Competitive Advantage: Why It's Good to Be Near Competitors

Updated on February 1, 2018
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Heidi Thorne is an author and business speaker specializing in sales and marketing topics for coaches, consultants, and solopreneurs.


Tale of Two Retailers

Was Target crazy? Walmart had already established a store in town. But then Target builds a location across the street from Walmart, literally just hundreds of feet away. Why would they do that? Wouldn't the close proximity ignite a head-to-head battle for competitive advantage? Possibly. However, it's more likely that Target understands that being near competitors can bring its own advantages to a business.

How is that possible?

The Monopoly Myth

Logically, being the sole monopoly supplier for a product or service seems like the ultimate competitive advantage. If customers want what the supplier sells, they have no choice but to buy, right? Wrong!

While true pure monopolies in today's complex world are rare and usually regulated in some way, holding a monopolistic market position does not guarantee sales because of:

  • Unlimited Alternatives. Customers are ingenious creatures. Can't get what they need or want due to limited supply or high expense? They choose something else... or even nothing else. Example: If cars were to magically disappear, people would turn to bicycles, trains or even walking.
  • Desire for Choice. Even if a business is masterful at getting customers to buy, customers (and people in general) like to feel like they have a choice, no matter how limited or illusory that choice is.
  • The Mall. The popularity of shopping malls has waxed and waned over the past decades. But the concept is still alive and well. As just discussed, customers want options. If they don't like an option from one competitor, they'll move to the next. And the closer those next competitors are, the more likely that a purchase will be made from one of them. That's why Target had no problem plopping themselves next to giant Walmart. They were creating a mall! And today we have the ultimate mall: The Internet.


Competitive Positioning

So how can a business, particularly a small business, position themselves near competitors, while still maintaining some distance?

  • Advertising. Advertising near competitors in print, broadcast and on the Internet, positions a business as an option for customers to consider. (Notice how many different auto manufacturers advertise during one hour of television!) As well, advertising can make even small businesses seem larger than they are and as a viable choice. Nowhere is this more relevant than with Internet advertising.
  • Networking. Having representation at relevant networking events positions a company as a potential vendor for customers. It also affords an opportunity to make friendly relationships with competitors for referrals should the need arise.
  • Strategic Locations. Most franchises will not locate another franchisee within very close proximity of another for good reason... they're too identical. However, most businesses that are not from the same company do have differentiating aspects that could make closer locations a reasonable choice. However, this should be done strategically and carefully. Hiring a marketing research consultant or business strategy adviser is highly recommended to assist in the process. Example: Auto dealers of differing manufacturers often locate near each other—again creating a mall of sorts for cars—since they know that customers shop around when choosing a vehicle.

Disclaimer: Any examples used are for illustrative purposes only and do not suggest affiliation or endorsement. The author/publisher has used best efforts in preparation of this article. No representations or warranties for its contents, either expressed or implied, are offered or allowed and all parties disclaim any implied warranties of merchantability or fitness for your particular purpose. The advice, strategies and recommendations presented herein may not be suitable for you, your situation or business. Consult with a professional adviser where and when appropriate. The author/publisher shall not be liable for any loss of profit or any other damages, including but not limited to special, incidental, consequential, or other damages. So by reading and using this information, you accept this risk.

Questions & Answers

    © 2013 Heidi Thorne


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    • heidithorne profile image

      Heidi Thorne 14 months ago from Chicago Area

      Thanks, John, for adding that to the conversation!

    • profile image

      John 14 months ago

      Technically, monopolies are not illegal in the US -- only violations of the antitrust laws to gain or maintain monopolies.

      I think this is the set of laws that Apple and Google and most of the rest of the tech giants were sued for a few years ago -- for artificially depressing worker wages through a 'no-poaching' and other policies.

    • heidithorne profile image

      Heidi Thorne 4 years ago from Chicago Area

      Hi Nell Rose! If only we all were loaded, we'd be rocking our industries. :) Maybe one day it will work out for you. Sounds like an interesting business idea. Thanks for stopping by & sharing. Happy Weekend!

    • Nell Rose profile image

      Nell Rose 4 years ago from England

      Great hub heidi, years ago I was going to open a small shop, mainly crystals etc, and I even was on the point of paying the first deposit, then another shop opened over the road, same as my idea, I am afraid I bottled it! lol! It wasn't because I was scared of the competition, it was purely the financial side, believe me If I had been loaded I would have gone in, all guns blazing! lol! voted up and shared!

    • heidithorne profile image

      Heidi Thorne 4 years ago from Chicago Area

      Mahalo, Joe! Aw, such nice words made my day. I guess I have a "keep your friends close, but keep your competitors closer" policy. Hope it's a lovely day where you are (nice here in Chi-town)!

    • heidithorne profile image

      Heidi Thorne 4 years ago from Chicago Area

      Thanks, purl3agony! I'm sure you'd find a unique niche for whatever business you decide upon. Your uniqueness will bring you competitive advantage. Keep us posted if you do make the leap!

    • heidithorne profile image

      Heidi Thorne 4 years ago from Chicago Area

      Howdy, billybuc! A biz consultant friend of mine was astonished at my low level of concern about competitors. Yes, they're a factor. But I just consider them part of the environment that I need to work in... or work harder in. Have a lovely day!

    • hawaiianodysseus profile image

      Hawaiian Odysseus 4 years ago from Southeast Washington state

      Heidi, a good morning to you from the Pacific Northwest!

      Your business savvy certainly shines through in this excellent address of competitive advantage--specifically, how proximity to one's competitor(s) factors into the equation.

      I have great respect for empowered women, and you, my dear friend, certainly are the poster child for that amazing group.

      Aloha, and have a terrific and productive day!


    • purl3agony profile image

      Donna Herron 4 years ago from USA

      Great hub! I've often toyed with the idea of opening my own business. This hub gives me some great food for thought. Voted up and pinned. Thanks for sharing :)

    • billybuc profile image

      Bill Holland 4 years ago from Olympia, WA

      Excellent points made, Heidi. When I owned businesses I didn't care how close the competition got; it just made me work harder and be more competitive.

      Hope you are having a great week.