How smaller companies can outperform larger companies with deep pockets

darrinkeller — Fri, 12 Feb 2010 02:52:25 +0000

What do you do if you find yourself competing against a much larger, more recognized competitor? You probably already know the answer: you focus on customers, not competitors. If you can meet the needs of your customers better than anyone else, you'll keep them longer and be able to charge more. It's kind of like becoming a specialist such as when a doctor chooses a focus in order to charge more for his/her specialized knowledge. The key is to understand the market potential, e.g., size, before you commit to a specific focus.

In addition, here are three questions that you need to answer:

What are your differentiating capabilities? How will you be different or better than competitors? You should try and stay away from "lower cost" as that has scalability issues. What changes can you make to solidify your position?
Who are your customers? Keep in mind that your perception of who your customers are may not be accurate. Take the time to meet with your customers. Ask them questions about other ways you can meet their needs. What made your existing customers choose you over competitors?
What expansion plans or diversification can you employ without sacrificing quality? There may be a temptation to do more than you could reasonably do. Avoid this as it could lead to your undoing.

For additional details, ideas and a case study of what could be done, take a look at "When New Products and Customer Loyalty Collide" by Regina Fazio Maruca and Amy L Halliday in the Harvard Business Review from November-December, 1993.

Technology Consultant » competing with large companies

How smaller companies can outperform larger companies with deep pockets