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But if competitors belong to the same industry and provide similar products then they can't sell the products at their price because if they sell products at more price than the competitor's price then consumers switch to the competitors.Example: A company named A sells something for Rs. 100 and the competitor in the same market or industry provides similar products and sells them for only Rs. 90 then from which company do you choose to buy the products? We buy the products from the competitor who provides us the same product in rs. 90 so now we understand about competition with an example. Now let us go in deep about competitors and understand things from close.
Table of Contents
Reasons Behind Competition
Now we understand the meaning of competition but what are the main reasons behind this competition, let us talk about them one by one.- Overpopulation: The first reason for increased competition is population as the population of a country increases, its resources become scarce because every person needs resources, and competition between them to secure resources increases.
- Innovation and improvements: As a new technology or idea comes into the market, the competition for existing businesses or organizations increases as customers always want up-to-date products so it becomes difficult for them to sell their products.
- Survival in the market: Today many businesses and companies compete with each other to survive in the market if they do not compete with their opponent and analyze their technique they remain backward from their opponents.
- Economic Growth: Today competition has also increased because every company today wants to earn profit and acquire a large market share so they compete with other similar companies and try to overcome them.
Tools for analysis
- SWOT Analysis: SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. To analyze the competitor closely we must know their strength in which things they work well and their innovation. We should learn about their weakness in which field they can't work properly and try to improve ourselves in that field to defeat the competitors. We also got an opportunity through some signals, so you should also get benefits from that opportunity. Some threats can hinder your progress.
- PEST Analysis: PEST here stands for Political, Economical, Social, and Technological. We must analyze the political, economic, social, and technological conditions of our country or the region that belongs to a market or industry and make rules and regulations, selling the products according to them.
- Porter's Five Forces: Competitor's strengths and numbers, supplier power to drive up the price, customer power to drop the prices, the substitution of our products, and the threat of new entry which impact us negatively are the five Porter's five forces a business must analyze to get success.
- Benchmarking: Comparing our products, financial growth, and operating efficiency with the market leader is an effective tool for analysis with the help of which we can find the areas in which we need improvement.
- Competitor Profiling: Get all the information about the opponent company, their background, their products, their strategy, their working environment, strengths, and weaknesses to analyze the competition.
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Types of Competition
- Perfect Competition: Perfect Competition refers to that type of competition in which a large number of firms compete with each other for similar products and only a single price prevails in the market and not a single firm influences that price. for example Agricultural products etc.
- Monopoly: In a monopoly, there is only a single firm in the industry and no other firm can take entry into the industry and that single firm has full control over prices.
- Direct Competition: In direct competition, the firm belongs to the same industry deals in similar products, and is present in the same market also. For example: Coca-Cola vs Thumbs up.
- Indirect Competition: In indirect competition, the firm belongs to a different industry but provides the same services to the customer and satisfies their needs in the same way.
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Data Collection Techniques
- Primary techniques: The primary techniques are very effective in knowing competitors' insights with the help of interviews, gaining consumer experience with the competitors, and gaining insights from stakeholders.
- Secondary Techniques: The secondary techniques and mediums for collective data are Magazines, and newspapers, monitoring their products, services, and strategic moves and getting news about them.
- Social Media and Web Analysis: Monitoring every aspect of their new products, services, and strategic moves on their social media handles and research about them with their analytics and stats also helps in data collection.
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