Why Do We Have Competition?

The Four Factors Creating Competition

I keep getting this question from sales people I work with in coaching and training sessions… Why do we have competition?

At first I thought it was a question looking for excuses regarding dealing with competition, however, as I got the question more often and from all levels of sales performers – I figured I needed to find the answer to this question. I found four primary reasons that competition exists, so here are the results of my research…

Tour Factors Creating Competition

  1. Lack of Differentiation
    This is the biggest reason for both having competition and the reason for price wars or commodity pricing coming on the scene. Uniqueness of a product or service creates a driven market where the buyers must pay the price in the offering because there is no real substitute product. However, when there is no clear cut leader or unique product, then the bidding on substitute products begin in earnest. Price becomes the default issue since there are no other differentiators or unique factors. The ease of entry in a marketplace is the sign of the beginning or growth of commodity based pricing and buying. Your success will depend upon you finding uniqueness in your offerings – and sometimes the unique factor is you. Yes, how you sell in the marketplace can separate you from the thundering herd of product pushers.
  2. Increasing Savviness of the Marketplace
    This is a double edged sword since it deals with both the competition itself and the customers in the marketplace. First the competitors – the competition is faster to respond to new or unique offerings in the marketplace today. Thirty years ago a product could come on the market and it could take up to three years for a competitor to offer a similar product. Today, it is a matter of weeks before a new product is out and competitively priced to offset your original premium pricing.
    Second, the customer is more savvy regarding product information. Buyers now surf the internet for product information, product comparisons and industry reports regarding the products you sell. This has lead to situations whereby the buyer knew more about a product or service than the sales person did who was calling on the buyer. This is embarrassing and usually leads directly to a price comparison since the buyer does not believe there is an difference based upon their research. Again, you as a professional b2b sales person may have to make the difference and be savvy enough to win the sale or account.
  3. Increasing Types of Competition
    Here we are talking about competition coming out of “left field” or blindsiding you by offering your product mix – all from a non-traditional competitor. I have seen this in the distribution sales business. Examples include: 1) a non competitor buys a similar company to yours (outside your market) and suddenly begins to offer these products to a customer; 2.) a manufacturer of competitor line goes direct to customers, bypassing the distributor network all together; 3.) a company doing “consulting like” work for a customer suddenly becomes the actual buyer or buying agent for the customer – opening bids from all sources; and sometimes the real competitor is inside the customers organization particularly in the service arenas – yet, manufacturing can be impacted as organizations buy and sell subsidiaries every month – competition becomes internal for the customer. As a b2b sales professional, you need to build a network of contacts within your customer accounts – especially your largest accounts – to create a form of early warning system for possible changes in the work flow processes or competitor activities to get a foothold in your accounts. Pay attention and keep your contacts going steady to stay in the know.
  4. Obsession with the “other guys”
    Again, there are two forms of “other guy obsession.” The first is insidious since it is you or your company’s obsession with a key competitor. This tends to create a “me-too” attitude rather than a more desirable – look at my uniqueness! I have seen companies work so hard to be like brand X that you cannot tell the two products apart – is there any surprise the next issue is who has the lowest price?
    The second version of this obsession is when the customer is fixated upon a brand name or competitor company. An old example of this was when IBM called on a company – they got the business due to their brand rather than the technology they sold or the sales person’s ability. There were other computer companies with better technology and better sales people, yet “big blue” kept winning the contracts. The added component to their success was it was safer to buy Big Blue due to their world class service rather than their technology. And, safe still wins more deals in the corporate buying arena than the better product or service. (This last comment is based upon extensive research into the buying habits of people within the corporate walls)

Trust you will find this information helpful in your selling strategies. You must know and prepare for a competitor coming into your customer’s space – early, often and late. Count on it and be prepared to win the battle – finding a differentiator is the best strategy, after that it is pure selling skills that win the competition war.

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Voss Graham

Sr Business Advisor / CEO at InnerActive Consulting Group Inc
Your Knowledgeable Partner for Business Success and Achievement. Dedicated to helping others get to their next level of success. Award winning business advisor; coach to executives and business owners; Business Growth Strategist; and experienced using assessments for hiring & selection, evaluation of teams and improving communication. Voss is available as a Speaker for your conferences or company meetings contact him at 901-757-4434 or use the LinkedIn or Facebook direct messages.

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