June 11, 2018
This is part 1 in a 3-part series on facing the competition
Is it getting hot in here?
The pace of change in manufacturing today is staggering. New markets emerge, seemingly, overnight. Micro industries and niche applications can light up the forecasts–then disappear—in a blink, leaving you with shelves of obsolete inventory. Trends come and go. Technology needs to be continually refreshed, and yesterday’s projections are ancient history before you even hit SEND on the report. But, the greatest danger of this break-neck speed of business isn’t in recognizing what’s ahead; It’s seeing who is sneaking up from behind.
Impact of speed
Today, fast-gaining competitive threats can blindside you. Start-ups can swoop in claiming market share and stealing customers before you even recognize them as a threat. Thanks to crowd funding, angel investors, global logistics, and e-commerce, new companies can set-up in a garage and ship world-wide within a fraction of the time business launches once took. Innovative technologies accelerate the competition’s launch-rate even further. Tech-savvy entrants to the market can use Virtual Reality to visualize prototypes, 3D printing to create personalized components, and digitally connected supply chains and logistics companies to ship products—same day.
Why is competition heating up?
Low-cost threats. Competition is increasing and becoming more challenging to fend off. Today’s global economy means that competitors from around the world now can become viable threats. Competitors from emerging nations often come to the table with pricing advantages, including a workforce accustomed to lower wages, fewer safety mandates, and minimal workforce conditions and benefits. These influences can bring overhead costs down and allow the manufacturer to flood the market with low-cost goods, bringing prices down across the industry.
Brand knock-offs. Some countries are also known for their lax views on rights to proprietary concepts, patents, and copywrite materials, turning a blind eye to companies making knock-offs and brand-name forgeries. These issues all lead to increased competitive threats
Prestige products. It’s not the just low-end of the pricing spectrum that is changing competition. In some industries, a demand for high quality, customization, healthy or socially-conscious goods has brought boutique suppliers into the competitive mix. Craft beers, personalized fashions, organically grown protein substitutes are among the offerings. Even if the price is higher and the product is only available through exclusive channels, highly passionate consumers seems willing to support their convictions with their wallet.
Transparency. Merchandise that supports special causes or reflects a view are among the wave of high-end options today’s consumers seek. Led by millennials, socially conscientious consumers are often demanding products with political and ethical transparency and are willing to spend extra for “special interest” niche products. That means more pop-up competitors vying for the available dollars.
Servitization. The Manufacturers of goods are not your only threat. With the growth of IoT technologies, servitization is a growing trend substantially changing the competitive landscape. Now, instead of selling competing products, your competition may be offering outcome-based services that achieve the desired end results. In this case you need to compete against value-added concepts, much harder to do.
What can you do?
With threats popping up from emerging players—as well as mature contenders who experience a revitalization of new technology, maintaining market share can be difficult. You must be vigilant and ready to respond. Just as technology helps the new contenders step up their game, it also can help you identify early warning signs of eroding market penetration. Fortunately, there are also corresponding tactics you can deploy to boost your competitive edge.