... Dealing with competition, understanding your competitive advantage in relation to rivals in the marketplace

In one of my business development workshops for creative entrepreneurs, there were artists, musicians, advertising professionals etc; by coincidence there happened to be three designers in the room. It was interesting to watch their reaction as people in the group introduced themselves. The designers’ reactions were defensive because they each perceived the others as competitors. However, by the end of the day they were good friends, swapping business cards and promising to send customers to each other.

This wasn’t because the workshop magically made competition disappear; it was because they weren’t actually direct competitors in the first place because each had a different speciality. They each had established themselves in a particular market niche and were pleased to be able to send customers to the other, more appropriate, designers.

This phenomenon applies across the creative industries in subsectors such as cultural heritage, performing arts, crafts and music. The more specialist your focus, the fewer real competitors you will have. Yes, the size of the market will be smaller too, but so will the number of suppliers. It’s good to be the biggest fish, even if the pond is smaller. In any case, very few creative businesses need a ‘mass market’ and most would not have the capacity to deal with thousands of customers anyway. "The mass market has been replaced by a mass of niches," says Jeff Jarvis, author of ‘What Would Google Do?’.

Often, especially in the early years of business, creative entrepreneurs try to appeal to many different types of customer and offer a wide range of services or products. So we see web design companies also offering graphic design, printing services, copywriting, and marketing consultancy. Their theory is that the bigger the net they cast, the more fish they will catch. Actually, the opposite is the case. This ‘jack of all trades’ tactic means that there is always a specialist better than them in every field in which they compete. Being tenth best in ten areas isn’t a clever strategy. Which customer wants to engage the tenth best supplier?

Instead of winning more customers, creative people who try to do everything make things worse by setting themselves up against more competitors, most of whom are better than them in the specialists’ own chosen fields. It’s a recipe for stress and business failure.

This desperate position often prompts people to react by lowering prices to undercut competitors. But competing on price isn’t feasible unless very thin profit margins are counterbalanced by very high sales. It works for commodities such as petrol or beans, but it’s not generally a good idea in the creative sector.

So it’s much better to choose a niche in which you can be top-class and can therefore command a high price.

Clients’ perception of your offering dictates your ‘market positioning’, in other words your place in the market in relation to competitors, as seen from the customers’ point of view. What’s your position?  Seth Godin says “If you can’t state your position in eight words or less, you don’t have a position.” Trying to be everywhere is no position to be in!

Like the designers mentioned earlier, if you have a clear and strong position, then others in your field don’t compete with your enterprise but actually complement it. This opens up the possibility of “co-opetition”, a blend of co-operation and competition, which is a strategy of collaborating with apparent rivals for mutual benefit. For example two rival art galleries in Vietnam which competed for the same tourist dollars reframed their local situation and put it in a global context. As a result, Tran Thi Anh Vu and a competitor collaborated to set up an online gallery to sell both galleries’ works internationally.

Other creative clusters work on the same principle, ie to combine forces to attract more customers so that everyone wins. In Hollywood, Bollywood and London’s West End, actors come together to play their own specialist part in a bigger picture so that everyone wins.

When you focus on a niche where you dominate competitors, others in similar fields are no longer rivals but instead become ideal collaborators.

Copyright © David Parrish 2009. www.davidparrish.com