Competitive Factors (SQA National 5 Business Management): Revision Note

When one company launches a successful product, rivals often copy it with a cheaper or slightly altered version

This reduces the original business’s advantage unless it continues to innovate or strengthen its brand

Walkers Shortbread is internationally recognised for its Scottish biscuits

Its success has led to supermarket own-label versions that copy the style and packaging of traditional shortbread but sell at lower prices

Businesses often lower prices to win more customers

This is good for consumers in the short term, but risky for firms, as profits may shrink

Small businesses are often unable to match the discounts offered by larger rivals

Larger competitors may use their buying power to survive on smaller profit margins

Supermarket chains such as Aldi and Lidl have challenged Tesco and Asda by cutting prices sharply, forcing bigger rivals to offer price-matching deals

Firms try to stand out by making their product or service unique, rather than just competing on price

This could be through branding, higher quality, better customer service, or innovative features

Differentiation helps businesses build loyalty and charge higher prices

Mackie’s of Scotland differentiates itself with a strong reputation for local produce and sustainable practices

This helps them compete against global ice cream brands like Wall's

Businesses invest in advertising and promotions to attract customers away from competitors

Common methods include social media marketing, sponsorships, loyalty schemes, and direct marketing

If rivals don’t respond, they risk losing sales and market share

Edinburgh-based clothing boutique Nelly McCabe uses social media campaigns and personalised shopping experiences to attract customers

This helps it compete with larger fashion retailers