Situation: A mid-sized company has learned that a much larger company is entering their geography and market niche. This company is known to enter new markets with a low pricing strategy to “buy” market share. How do you respond to significant new competition?
Advice from the CEOs:
- Accept the fact that you will lose some business; particularly from customers who driven more by price than quality and service. The flip side is that these customers are likely not your best customers.
- Research the reputation and business practices of the new entrant in their traditional territory. What is their reputation? What are their weaknesses? Do your homework by networking with their current competitors and customers.
- Take a lesson from those who have survived a move by Walmart into their territory:
- Boutiques survive Walmart – especially those that focus on personal service. Upgrade your customer base based on personal service.
- Use your knowledge of the marketplace and your long term relationships to your advantage – including your reputation with existing customers when going after new customers.
- You may remain more profitable than the larger company, on a per transaction basis, based on your knowledge of the territory or business niche.
- Don’t assume that all large companies are Walmarts. Walmart has a unique set of talents and a tightly controlled process. This may not translate to other markets – especially those involving personalized service.
- If you are a family business, consider promoting your “old world skill” and established reputation and expertise.
Key Words: Competition, Geography, Market Niche, Walmart, Price, Personal Service, Reputation, Contacts, Boutique, Profitability, Family Business