or not, competition can be a good thing. It can help you understand your niche, it can show you where you are weak, it can motivate you to improve, and it can lead to unexpected partnerships. The key is to see your competition as an ally (of sorts) rather than an enemy.

In other words, competition doesn’t always have to be about winning and losing.  It can be about growth and learning, building and partnering. How would it feel to see your competition as there to help build your business? How would you do business differently if you believed that both you and your competitors can be profitable, that no one has to lose?

Here are a few things to think about the next time you look down the street, across town, or on the web to see what your competition is up to:

  • What do you know about your competitors? What are their strengths and weaknesses?  How long have they been in business?  What are they particularly known for? How might you support them? Be open to discovering you have immense respect and admiration for those you have been competing “against.”
  • Do you know what sets your business, product or service apart from theirs? Use this information to get clear about your target market and how it differs from your competitors’.  Perhaps a potential customer is really a better fit for your competition: are you willing to refer them so your customer gets what they are really looking for?
  • Make a list of five reasons customers should choose your product over your competitions’ without putting your competitions’ product down. If you have to spend energy making another business look bad, you don’t have that energy available to tell your potential customers why your business, product, or service is the best possible choice for them (assuming it is). Besides, it’s not very becoming either.
  • Be honest with yourself about how your competition is better than you.  Is their product superior?  Do they have better customer service? How can you learn from and emulate what they do well? Are you willing to ask them for help?
  • How can you collaborate with your competition to create win-win situations that lead to greater profits for you both? Be willing to make referrals to your competition as appropriate and don’t be afraid to play nice in the sandbox; you never know where a positive relationship with your competitor might lead.

 


Federal Contracting Success Series

By Chemeketa SBDC

1. The Basics of Government Contracting

Topics:
• Who is GCAP and how can we assist your small business to succeed in government contracting
• Understanding the federal codes NAICS and PSC
• Finding leads FedBizOpps, FedConnect, GCOM
• Federal Acquisition Regulations (FAR)
• Federal contracting set-asides HUBZone, 8(a), SDVOSB, VOSB, WOSB, EDWOSB
• Registrations SAM and DSBS

Date: February 13, 2014
Time: 9 am to 12:00 pm
Instructor:  Marta Clifford

2. Understanding Federal and State Small Business Certifications

Topics:

• FEDERAL-Understanding Small Business Certifications
• Understanding Small Business Goals|• Small Disadvantaged Business (SDB) Certification & 8(a) Program
• Service Disabled Veteran Owned Small Business Certification (SDVOSB)
• Woman Owned / Economically Disadvantaged Woman Owned Small Business Certification
• HUBzone Certification
• Veteran Owned Small Business (VOSB) Certification
• STATE-ESB- Emerging Small Business, DBE- Federal Disadvantaged Business Enterprise
• WBE-Woman Business Enterprise, MBE- Minority Business Enterprise
• What are the benefits of state certifications?
• How do I market to state agencies? Do any agencies set aside contracts for certified small businesses?
• What are the requirements for state certification?
• How to leverage your small business certifications

Date: February 20, 2014
Time: 9 to 11 am
Instructor:  Marta Clifford

3. Marketing Materials and Methods

Topics:

• Capability Statement what it is, how to write one and how to use it to market to the Federal government
• Websites: why you should have one and what should be included on your website
• BUSINESS cards what do they say about your business
• GCOM GCAP’s Government Contracting Opportunities Match how to make it work for you.
The instructor will assist you with the form while in class.

Date: February 27, 2014
Time: 9 to 11 am
Instructor: Marta Clifford

Location: Chemeketa Center for Business & Industry
626 High Street NE, Downtown Salem
Cost: $10 each session or $25 for all three
Registration and Information: 503.399.5088


Use Product Differentiation as a Competitive Advantage

By Chemeketa SBDC

As a business advisor, I routinely ask my clients “What sets you apart from your competition?” and “What is your competitive advantage?”  I frequently receive the answer “I charge less than my competition.” That always
raises red flags for me, and I worry about this business owner getting thinner
and thinner margins and needing to get ready to post the “going out of business” sign.

Gone are the days of the company store. Even in a small town, all businesses are in a global market with hundreds if not thousands of competitors. With so much competition, there are only two ways for businesses to compete: price and differentiation. Small businesses cannot compete on price with the large box stores, larger department stores or the Internet. The only way for small business to compete is on differentiation.

So what does that mean exactly? Product differentiation can be as simple as creative packaging or as elaborate as incorporating new functional features in a product. Sometimes differentiation does not involve changing the product at all, but instead it’s about creating a new advertising campaign or other sales promotions to highlight differences between one provider and another.

Differentiation strives to make a product or service more attractive by contrasting its unique qualities with other competing products. Successful product differentiation creates a competitive advantage for the seller as customers view these products as unique or superior. And that’s what the business owner wants the customer to focus on, not the price.

What sets you apart from everyone else? Here are some examples that may apply to you: proprietary know-how, intellectual property, your reputation and your brand’s equity, your high level of customer service, your convenient location, a speedy turn-around time, etc. And this is only a small sample.

Take some time to determine what your point of differentiation is and then build a marketing campaign around it. And for goodness sakes, stop talking about how your prices compare to everyone else’s.

Marcia Bagnall is Director of the Chemeketa Small Business Development Center and instructor of Small Business Management Program. The Small-Business Adviser column is produced by the center and appears each
Sunday. Questions can be submitted to SBDC@chemeketa.edu. Visit the SBDC at 626 High Street NE. in downtown Salem or call (503) 399-5088.