Surviving cut-throat business competition

Competition is borderless and without boundaries across different businesses and segments.

Since the existence of business, so has competition. Nonetheless, the definition of competition has evolved through time along with the complexity of the business models in today’s global economy.

We have learned in economics monopoly, oligopoly and perfect competition, where competition is defined as direct and indirect in relation to the products or services which could be good or poor substitutes in the utilities derived from the consumption of the products or services.

Academic and theoretical pursuit aside, competition exists in many forms and has transcended across borders with globalization in our modern day economy.

A good example would be the renowned Manchester United football club, which is an English public listed company owned by Americans and has one of the largest global fan base.

Traditionally, English football clubs depended largely on its domestic fan base for gate receipts and purchase of club jerseys as well as related products for most of its revenue. Now, the business model has evolved with an increasingly globalized fan base which has provided opportunities for revenue growth in the sale of club jerseys and related products.

An interesting question comes to mind – Is sports like soccer an entertainment? Henceforth, it would be in direct competition with other forms of entertainment such as movies, concerts, etc.

Since the sale of club jerseys and related products is a major source of revenue, are the football clubs in the retail business in direct competition with other retail outlets offering similar clothing products?

In the stadium facility, it houses restaurants and outlets providing food and beverages especially during match days to the crowd of fans. Are the clubs into the food and beverage business too? Or perhaps this is a complimentary extended business looking for supplementary sources of revenue?

As a matter of fact, we have the Red Devils sports bar in Singapore which is the gathering place for the MUFC fans during match days to watch the live coverage. So these restaurants or sports bars are competing in the food and beverage business.

With technological advancement, we have live coverage of the football matches via cable and multimedia devices, and this has increased the potential revenue for the clubs. Notwithstanding the potential revenue from the television coverage and advertisements, we now have sponsors who seek the marketing exposure and coverage with the sponsor’s name appearing on the jerseys.

This has now expanded the scope of the business, and its potential revenue streams which come from a few different areas or businesses, putting the business in direct and indirect competition across a wide range of related and unrelated businesses.

In view of such complexity of the business model and how it has evolved over the last few decades, competition has to be redefined accordingly.

Fundamentally, competition should be defined as any business which is competing for the same source of revenue. In translation, this means any business which is competing for a slice of a targeted consumer’s spending is competition.

Any consumer has a limited spending budget for a wide range of expenses including basic necessities such as food and transportation, including leisure expenses for entertainment and travel.

Henceforth, a restaurant which is targeting this consumer is in direct competition with the cinema or theatre offering entertainment to the same consumer. Likewise, the football club this consumer supported would be in direct competition for the consumer’s spending with all other businesses including the supermarket providing the basic necessities.

It is with such complexity and growing intensity in competition that we have to redefine what competition really means. This has also heightened the need for better market and competitive intelligence for effective target marketing strategies.