Competitor is an market entity, which competes with other entities in the market, by providing a more favorable market offer.
All the companies in the market have competitors. Usually the number of competitors depends on the success achieved by the company. The more the company earns, the more it attracts competitors.
Types of competitors
Competitors can be divided into:
- good, who contribute to the development of company, by giving incentives to continuously strive to be the best,
- average, which can be seen as minor inconvenience,
- bad, who cause a lot of problems and initiates unfair competition..
Role of competitors
The company should never ignore its competitors. Most of the time spent on their analysis is not wasted. If company want to be an effective competitor, it should also be an effective partner. It is better to be a partner in a network, and not a single company, because nowadays there is a lot more competition between networks, rather than individual companies. The main motive of inducing customers to choose products or services of company is its individual character that distinguishes it from its competitors.
Ways of dealing with competitors
The best way to overcome market rivals is to attack. If what company produce is not competitive enough, managers should seek another way to acquire customers, by offering additional services, through advertising, packaging, consultations for clients etc.
Porter defines 3 basic competitive strategies:
- cost minimization,
According to Porter the key to success is to focus efforts of the company to one or two of these strategies. Failures of managers steams from the lack of skills of choice.
- Chen, M. J. (1996). Competitor analysis and interfirm rivalry: Toward a theoretical integration. Academy of management review, 21(1), 100-134.