In business, the aim is to compete against other individuals and businesses to win the customer’s attention, approval, willingness to part with the money, and, ultimately, their cash. In the case of a business that sells products, competition includes a situation where other products are available to your customers that are the same or similar to your product and that may induce the customer to buy the other product or not buy your product. Those individuals or companies offering the ‘other product’ (i.e. the competing product) are commonly referred to as ‘the competition’. Competition need not be about products, but could be about getting support, friends, people’s attention, votes, a mate and much more. But here our focus is on getting the customer’s commitment to buy. Competition and the opportunity to compete freely against others in business is a cornerstone of our democratic society.
Whatever product you choose to sell, others may decide to sell the same product, and you are therefore competing with these others for the customer’s purse. If your product is exactly the same, and the other person/company sells their product cheaper than you do, then the customer is likely to buy from them. With some many products to choose from and limited financial resources, customers are often heavily swayed by price and price is thus a major factor in succeeding in business. But price is not the only factor that will sway a customer. Again, assuming that the products are identical, and assuming the context of a market stall, if you are the friendlier sales person, with a pleasant disposition, a nice non-threatening banter and a broad smile, the customer may be swayed to buy from you rather than your competitor, even if their price is lower (assuming it is not a lot lower). Personal factors can play a key role in business success. Similarly, a pleasant and attractive, clean and bright market stall, may entice or convince the customer to buy from you, even if you are a little more expensive. The selling environment makes a big difference in business success. Perhaps you are willing to exchange the product if the customer takes the product home and finds the product not suitable (it doesn’t t, f
example) and it still remains resellable, while your competitor with the slightly cheaper product is not willing to do so. In this instance, additional services or guarantees that something works (and can be exchanged if it does not), may encourage a customer to spend more.
So far, we have assumed that the product remains the same. Perhaps the best way of differentiating a product is based on the product attributes, include the product’s look and feel, its functionality, its recyclability, its size, weight, its quality, etc. Product features are perhaps the main factor for differentiating products and being able charge different (and higher) prices.