In the last post, we established that unhealthy competition is one of the most underestimated reasons products fail. We examined how incumbents deploy the regulatory lever sometimes filing complaints with regulatory bodies to trigger investigations and delay market distribution. We explored how exclusive distribution arrangements structurally close doors against new entrants before they can build commercial momentum. Red Bull’s entry into the energy drink category demonstrated that survival is possible, but only for challengers who build differentiated positioning early.

This week, we will look at some other tactics incumbents use and how to counter them. When an incumbent cannot block entry through distribution or regulation, it frequently turns to the bluntest instrument available: price. The logic is simple. If the new entrant’s business case is built on a particular price point and margin structure, a sustained period of price reduction by the incumbent, even below profitable levels can destroy the economic rationale of the challenger’s market presence before it establishes consumer loyalty. However, note that new entrants also use the price logic to tackle existing players.

In some cases, the new entrants may have planned to make losses in their first few years to enter the market. This is precisely what happened when legacy carriers responded to the rise of low-cost airlines. Faced with Southwest Airlines’ growing route coverage, established carriers selectively matched Southwest’s fares on contested routes, absorbing short-term losses to starve the challenger of the price-sensitive passengers it needed to build load factor and profitability. The practice was ruled anticompetitive in some instances, but the commercial damage to several smaller low-cost entrants was already done. Matching an incumbent’s promotional aggression requires capital reserves that most new products simply do not have.

The answer to competitive aggression isn’t to become aggressive in kind, or to surrender to the antics of the competitor. It is to build a system that anticipates unethical practices and is designed to survive it. There are several principles that consistently separate products that navigated hostile competitive environments from those that did not.

First, ensure a secure distribution channel ahead of any competitive aggression in your route to market. A product that has already locked in distribution agreements, including secondary and tertiary channel partners denies the new entrant or a competitor the opportunity to foreclose those channels. Keeping your launch plans confidential as a new entrant is legitimate competitive discipline. It is not lying. Withholding information is different from giving false information. It is competitive intelligence. Move stock quietly. Keep your preparations confidential for as long as possible.

Second, build a regulatory posture, not just a regulatory file. This means going beyond minimum compliance requirements and building proactive relationships with relevant regulatory bodies before experiencing any unethical aggression from your competitor. When a competitor files a complaint, the response of a regulator who already knows your product, has reviewed your documentation, and understands your manufacturing process is categorically different from the response of a regulator encountering your brand for the first time through an adversary’s complaint. Compliance teams must be treated as strategic assets, not administrative functions.

Third, build consumer pull early. The fastest way to neutralise distribution pressure from unethical competitors is to create a consumer who asks for your product by name. Once a retailer’s customers are requesting a specific product, the calculus of exclusivity changes. Unilever understood this with its sampling and market activation campaigns in new territories. P&G understood it in its entry into new markets. Consumer pull isn’t just a marketing objective. In a hostile competitive environment, it is your primary defensive weapon.

Fourth, document everything. If you have evidence of anticompetitive behaviour such as a distributor who shows you the exclusivity clause in their agreement with a market player, a regulatory complaint whose timing is suspiciously precise, a ridiculous price reduction that targets exactly your price point, ensure it is documented. You may never use it legally. However, it gives your commercial and legal teams options, and it forces the competitor to reckon with the fact that their actions are being observed.
Understanding competitive dynamics is therefore not a luxury reserved for those with marketing in their job title. It is a leadership competency. The head of operations treats unexplained delays in clearing raw materials at the port as a possible signal of competitive.

interference, and the finance manager reads a regulatory audit timed with a product launch the same way. The brand manager who expects the competitor to watch him grow market share without them putting up an aggressive reaction is simply being naive. Your job as a senior executive is to anticipate competitors’ moves and be ready to earn your place in the market.

Oluwole Dada is the General Manager at SecureID Limited, Africa’s largest smart card manufacturing plant in Lagos, Nigeria.