All of us, at one time or another, are confronted with a low-cost or low-price competitor. The solution isn't to lower your prices and engage in a price war, because the result is lowered profitability for everyone involved.
So, what can you do to compete?
Before you decide on your strategy, you need to do some research, which should begin with both an objective analysis of where you stand in relation to your competition and an analysis of market needs and preferences.
Use the results of your research to determine what segments you serve and which ones the low-cost competitor serves, to better understand whether you are serving the same segment of the market or different ones.
If you are truly serving different parts of the market, then stay the course. But if you believe the low-cost competitor will eventually enter the segment you serve, now is the time to prepare for when this competitor and you are attempting to win the same segment.
The Best Defense Is a Good Offense
In 1799, George Washington wrote that "offensive operations, often times, [are] the surest, if not the only (in some cases) means of defence." That approach has been applied to various competitive theaters, including business.
The following five tactics will help make sure you'll have a fighting chance against competitors.
Laura Patterson is president and founder of VisionEdge Marketing. For 20+ years, she has been helping CEOs and marketing executives at companies such as Cisco, Elsevier, ING, Intel, Kennametal, and Southwest Airlines prove and improve the value of marketing. Her most recent book is Metrics in Action: Creating a Performance-Driven Marketing Organization.