Competition in business terms is where there are other companies or firms in the same sector as you and they will compete with you to try and get their product to do better than yours. They would change the product, price, place and promotion of their product to get it to sell more effectively.
For example to change product they would need to spend some time and effort of making their product service different from the competition this is differentiating. They could concentrate on quality, use better material and tailoring the product to their customers. They could also differentiate on availability for example opening long or unusual hours.
If they changed on price, they would set a price that will allow a good profit and good value for money, they could use pricing methods such as competitive pricing – this is when a firm looks at the prices competitors are charging and bass their prices around this.
If they changed on place they would have to sell their product at the right place and at the right time
If they changed on promotion, they would need to promote their product in a way so that they can get a message across to the customer so that the customer reacts by buying the products. There are lots of different promotion techniques such as changing the packaging, improving personal selling, public relations, sales promotion and advertising.
My business will be affected by competition in the following ways:
* By place there will be other sports shops in the area that would be competing; they could also be placed in a more strategic area such as next to the parking lot. Depending on where my shop is placed compared to others it could drastically change the number of people entering the shop.
* By Promotion there will be other sports shops advertising themselves in a variety of places some could have more strategic advertising such as on a bus that is used a lot by local people. This could affect my shops public awareness.
* By price they could be other sports shops doing offers on their such as buy one get one free and selling their products using good communication skills. This could affect the number of sales I would have as the customers will go round all the sports shops before deciding which shop as the best price/offer.
* By product there could be other sports shops that are stocking the latest range of products or products of better quality. This could affect sales, because if we don’t have the latest products or the best quality we will be branded by people as cheap or nasty.
I will overcome the effect of competition by doing the following:
* In place I will try to put the shop where the most customers are likely to come, places like next to the parking area or near the bus stop or near the train station.
* In Promotion I will advertise my shop in the areas were people are most likely to look at for example on the way to town or on the bus shelter. I will also do local events to promote my sports shop and I will also sponsor events to generate public awareness
* In price I will do lots of deals and offers to have good value for money and get more people to buy from my shop using the deals I have buy using promotion.
* In Product I will sell more of the newer products at cheaper prices and also sell good quality products and also advertise that I am doing this so I wont get branded badly by the public.