Thinking about your competition

Competition abounds in continuing education, and we can get too caught up in what Nearby For-Profit University and Small But Aggressive Private College is doing.  Benchmark with balance. Michael Hess has some good advice in CBS Money Watch.

Here are some common ways that competition can steer you the wrong way, and the alternatives:

Pricing: This is probably where competitor-obsessed decision-making is most dangerous, especially for small businesses. Author Mark Stiving said it best: "Pricing is not a sustainable competitive advantage." You may be desperate for sales, but it does you no good to get sucked into price competition that erodes your margins and might even put your business at risk. You might win some battles but lose the war.

The Alternative: Let others race to the bottom. Better to price where you need to be to run a healthy business, maximize the value of your product and company to customers, and only take business that is good for you. If you can't get the business you need without risking your financial health, there is either something wrong with what you're doing or you're in the wrong business. My father's favorite expression in running my family's successful, 50-year-old business was "Volume is vanity, profit is sanity."

Product: Companies that heavily weight product or service decisions based on what their competition is doing usually end up chasing the pack rather than leading it. Competitor comes out with a bigger widget, you come out with a bigger widget. It's possible to survive doing this, especially if you bring other value (a bigger widget that works better, etc.), but you risk being too late to market and always behind the curve, being perceived as a "me-too" company with less value to the market, or making/offering the wrong products or services. Just because other companies are doing it doesn't mean it's right for you.

Comments

Anonymous said…
Tuition increases are a common occurrence among public and private universities. I like this article because it speaks to exactly what I was thinking about tuition rates, especially in the private university sector. The best way to beat the competition is to be the lowest priced offering the highest quality product! Many will say it can't be done; I beg to differ.

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