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Do you go where your competitors aren't, or do you attempt to gain a foothold in the same area?

My competitor currently has a foothold in the part of town I am planning to expand to next. Does it make sense to go into the same area and try to bring on clients that they have not yet gotten on their platform, or should I bypass it entirely and start in another part of town where they currently do not have any clients?

I am selling a platform to small businesses.

11 Replies

Nevine Gulamhusein
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Nevine Gulamhusein Entrepreneur
Consultant, HR Resource Management Support at The World Bank
Hi Joshua,I think your competitor must have done their homework before deciding to move jnto your territory; ie a ready market. Therefore the clever thing would be to not only move into the same territory as u had previously envisaged but simultaneously explore new areas too, provided you have a proven product. Good luck. Sent from my Samsung Galaxy smartphone.
Michael Leeds
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Michael Leeds Entrepreneur • Advisor
CEO & Founder
Hard to answer without knowing more, but this is worth reading - relevant for certain kinds of businesses @ http://www.marketplace.org/2016/05/02/world/why-are-there-so-many-mattress-stores
Markus Siebeneick
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Markus Siebeneick Entrepreneur
Helping Dev & QA Teams Achieve CI/CD Through Test Automation at Sauce Labs
It really depends on your product.
The benefit of going into a territory that your competitor is already in, is that they probably have already educated companies about the market you are in which often makes selling easier.
If your product needs little education for people to see its value and buy, then it might be best to do your market research on parts of the city and determine if another area might be better.
Is your competitor a really good sales person or do you think that your product and your sales team are better?

Thomas J. Kaled
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Thomas J. Kaled Advisor
Business Development Consultant @ thomas.kaled@gmail.com
Keep your friends close and your enemies closer.

Triangulate.

Standing on the defensive indicates insufficient strength; attacking, a superabundance of strength.

Sun Tzu seems trite I know however they are principles that sustain.

Sidney Sclar
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Sidney Sclar Entrepreneur
SID the SECURITY PRO at sidthesecuritypro.com
This is an easy decision if one has been down this path like I have. There is no real reason to enter into the competitors area unless you can close and service the prospects for profit.




Whitney Zhan
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Whitney Zhan Entrepreneur
Founder at UWe Technologies
You may have to do some further study to answer below questions.
  1. How is the potential in the undeveloped part?
  2. Why your competitor stay away from it?
  3. Can you solve those issues concerning your competitor?
  4. What are your advantages against your competitor?
  5. Are those advantages strong enough to move your competitor's cake?
Once you have the answers, you may have the decision.

Aiborlang Andrew Chyne
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Aiborlang Andrew Chyne Entrepreneur
Bass Guitarist at Klevoans
Joshua, it is always good to start in a different town. It would be to your advantage. You might even get new clients in a new town as well. The longer your presence and the quality service you provide, the more demand you'll have in the market. It is always tempting to be in the major metropolitan area but one needs to keep a tab on the cost as well. A thrived township is more expensive that an upcoming one. Keep on having more liquidity on your kitty and when you explore a new area, it would always be adventurous and worth striving for.
Good Luck.
Steven Wolk
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Steven Wolk Entrepreneur
Principal, Strategic Investment Consulting
Joshua, you should always try to be a monopolist.

You can do that by getting a patent on a product that is so comprehensive that there can be nothing else like it. Or you can do it by being the only gas station at your exit. The more commoditized your product (i.e. the more it is like others), the more you should try to differentiate by providing different services (which could just be better customer service or an online way to order where competitors don't have one) or providing complimentary products in a "1 stop shop" approach that makes things easier for your client.

So to more specifically answer your question you need to know:
How well can you compete against your competitor (i.e. is your product / service better (assuming price is equal) and will it be perceived that way) and are you good at sales)?
Is the product you and your your competitor selling sticky? e.g. if it's a bank account which is VERY sticky (i.e. big switching costs for customers) and if your competitor has sold to most customers in their area, it may be difficult to get in.
Which town has a target market ready for and desiring your customers?
From an ops perspective, how difficult/expensive will it be to set up in each part of town (building facilities, sending salespeople, etc.)

Those are just a few of the questions. But remember, it makes no sense to compete on a level playing field or where your competitor has an advantage. Find where your advantage is and serve your customers.
Rob Enderle
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Rob Enderle Advisor
Owner, Enderle Group

As several have said here the answer is, based on limited information "it depends". For instance take Google and Apple. Google let Apple open up the market for screen phones and then came in at lower price and eventually got more share, however, Apple was the demand engine for the segment and couldn't afford to drive demand as they lost revenue so the segment stalled. This has been even more pronounced with tablets because Smartphones were partially supported by carrier subsidies. So you can, in a predatory fashion, steal our competitor's customers with a lower cost similar option but at some point, if successful, you'll need to pivot to own demand generation and your price point may not allow it.

One other place where this works is in retail. Apple picked the best location for their stores showcasing the mistake Gateway made with a similar retail strategy. Microsoft generally placed next to Apple and that gives them similar traffic but this showcased another weakness with Microsoft products, outside of the Xbox, they didn't pull people into the stores and the Xbox was too different from the other Microsoft offerings to provide strong sales synergy. So store traffic and sales still suffered. The idea was good the execution less than ideal.

Going where the competitor isn't is better from the standpoint of building a strong organization, this way the firm learns how to generate demand and isn't just undercutting the competition. It forces the firm to mature its sales and marketing efforts which I believe is critical to the long term health of the company. But the trade-off is higher risk and cost.

One thing about at least some overlap is it helps you focus not just on what your product does but what the competitor's product does and eventually you will have to compete for business so a blended strategy of primarily going where the competitor isn't but contesting some high value clients would likely help build a more balanced organization and force a better product/service.

Frieder Jung
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Frieder Jung Entrepreneur
CEO at CIM-TEAM Informática Ltda
During my business life, I always started with products, which nobody else could offer.

Example: When I launched SolidWorks in Brazil, nobody had a comparable product. AutoDesk dominated the market, and the customers had difficulties to understand the difference. It was a real challenge to sell the idea.

But you can enter into a market with competitors. You should position well your company and your product! To become a main player, you need about 30% market share within a planned time. Then you can - at least partly - set the rules of the game. If you stay below, you are a follower, who will follow price and conditions set by the larger competitor.

So think well, what you want to do and where you want to participate.
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