One mistake a business can make is to ignore their competitors and what they do. Whilst it is important to focus on your customers and their needs, you should never forget that there are other companies out there competing for a share of your customer’s wallet.
Often, a new competitor moving into the area or an existing competitor increasing their publicity or having a sale can have a devastating impact on your business but, by responding in the right way, you can turn it into an opportunity.
Take John Lewis as an example. They have done a lot of work to understand their customers and their needs and realised that, although they value the quality of service, they are also price sensitive. That is why John Lewis use the strapline “never knowingly undersold”.
That implies to their customers that they will monitor competitor prices and respond accordingly, giving the customer peace of mind that they will pay a competitive price when they shop at John Lewis.
And they live up to that promise. Every time a competitor has a sale, John Lewis has a large publicity campaign saying “Today one of our competitors have lowered their prices. So we have done the same”. This attracts more business to their stores.
One thing to note, however, is that they do not say “One of our competitors have lowered their prices. So we have reduced ours to be cheaper than them”. That is because by doing that they would give the impression that they were overcharging in the first place. Instead, they reinforce the message that they care about their customers and continually research the market to make sure they are offering the best value they can.
This, backed up by brilliant customer service, is exactly what their customers want.
A second example is the reaction of Marks & Spencer food when Aldi and Lidl came into the UK. Aldi and Lidl had massive advertising campaigns which focused on the price of the goods they sold – a price which was significantly cheaper than you could find in other UK supermarkets for similar products. Most supermarkets responded by cutting their prices but still lost market share. M&S knew that their customers valued the customer experience over price, so responded by increasing their advertising talking about the quality of their food and increased their share of the market.
It is the same when a new competitor moves in locally. They will announce their presence in a blaze of publicity, looking to attract customers. If you do not respond, you will lose customers. Instead, see it as an opportunity – their publicity will drive foot traffic to the area around your business. Increase your publicity to capitalise on that, but make sure that you understand your customer and their needs and publicise how you meet those needs better than your competitor does.
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