Is a perfect place to be. Allegiant Air understands this. They don’t fly to a lot of major airports or compete with major carriers. Instead, they serve small destinations almost exclusively. As of October 2009, they had competition on only five of their 136 routes. They’ve seen insane growth as a result.
The same applies to marketing, packaging, customer service and sales. Anywhere your competition isn’t – any component they choose unanimously not to compete on – that’s an opportunity for you.
Does everyone else have a strict return policy? Good. Be lax. Be Zappos.
Does everyone else make mid-sized cars for the mass market? Good. Be Hummer or Smart Car.
Never mind competing for a share of the pie. Go make your own pie. Find an under-served (or completely un-served) market and make it yours exclusively.
You can start by assessing the “brand personality” of your competition, then making your marketing say the opposite. Think of Geico. In an industry saturated by “competent” and “compassionate” messages from the likes of Allstate and State Farm (“good hands,” “good neighbors”), Geico chooses to be amusing (“so easy a caveman can do it”). These companies are all offering essentially the same thing, but Geico manages to differentiate itself as the cooler, more accessible brand. Go and do thou likewise.