Market competition is often seen as a threat by businesses with worries of being overshadowed by market giants. It is a rational fear, especially if you are a startup or a small business. Nonetheless, market competition isn’t necessarily a negative thing, in fact, it builds businesses. Many entrepreneurs try to steer clear from competition as they see them as a ‘problem’ or a ‘nuisance’. But in reality, there is much to gain in keeping an eye on your competitors. Market competition builds a positive entrepreneurial environment that promotes fair prices, varied options, and consumer activity. In this article, we will discuss why competition is healthy and why you should not see it as a threat. Without further ado, let’s jump right into it.
- Drives Innovation
Healthy market competition stirs innovation to businesses. I bet you’ve seen the constant competition between Apple and Samsung’s smartphone flagship line. Every time Apple releases a new iPhone, Samsung would respond with a new and better product. And by next year, Apple would do the same. These two brands have created a cycle of innovation when unveiling their latest smartphone devices.
Similar to your business, whatever your niche, competitors can drive inspiration to stir innovation to your products or services.
- Competition opens opportunities for improvement
When you have no competitors, it’s easy to lay back and relax, leading you to lose sight to improvements and innovation. It is a dangerous position to be in as your business becomes complacent, and that’s when uprising competitors comes into play and targets your business. And this is why having a healthy market competition is essential to keep everyone happy.
If you do have competitors, keeping an eye on them can surprise you with opportunities to find grounds for improvement. Competition creates a cycle of innovation and improvement, pushing your business to innovation in delivering quality products and services that can be valuable to your customers.
- Competitors highlights your value proposition
Innovative businesses are created to provide solutions that other businesses can’t provide. Businesses or competitors in the same market as yours may offer similar products and services to customers. What really makes your business stand out from the competition is your value proposition.
When you start to evaluate your upper hand against competitors that can’t provide services similar to yours, this highlights your value proposition. This opens opportunities to target your business’ selling points and why you stand out from the competition.
An example for this is Shoppable Business, a B2B eCommerce marketplace in the Philippines. So, another eCommerce marketplace? No. What makes Shoppable Business stand out from marketplaces in the Philippines is it offers:
- great discounts when you buy in bulk
- makes procurement easier and seamless to businesses
- 100% authentic products guaranteed
- easily find suppliers with thousands of vetted suppliers in the marketplace, and
- provide digital invoices for businesses to easily comply with tax regulations.
It is a dream for businesses looking to streamline their procurement process.
- Customer centricity
Your customers are the bloodline of your business and as much as you can, you want to please them and you want them to come back, right? Market competition between businesses is about winning over customers.
It urges businesses to heed the calls of their customers in what they want, what they are looking for, and what they expect from the products or services you offer. And for businesses to guarantee sales, they aim to provide top-quality products and services at competitive prices to their customers.
- Deliver quality at fair prices
Market competition levels fair pricing of products and services it offers to customers. When a dominant business without competition plays in the market, they can easily manipulate and exploit prices.
Have you had the opportunity to use Grab or Uber back in 2017? These car hailing apps can give you a ride from Makati City to Quezon City for only Php 150.00 to Php 200.00 way back. After its acquisition of Uber in 2018, Grab has total control over the prices of its services. At this time of writing, a trip from Makati to Quezon city costs Php 350 to Php 400 minimum and it can cost you around Php 500 to Php 600 during heavy traffic.
In theory, based on pure speculation, the cheaper pricing of Grab may be relative to the competition of Uber way back. But of course, we also have to take into account the heavy traffic, rising gas prices, and inflation into why Grab’s car hailing services blew up in prices today.
- Consumer activity
Have you ever been to a place where you can spot Jollibee, McDonald’s, KFC, Burger King, or any other fast food restaurant that you think of close within at least 100-300 meters apart? When there are more options available for customers to choose from in a market, it tends to increase customer engagement.
Having multiple options encourages customers to evaluate and compare different products or services. Offering a variety of options means that customers have a greater variety of products or services to select from. This variety caters to different preferences, needs, and budgets, allowing customers to find options that align with their specific requirements.
- Promotes economic growth
From outside the business perspective, market competition promotes economic growth.
Engagement from customer purchases, business investments, good debts, or any type of transactions at a healthy moderation promotes economic prosperity.
Healthy market competition stimulates economic growth by fostering innovation, driving productivity, and creating employment opportunities. Fostering healthy competitiveness between businesses encourages entrepreneurship, as individuals are motivated to enter the market and offer unique solutions. It also attracts investment and drives overall market expansion, resulting in economic development and increased prosperity.
Takeaway
Fostering healthy market competition is an advantage for your business, and even to your fellow competitors. Competition pushes your business to its limits to thrive and succeed. It creates a sense of urgency to be creative and innovative in providing your customers with the best quality products and services at fair pricing. Rather than looking at competition as a threat, view it from a perspective of support. Leverage the competitive market as a stepping stone in developing your business to success and innovation.
