1. Spectrum of competition

• Competition is the rivalry that exists between businesses in a market as they seek to gain a share of the market and influence customers to buy their product/service
• Influence of competition on a business:

  • Innovation
  • Branding
  • Differentiation
  • Opportunties
  • Customer needs
• Competition influences innovation as a greater number of competitors in an industry forces businesses to innovate in respect of products, design and delivery and/or business processes
• Competition influences banding as businesses need to build and maintain strong brand images in order to grow market share and revenues
• Competition influences differentiation as businesses must create and maintain unique selling points that differentiate their products/services from rivals in order to maintain market share
• Market opportunities exist in a competitive market due to a perceived gap in the market, therefore businesses can create a niche market for their products and take advantage of opportunities to increase sales revenue
• Competition influences customer needs as businesses must focus on meeting the needs of customers in order to increase market share and secure growth
• Market share represents the proportion of sales a business has achieved, expressed as a percentage of the total sales in the market during a specific time period
• Market growth represents the increase in market size (measured in terms of quantity and/or revenue) for a product or service over time
• Market size represents the total value or quantity of products sold by companies in the market