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APRIL 13, 2000

When a Big Competitor Enters Your Market

An interview with Debra Koontz Traverso, author of "Outsmarting Goliath"


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It's every entrepreneur's worst nightmare: After developing a successful product and building market share, a large competitor comes along, with all the finesse of an elephant, and stomps all over your success. Can you expect to compete with such a behemoth, which has more money, staff, connections, and resources than you can dream of?

Don't give up, advises Debra Koontz Traverso, author of Outsmarting Goliath: How to Achieve Equal Footing With Companies That Are Richer, Older and Better Known(Bloomberg Press, $19.95). A Frederick (Md.) business consultant and adjunct professor at Harvard, Traverso says small guys can stay in the game -- provided they're nimble, creative, and focused. Traverso spoke with frontier's Larry Kanter. Here are edited excerpts from their conversation:

Q: If a large competitor enters your market, what can you do? 

A:  If you can't compete pricewise, you're going to have to add something at the point of purchase, something to differentiate yourself...that compels customers to buy. It requires an extensive communications effort, and you're going to have to do it in some nontraditional ways. Can you team with another product? Can you add a freebie? Can you narrow your focus to a particular demographic group -- kids or health-conscious consumers? Whatever you do, you're going to have to be seen and be remembered.

Q: In such a situation, is there an advantage to being small?  

A:  When you're small, it's generally easier to react to customers. I've seen large corporations take months and months to pass a basic customer policy. Small companies have the benefit of being able to serve a customer based on the person rather than a set policy.

Q: But there has to be a downside, right?  

A:  A lot of it has to do with the mentality of small-business owners. If you the study [them], you learn that they are very different. Many of them are great at putting together ideas and getting things started and developing a product. But they're not very good at managing their own business. And that becomes a problem when trying to compete. That said, I still think small companies have an advantage. A lot of it has to do with marketing. They also have the flexibility to cater to changes in the market.

Q: For instance?  

A:  I love the example of Books of Wonder [a Manhattan-based children's bookstore]. When a Barnes & Noble opened four blocks away, sales [at Books of Wonder] actually went up, and it was all because of their increased emphasis on customer service.


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