Regardless of your location, type of business or its size, your business faces some form of competition. Therefore, you need to be prepared to meet your competitors. Not every business can be number one, but every business can build itself and make money. Market followers are nothing new. It is one of many strategies of competing in the market.
Who is a Competitor?
“A competitor is a person or business who seeks to unseat your business by either outwitting you, say by getting your traffic and converting your customers to be his own.”
Competitors cause us both pains and benefits.
The pains are obvious- they take our business, therefore we cannot meet our business goals.
Benefits, on the other hand, may not be outright. But they cause us to think out of the box or even think without the box. This breeds our innovative potential.
The 6 Levels of Business Competition
Businesses either compete on one or a combination of the following 6 levels. These levels of business competition are:
- Product Category,
- Nationally/Regionally or;
Whereas the last four types of competition are straight forward, let me clarify the first two.
Brand competition tends to be head-to-head competition. This entails close substitutes that seek to fill customer needs. Therefore businesses here want to gain a greater share of the customers’ mind, heart and wallet.
Category competition, on the other hand, entails competition targeted on a given product category. Here an array of products in the same category try to gain space and attention. All players in the category compete for the customer’s share.
Generic Business Competition
Now generic competition goes beyond these first two classifications discussed above.
Generic competition at its most base form is simply, “The competition for the customer’s wallet.”
The question is not ‘who is my brand or category competitor?’
The Right question is, ‘Who else competes for my customer’s shilling?’
Let us put that into perspective, if the customer has Ksh.50.00, what spending options do they have? These options the customer has then are your competition.
The 4 General Competitive Strategies
There are four broad competitive strategies open to businesses. These are:
- Market leader strategy
- Market challenger strategy
- Market follower strategy
- Market nicher strategy
1. Market Leadership Strategy
Market leaders are the most valuable businesses in their industry. They occupy the 1st position in the market. They are ahead of the pack. The rest of the industry looks up to them for innovative ideas. Market leaders tend to be the first business in their category. They command the largest market share and are often the most profitable.
2. Market Challenger Strategy
Market challengers occupy the 2nd or 3rd position in the industry. These businesses contend with the market leader. They intend to unseat the market leader and wish to take a portion of the leader’s share.
3. Market Following Strategy
Market followers have resigned from fighting in the big battle. They do not wish to play in the premier league. They basically follow the market. They are the crux of this post. We will revisit them in a short while.
4. Market Nicher Strategy
Market nichers are unique. They look for underserved markets and devise appropriate product mixes for them. They are backwater players. They thrive in neglected markets. They tend to be small and nimble-agility is their greatest asset.
Market follower strategies
As we have indicated, market followers are neither interested in market leadership nor the market challenger position. Given this stance, their desire to compete is not in offering novel or innovative products. No. They compete on less novel ideas-they follow the market leader.
These are businesses that have resolved to be in the market but survive on the basis of the leader. They take advantage of the leader. Being followers, they are a thorn in the flesh of the leader. Therefore, the leader will spend money to tell the public the differences that exist. That way, the follower gets free publicity.
The follower hurts the leader’s business by prying on peripheral customers. These might be customers attracted by the leader but find the follower’s products available and accessible and all the same satisfactory. The leader spends the right shilling while the follower reaps the benefits (small as they may be).
Let us wind up the article by looking at the 4 market follower strategies that you can or are employing in your business.
The 4 Market Follower Strategies
1. Cloning strategy.
Here the follower copies the market leader by presenting slight variations in the final product’s package or label. This is actually a me too product.
The unsuspecting customer really believes he is getting the leader’s product. ‘Me too’ products tend to work mostly in the short-run. Soon after, the leader re-emphasises the salient differences.
This action increases the cloner’s publicity. A portion of the market may switch to the leader. Another portion sticks with the cloner citing things like proximity; availability; accessibility as well as a personal touch.
2. Imitating strategy.
The market follower, in this case, copies something from the market leader but makes slight differences.
There may be evidence that the imitation will be noticed. That does not worry the imitator-that is the good reason for presenting the offer.
Customers like the idea that the follower is trying to imitate the leader. He plays the leader’s role-and they assume they are now beating the leader. It works.
3. Adapting strategy.
The market follower offers improved products over the leader’s innovation.
The leader has a large spending on R&D. There are spin-offs from such innovative activities. Some spin-offs are abandoned while others are followed through to innovative products. The adapter preys for any such innovations to modify into his own product.
Basically, this is a short-cut to R&D spending. The end justifies the means.
4. Counterfeiting strategy.
Counterfeiting is prohibited in Kenya under the Anti-Counterfeit Act 2008.
Dr. Aila is available at email@example.com