Lesson 4.3 Know Your Competition Goals Explain the importance of knowing and understanding your competition. Prepare a competitive analysis. Describe strategies for maintaining customer loyalty. Chapter 4

Vocabulary direct competition indirect competition competitive analysis Chapter 4

Please complete the following slide in Google Classroom and name the new document “Focus on small Business” Work in your group. Chapter 4

Chapter 4

Impact of Competition You should always watch the competition. Offer products that are of equal or better quality that sell for the same or lower prices.

Impact of Competition Example: When personal computers first came on the market, Apple computers were the biggest sellers. Then, IBM developed a personal computer, and soon thee were many other manufacturers of personal computers. Today, customers have many choices. All of the computer manufacturers work hard to persuade customers to buy their product. Chapter 1

Understand the Competition Businesses typically enter into areas where there is competition. For this reason, new businesses need to identify some special customer need or want that is not being met. Example: Customers may be happy with the product, but may be unhappy with the prices A customer need is going unmet by a competitor, indicating a possible opportunity for an entrepreneur Chapter 4

Know the types of Competition Competitors are categorized as: Direct competition Indirect competition Entrepreneurs need to find ways to identify and differentiate themselves from both types of competition Chapter 1

Know the Types of Competition direct competition a business that makes most of its money selling the same or similar products or services to the same market as other businesses Chapter 4

Know the Types of Competition Direct competitors may also be located far away Example: Carmen publishes a travel newsletter about Ireland. Carmen’s target customers live all over the U.S. Her competitors include five other newsletters about Ireland as well as several travel websites. Although Carmen’s competitors are located far from her, they compete for the same target customers.

Know the Types of Competition Secondary data resources can give you information on your direct competition If your direct competitors are in the same geographic area as your business, you could use: Telephone directory Internet Search Local Chamber of Commerce Chapter 1

indirect competition a business that makes only a small amount of money selling the same or similar products and services to the same market as other businesses Locating your indirect competition is more difficult than finding direct competitors Chapter 4

Know the Types of Competition Example: A large department store may stock some of the most popular products carried by a privately owned specialty shop. The department store offers many other lines of merchandise as well. It makes only a small amount of money on the same items that the specialty shop offers. This makes the department store an indirect competitor to the specialty shop.

Large Retailers Large retailers like Walmart bring lower prices and jobs to a community Many small businesses find it difficult to compete with large businesses Some of the smaller, locally owned retailers often are forced out of business

large retailers Reasons that make it difficult for entrepreneurs to compete with large retailers include: Large retailers can keep larger quantities of products in stock. Large chains do not rely on a single product line. Large companies have a larger advertising budget. Chapter 4

Why is it important to understand the competition your business faces?

Competitive Analysis competitive analysis identifying and examining the characteristics of a competing firm Analyzing the strengths and weaknesses of your competition will help you identify opportunities and threats against your business Chapter 4

Follow these steps to begin your competitive analysis: Make a list of your competitors. Summarize the products and prices offered by your competitors. Use the Internet, Yellow Pages, and drive through the area in which you plan to locate your business in order to identify competitors Talk to potential customers to find out with whom they are currently doing business Chapter 4

List each competitor’s strengths and weaknesses. What does the competitor do that no one else does, or what does it do better than everyone else? Where are your competitors located? Determine if their location is better, worse, or about the same as the planned location for your business. Compare your competitor’s facilities to the planned facility for your business. Are their facilities better, worse, or about the same as yours? What attracts customers to your competitor’s facilities? Chapter 4

Find out the strategies and objectives of your competitors. A copy of each competitor’s annual report would have information on strategies and objectives Competitor’s websites or advertising can give you clues about their strategies and objectives

Identify threats to your business from the competition. What would make a customer choose the competition over you? Examine your competitor’s strengths. How will you compete with these strengths?

Chapter 4

Answer the following questions in Google Classroom and name it “4.3” What is the purpose of a competitive analysis? List two competitors for your competitive analysis (you are thinking about your business). Explain at least two things you would like to find out about each competitor while performing a competitive analysis. Chapter 1

Maintain Customer Loyalty Listen and Respond to Feedback Continually ask for and respond to customers’ needs. Once you get the customers, you must make sure they remain loyal to you and keep coming back. Chapter 4

Other strategies for Maintaining Loyalty calling customers after sales are made to ensure satisfaction convenient hours easy return policies store-specific credit cards personal notes or birthday cards frequent-buyer programs Chapter 4

What are some strategies for maintaining customer loyalty?

PERFORMANCE INDICATORS EVALUATED Develop a convincing multimedia presentation. Recognize and respect copyright issues. Develop and support a theme with a multimedia presentation. Chapter 4

Make use of and implement innovative technology in a multimedia presentation. Set priorities and manage time to prepare and present an effective multimedia presentation. Chapter 4

THINK CRITICALLY Why must the Super Bowl use a multimedia presentation to attract new corporate sponsors? What kind of music or visual images would be good for a Super Bowl multimedia presentation? Chapter 4

Why must the presentation emphasize the potential return on investment for corporate sponsors of the Super Bowl? What is the value of being associated as a financier of the Super Bowl? Chapter 4