Capitalizing on Competition

When I was overseas I always made a point to stop at the local markets and shop for souvenirs. After all, you never know the next time you‘ll get to shop for pearls sipping Thai tea from a bag in a back alley in SE Asia. 

These markets were the antithesis of market dominance and a beautiful display of healthy competition. There were hundreds of booths, many of which sourced form the same place and sold the same wares. You didn’t shop for the cheapest, you shopped for the best. When a new booth opened up you didn‘t see the current both holders picking up pitchforks and torches. Nobody was afraid of each other. They realized that a market monopoly was no fun. Plus, when you introduce competition, you agree on the fact that someone else can do it better than you. When they can do it better, you improve. When you improve, the entire ecosystem benefits from a superior experience. There were markets with 1-2 pearl stands and our host rolled his eyes when we tried to stop there. He knew that the best products would thrive in a market with the most competition. 

Why do I tell this story? Because I‘ve seen a dramatic uptick in the fear displayed in our markets since the pandemic hit earlier this year. Hobbies became lifelines for some and scarcity fueled the fallacy that all resources are finite. In addition to the medical knowledge we needed, I wish an economist could have taken center stage and walked us through the ups and downs of massive industry disruptions. Alas, here we are. So let‘s learn what we can and improve upon the process so that our world becomes the best place to live and do business. 

A few weeks ago I was asked to speak in a private Facebook group to a large number of followers. This was a standard marketing scheme where I was offered a platform to provide value - they got more followers, and I received greater exposure. My picture was everywhere, my talk title was on point, and I had taken care to differentiate myself slightly from the other panelists. At the last moment (I mean 10min before I was supposed to go live) the group founder messaged me that my website made her think we were too similar and that I would be removed from the panel. To my surprise I was also kicked out of the group, and, as far I was aware, I had done nothing to detract from her message.

This woman failed to take advantage of one of our greatest resources - market competition. You may be familiar with the bell curve of market adaptivity, but how does competition reflect that?

Stage 1 - Oblivion: No one knows who you are or what you do, so you spend all your time explaining why it‘s valuable and rarely get to talk about who you are. The “why” matters. 

Stage 2 - Curiosity: People start to understand what you do, but they don‘t know who you are. You spend your time explaining who you are. Loyalties are formed.

Stage 3 - Desire: Consumers know what you do, but they also care about knowing you and how you do it. Quality matters.  

Stage 4 - Oversaturation: Everyone knows what it is and have decided that all they care about is speed and price. Only machines survive.

Entering at stage 1 is hard. You better have rocket boosters of energy and capacity (and probably a lot of capital). Most people are wise to enter the market at stage 2 and improve upon the mistakes others have made at stage 1. Once you reach stage 3 you need to have the mind of a craftsman - how can you and your product/service excel and best meet the desires of your clients (this rarely means being the cheapest). By the time stage 4 hits, if you haven‘t been successful, you need to find a new market. 

Competition scares us, but when we embrace it we build muscle. Failure threatens us, but when we overcome it we grow. Life challenges us, but when we accept the challenge we thrive. 

How will you respond to your competition today?