A curling iron is a curling iron, right? It’s not a product you expect to undergo massive innovation. However, English inventor Sir James Dyson changed this concept with the Dyson AirWrap™. You see, the AirWrap combines a hair dryer with a curler, giving customers the ability to style their hair without the need for extreme heat.
To some, it might seem strange that Dyson, largely known for vacuum products, has gotten into the hair care business. Entering competitive markets like this can sound counterintuitive when your business is known for something else. But what Dyson has done here is actually rather brilliant. He’s taken his famous expertise (airflow) and created a blue ocean for his organization to inhabit and explore.
Using a differentiation strategy, Dyson’s come out on top of a highly competitive market. He discovered there was a high demand for this technology, and is now reaping the rewards of innovative thinking. In 2018, the business reported a 37 percent increase in revenue thanks to a line of new products like the AirWrap. As a result, this move added $4 billion to Dyson’s wealth.
When companies have low-quality products that don’t demonstrate innovation, they are likely to fail in competitive markets. Saturated markets are all too common because they feature businesses that all do the same thing and compete with each other over prices. Lower prices often lead to poor quality, and soon, you have a product that customers don’t want.
That’s why you should want to come out ahead in competitive markets. You do so through excellence and transforming customers’ lives for the better. It’s not always easy to do, but once you master it, you’ll be able to carry out your vision of changing the world.
In this article, learn how to rise to the top quickly and win over more customers in a perfectly competitive market.
Table of Contents
What Is a Competitive Market?
In a perfectly competitive market, a high number of companies compete with each other as they try to get the most customers to purchase their products or services. A perfect competition market has no clear leader, meaning one company is unable to set the tone for how the market is run. At the same time, a perfect competition market doesn’t have one dominant consumer to dictate the nature of the market. In a certain way, competitive markets maintain an equilibrium that can be hard to break. Some examples of competitive markets include toiletries, soft drinks, cereal, luxury goods, and commodities.
Characteristics of Competitive Markets
- Competition among consumers: While competition often focuses on the producers, in a perfectly competitive market, consumers will compete amongst themselves for specific goods and services.
- Limited supply: A competitive market also features a limited supply of products. This leads to more intense competition for both producers and consumers.
- Focus on property rights: Companies within competitive markets tend to be even more protective of their property, whether it be their physical stock or their intellectual property.
- Greater chance to make money: For better or worse, a perfectly competitive market offers companies the chance to make some serious money. Many businesses enter these types of markets for the express purpose of turning a large profit.
- Advantageous margins: Many companies in competitive markets deal with healthy margins. They can charge more while the costs of production go down. Both buyers and sellers could stand to gain from it.
- Faster responses: With so much competition, companies know they need to respond to their demands faster. Customers won’t put up with poor customer service if there are other readily available alternatives.
- Ample opportunities for business owners: Competitive markets are places where entrepreneurs can thrive. While the barriers to entry can sometimes be high, entrepreneurs may do well if they have innovative ideas they can bring to the table that will change the market structure.
How to Win Over a Competitive Market
1. Blue Ocean Innovation
Value innovation is the cornerstone of blue ocean strategy. We call it value innovation because instead of focusing on beating the competition, you focus on making the competition irrelevant by creating a leap in value for buyers and your company, thereby opening up new and uncontested market space.W. Chan Kim, Blue Ocean Strategy
Many people might look at a perfect competition marketing and think, “How can I possibly stand out above the crowd?” The answer is to swim away from the crowd and explore your own blue ocean. With a blue ocean strategy, you essentially become your only competitor.
Part of embracing this strategy is to get out of your comfort zone. Indeed, companies sometimes have to put a shock through their systems in order to get them out of routines and patterns. In Built to Last, Jim Collins writes, “Comfort is not the objective in a visionary company. Indeed, visionary companies install powerful mechanisms to create discomfort—to obliterate complacency—and thereby stimulate change and improvement before the external world demands it.”
You can create a blue ocean through innovation strategy. This is where you look at what the customer wants, not what the competition is doing. By following this line of thinking, you discover what customers value and where other companies may be missing the mark.
How you can innovate:
- Always focus on the customer
- Identify where the customer experience in other companies may be lacking
- Consider what needs the customer has that other companies aren’t fulfilling
- Create a solution to meet those needs
2. Building a Dream Team
Hire people who are better than you are, then leave them to get on with it. Look for people who will aim for the remarkable, who will not settle for the routine.David Ogilvy
Perhaps no team better personifies a dream team than the one actually dubbed the Dream Team—the USA basketball team that competed in the 1992 Summer Olympics. Helmed by the greatest basketball players in the world, the Dream Team steamrolled the competition on their way to win gold.
Companies can get ahead in a competitive market by building their own dream teams. It all starts with the hiring process, bringing people to the team with excellent skills in specific areas. If you cover all your bases, you’ll be able to tackle any challenge. From there, you need to make sure to put each person in the right position to succeed.
Ultimately, a dream team works best when everyone is in tune with each other and performing well in their roles. One may be an expert in supply and demand analysis, while another can carefully calculate market price factors. Underperformers could end up bringing the whole team down. As Collins explains, “Letting the wrong people hang around is unfair to all the right people, as they inevitably find themselves compensating for the inadequacies of the wrong people. Worse, it can drive away the best people. Strong performers are intrinsically motivated by performance, and when they see their efforts impeded by carrying extra weight, they eventually become frustrated.”
From there, you need to ensure the right systems and structures are in place to create a culture of growth. Support your employees, help them excel, and you will see them lift the team.
For more on hiring the best people, check out The Hiring Process: A 10-Step Guide For Finding A-Players.
3. Tell a Superior Brand Story
Marketing is no longer about the stuff you make but about the stories you tell.Seth Godin
A good brand story can go a long way toward getting people interested in your business. All I need to do is mention the name TOMS Shoes, and most people will instantly know what I’m talking about. Since 2006, TOMS has given away a pair of shoes for each pair sold, an act that has captured the attention of people all over the world.
A perfectly competitive market like the shoe industry is difficult to gain a foothold in. Think of all the major companies out there: Nike, Reebok, Adidas, Puma, and more. But TOMS has managed to grow and flourish thanks to its brand story. Not only do they tell their story with such enthusiasm, but they also make the consumer an active participant in their story. That pays dividends in the long run.
While some may try to get ahead in a perfect competition market through an emphasis on supply curve factors or logistical solutions, brand story is something that everyone can relate to. It humanizes a company and makes it something people will want to get involved with. When combined with a noble vision statement, it can be the deciding factor to get you noticed.
For more on marketing through your brand, check out this article: StoryBrand Increases the Effectiveness of Your Marketing.
4. Know and Meet the Greatest Desires of the Consumer
If you want to know how to sell more, then you better know why customers buy.Steve Ferrante
Growing in a perfectly competitive market requires a deeper understanding of who your customers are. Get to know them as much as possible. Find out what makes them tick. It’s not enough to simply learn the stats on demographics. You have to know them on an emotional level. Figure out what they’re feeling and how you can help.
Part of this discovery process involves knowing more about their lives and identities. What gives them meaning every day? Why do they go out of their way to make sacrifices? What or who do they live for? It’s through answering these questions that you can arrive at an understanding of who each customer is.
You get to know their pain points, and as a result, you learn how best to serve them. After all, serving is about lifting others up and helping them reach their potential. Once you figure out how to do that, they will develop a connection with you and your business. In a way, it’s sort of like meeting market demand, only it’s much more personal and, as a consequence, longer-lasting.
Read more about the importance of servant leadership.
5. Create a Roadmap
All you need is the plan, the road map, and the courage to press on to your destination.Earl Nightingale
In a perfectly competitive market, it can be easy to get distracted by what other people are doing. After all, you’re scrapping over customers, trying to find whatever edge you can. But with a roadmap, you can be certain to stay on course and always progress toward your destination, which would be the vision you have for your company.
The details of your roadmap are up to you, but they should indicate where you want to be over the course of the foreseeable future. This roadmap should show the destination points 5, 10, and even 20 years in the future. Once you know what those destinations are, you can then make more solid plans on how you will reach them. No amount of perfect competition can sway you from that path.
In my case, I started my own journey out with no money and hundreds of thousands of dollars in debt. However, I knew what I was good at: teaching. So I set a goal—a roadmap—of where I wanted to be a year later. Once I knew that, I started on the path, speaking every chance I could get, utilizing platforms like Facebook and YouTube. With a roadmap, I ensured I was always going where I wanted to and not getting distracted by unnecessary detours.
6. Putting in More Work Than Others
Hard work spotlights the character of people: some turn up their sleeves, some turn up their noses, and some don’t turn up at all.Sam Ewing
There are times when the best way to get ahead in a perfectly competitive market is to simply outwork others. Hard work and determination are difficult to quantify, but they often make the difference between being the best in your field or being stuck in the crowd. They allow you to catch up and even pass other businesses that may have had a head start on you.
Think of it like the parable of the tortoise and the hare. Hard work that is steady and consistent will outpace those who have occasional bursts of speed. The key to sustained success for some of the most effective people on YouTube is consistency. Look how often people like Tom Bilyeu, Jay Shetty, and Karlton Dennis post videos. It’s all about consistency, and that takes hard work.
If you keep at it, staying true to who you are, you’ll eventually hit a tipping point where you become so good and consistent that you end up growing like crazy. Combine that with a great product and some form of monetization, and you get a snowball effect that rewards you and others greatly. Ultimately, it’s about doing more than the other guy, and that will give you an advantage in a perfect competition environment.
Make It a Goal to Do Everything With Excellence
You should never settle for being second-best, especially in competitive markets. Do everything with excellence in mind. Choose what you want to be the best at, then go out and do it. Have it firmly in your mind that you will be number one and let your actions and their results speak for themself.
A perfectly competitive market may feel intimidating at first, but following the above tips will help you in your journey. Even when the threat of new entrants is low, you can still make waves through innovative solutions. Truly innovative people who rise in their markets aren’t interested in low quality or having a low impact. They have it in their heart and soul to be the best. They find a way to make that happen.
So, do what no one else is doing. Do what needs to be done but isn’t easy. Practice a strong work ethic to get the job done. No amount of perfect competition will be able to hold you back.
As an entrepreneur, you will need to have intrinsic motivation to be successful. Read the following article for more information: “What Is Intrinsic Motivation?“