How researching your competitors activities can give you Competitive Advantage
To gain and keep on achieving Competitive Advantage in your market, you must have a thorough knowledge of your competition. This article explains how researching your competitors activities can give you Competitive Advantage. It is important you do at least these three things:
- Understand how your customers and potential customers view the competition
- Identification of the strengths and weaknesses of your competitors
- Provide you with a great starting point for developing effective competitive marketing strategies in your target market.
But this is all well and good, and it sounds like a great idea. But where do we start? The first action is to identify who your competitors are. Any service provider or product similar to yours within the same geographic region can be classed as a direct competitor. And many businesses geography barriers are reducing at an alarming rate all the time. Think Boots and Superdrug.
And any business offering something different or something that customers can use instead of yours is considered an indirect competitor. Think a train and intercity coach. So when determining if someone is your competitor, you should ask:
- What product or service are they offering?
- Are they offering that product or service within your market?
- Are they operating within the same geographic region?
Ok, but how many competitors do we need to look at
How many competitors you need to look at is dependent on several things. Such as what you want to do with the information you find, how competitive the industry is and how easy it is to name all of the competitors. If you can easily name your competitors, then it’s wise to analyse each one of them. But if you are in a market with many competitors, your job becomes a lot harder. And you can save yourself a lot of time by following the 80/20 rule. In a fragmented market, it tends to be that 80% of the revenue is achieved by only 20% of the competitors.
However, never take this for granted, and you should first take a look at the market as a whole. Then dig down. We recommend a pyramid approach. Your most essential competitors sit at the top of the pyramid. The lower down the pyramid, there are more competitors. Midway down, you will find upcoming competitors, those on the decline and mid-sized companies. At the bottom are all the small competitors, less of interest or you know little about.
The top of the pyramid is where you do your deepest Competitive Intelligence. And the best place to utilise external assistance. We can dig deeper without fear of compromise. In the next layer, you do a reasonable job of making sure you know everything about them. At the bottom, you ensure you keep an eye on them by monitoring and price checking.
Selection criteria
It’s wise to determine your selection criteria for the pyramid and agree on when a competitor should move up or down your pyramid. Before you start looking for your sources, bear in mind what you need to know. You need to be able to answer the following questions about your competitors.
- What’s the full range of products and services they offer? Are their products aimed at satisfying similar target markets to you?
- How well established are they?
- Are your competitors making money? Are they profitable?
- What’s their growth rate?
- What’s their market share?
- Are they expanding or scaling down their operations?
- What’s their sales, pricing and marketing strategies?
- Have there been any changes in their target segments? What do their customers think of them?
- What is the quality of their products and services?
- Do they market on price, durability, style, brand name, customer service, convenience etc.?
- How do they compare to your own business?
- What’s their competitive advantage?
- And how can you differentiate yourselves from them?
The starting point is by looking to secondary sources. Secondary source information is collected for a specific purpose and published “opensource”, usually on the web. Some great, fundamental, and obvious secondary sources are advertising copy, product information, Linkedin, websites, and sales brochures.
Product information
These sources provide a great deal of product information so you can learn the basics of how your competitors are positioning their products and themselves. What features and benefits are they’re using to sell their products or services. These basic secondary sources give an idea of:
- How and what are your competitors planning for the future?
- How their organisation is run
- Their new product information or innovation
- What they are saying about their new product
Product reviews are valuable for revealing a competitor’s product strengths and weaknesses. Business databases can be accessed for free at most public and college libraries with business resources.
How to do Competitor analysis
1: Set your analysis goals
2: Define your market
3: Create a list of your direct competitors
4: Conduct secondary and primary research
5: Analyse competitors
6: Summarise competitor product and market strategies
7: Compare and contrast competitors with your products
8: Maintain up to date competitive analysis
Sources
Then there are the government sources for such information as the annual financial reports, surveys, industry directories and national and local statistics. If your competitor is a publicly-traded company, its reports may be available on their website or via the exchange they trade on. And perhaps there will be analyst reports available too. Then there are your own sales teams. They probably have more access to competitive information than anyone else.
Customers can show your sales team, literature, contracts, price quotes and other information from competitors. They also interact with industry peers, And will often learn what their rivals are doing or hear the gossip. Your trade associations compile and publish industry statistics and reports on industry news and its leaders. Many will sponsor trade shows and network meetings, where you can see firsthand what your competition is producing and discover new players in the scene.
Visit all physical locations of your competitors in your geographic region. Be a prospective customer. Ask questions about your competitors’ products. No need to lie in this situation, but you need to tell them who you are either. Call them up and ask questions. See how you compare in terms of customer service and get on their email list. A friendly conversation can go a long way. People enjoy talking about themselves and sharing their success stories and concerns with peers. Try and interview your customers, suppliers and industry experts about your competitor product and service.
Now, this should get you started on your road to Competitive analysis. Once you’ve collected all the information, it’s time to analyse it. To turn it into Intelligence.
How researching your competitors activities can give you Competitive Advantage
This article explained how researching your competitors activities can give you Competitive Advantage. And how it’s essential to understand how your customers and potential customers view the competition. Identify the strengths and weaknesses of your competitors
These will provide you with a great starting point for developing effective competitive marketing strategies in your target market.
- Former Global Competitive Intelligence lead at GE answers our Competitive Intelligence questions
- How To Compete With My Competitors Using Competitive Intelligence Thinking
- How to Keep Ahead of the Competition With Competitive Intelligence
- Answers to Competitive Intelligence Questions by a UK Government Official
- What is Competitive Intelligence in The Real World?
