Entrepreneurial Strategy

Think Like Your Competitors

Written by James Garvin for Gaebler Ventures

Game theory and strategy is a common and popular method for analyzing how firms make strategic decisions. One of the most common strategies addresses how established firms must decide is how to compete against emerging companies and emerging threats.

As an entrepreneur you are in a unique position compared to established competitors as you are able to move more quickly to exploit market opportunities.

However, established firms understand that they need to spend resources and money to combat emerging threats such as new companies in order to protect their dominant position in a given market. As an entrepreneur, rather than solely focusing on yourself and your firm, it is critical to put yourself in your competitor's shoes to understand what to expect from them when they do come after you and your business.

Many entrepreneurs fall into the trap of thinking that they are too small for larger competitors to worry about, but falling into this mindset is a dangerous trap. Established firms are always looking at emerging firms and emerging threats and identifying ways to remove them from the market as early as possible to avoid any possible future risks. Knowing how your established competitors will react as your company emerges will help you make strategic decisions that will throw your competitors off and help you avoid direct competition with established leaders.

Under Armour is a firm that went up against Nike, Reebok, and other much larger and established athletic brands and has proven that it deserves to be side by side these companies in the athletic retail businesses. When Under Armour established itself as a threat to Nike and the other leading athletic brands, they quickly combated the emerging company by launching their own wicking clothing line that had similar functionality and product attributes as Under Armour's. How could Under Armour compete with the likes of Nike who just released a similar clothing line?

The answer was to do things that Nike wasn't doing or things that Nike wouldn't expect Under Armour to do. While Nike was focused on paying high-profile athletes such as Michael Jordan and Tiger Woods millions of dollars to endorse their products, Under Armour focused on penetrating the collegiate athletic market by providing free samples of their clothes and even sponsoring several football teams. Because they built personal relationships with collegiate athletes, many of these athletes spread the word about Under Armour and their great athletic apparel.

Word of mouth marketing is the most powerful way to build a brand and Under Armour was able to grow through word of mouth marketing by establishing powerful relationships and distribution channels with college athletic teams rather than trying to sponsor pro athletes and compete in the same channels as Nike.

As an entrepreneur, it is critical to assess how your competitors will react and be prepared to make strategic decisions and moves that your established competitors cannot or will not copy. Remember, you and your firm are small. You have fewer resources, less money, and less brand power. Focus on expanding through creative channels that are too small for your competitors or better yet through channels that your competitor cannot or will not enter due to conflict of interest.

As you become an emerging threat to established firms, expect them to combat you by trying to compete directly with you. It is your job to understand how you can maneuver and counter your competitor's moves so as to avoid direct competition that positions your firm to continue to expand.

James Garvin began his education studying biotechnology. In recent years he has turned his interest in technology to helping two internet startup companies. The first business was an online personal financial network and the second was an e-marketing platform created to help entrepreneurs demo their web sites. Currently a student at University of California Davis, James is spending his summer incubating two new online businesses and writing about his entrepreneur experiences.

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