I just read a great article on HipMojo.com about the "The Wisdom of Not Following the Crowd" and it's worth the read.
There was a quote from Jack Welch in the article and I'm paraphrasing here ... "if you can't be either #1 or #2 in your market, then get out of that business". Now, there is no denying that Jack Welch is a superstar CEO, he made money for himself, the board the the stockholders, but I don't agree with his statement completely. The quote is evidence of how Jack Welch defined success - but that's not everyone's definition of success [either in life or in business].
As a business person, you can decided that "winning" in your market is the single best thing you can do. And if that's your motto for business, then you had better know the competition better than they know themselves. You should also get ready to use lots of sports metaphors when motivating your employees - and maybe a few ex-coaches to come speak with your sales people at the next sales conference.
But maybe you're not the competitive type and would rather "find" your market space [more of the Blue Ocean strategy]. In this case, you're looking for where the competition is not -- and where there is a void for the market. I'm more of a Blue Ocean kind of person - finding the space in between is very interesting to me. And in this situation, you are the leader of the market, but if you're successful, then others will follow. The key is being true to your beliefs and true to your market and true to your customers.
Success will bring competition. If you believe in winning - then that competition is a threat to your survival. If you believe in Blue Oceans, then maybe it's time to move out into open waters and find the next opportunity. Either way, knowing your competition only helps in your decision making.