No matter the market, customers have choices. Understanding your competition and how you succeed against them is critical for growth.
First, it is important to consider all of the competitors for your business. Some of them are not that obvious . . . There are three categories: direct, indirect, replacement.
For example, let’s consider the types of competitors for a single location daycare business:
Direct competitors sell similar products/services to you at similar prices
Direct competitors would be other single location daycare businesses in the area. You may also include chain daycares because they would have a similar price structure and offer a similar environment.
Indirect competitors offer different products/services but target the same customer group
Indirect daycare competitors would be park districts, faith-based daycare and in-home daycare. They may offer shorter hours of operation, different environments or more competitive pricing.
Replacement competitors propose a totally different solution
The classic replacement competitor for daycare is the stay-at-home parent. Note - It is difficult to compete against replacement competitors so you need to monitor their presence and traction.
Quickly brainstorm your competitors in all three categories. Then for each competitor ask yourself two questions:
1) How is this competitor successful?
2) When given the choice, why do customers choose my business?
Now that you have a better understanding of your competitors, it is time to use that knowledge. A few ideas:
• Expand your product offering to differentiate yourself from your competition
• Enter into a new market that your competitor serves
• Grow your current market share by marketing more effectively
So, why do customers choose you?