How Competitive Analysis Forecasts Your Competitors Future Actions.

How Competitive Analysis forecasts your competitors’ future actions

This piece describes our thoughts on how Competitive Analysis forecasts your competitors’ future actions. When forecasting your competitor’s actions, it’s essential to avoid mirror imaging. It’s a natural reaction to assume they will think and act as you do. It’s obvious when you think about it. They most certainly don’t think like you. If you want to know how they will react, try to see how they perceive threats and opportunities.

Values and perceptions

To do this, you must understand their values, misperceptions, bias, and assumptions. And, if they are from another country, their culture. Some of your competitors are going to walk like you and talk like you. It’s likely some will have similar strategies too. These are described in business schools as symmetric competition. Similar companies with similar resources may react to market changes in a similar way. 

Resources and capabilities

Asymmetric competition is when companies have access to different resources and capabilities. They will may react differently to the same opportunities and risks. So ask yourself these questions:

  1. How much does your competitor down the street or across the world resemble you? 
  2. How much does your competitor look and act differently to me?

Understanding how they make decisions within their resources and capabilities is fundamental Competitive Analysis. And to anticipate their moves, you have to understand how their decision-makers think. They are playing in the market you share with them. And it’s challenging to get inside your competitor’s head. Because they will rarely think alike. How they think is very much associated with their resources. As well as their perceived market position, financial strength and the assets they have. 

Alternative objectives

You may have similar resources and assets to your competitor. But if their objectives will be different, they will think and do things differently. Put yourself in their shoes with the resources they have to hand in and the market they find themselves in. Think about the strategic actions they need to do to be successful. 

Define who makes the key decisions within your competitor organisation. Understand if others would like to make these decisions. And perhaps if their thoughts are considered by the ultimate decision-makers. Here you really have to think and work out how they make their decisions. 

  • Look at what they have done in the past. In their current position and with other companies. 
  • Look to see what worked well with them. 
  • What were complete disasters? 
  • What did their subordinates have to say about them? 

How competitor analysis is done


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

A decision-maker will probably make the same moves that worked for them in the past. And anything that bombed is likely to be avoided at all costs. Remember, this may not always work out the way you think it will. Something that failed in the past could still be a personal favourite strategy of theirs. And they will try it again. The bottom line is to get to know who is running your competitors business. Now, this level of detail will not altogether remove the risks, and you may well be surprised. But more often than not, you will be able to predict competitor moves. And if you are doing it right, you will have thought out possible implications and actions.


Asymmetric, and symmetric competition

Understand asymmetric, and symmetric competition will help you anticipate their strategies:

  • By analysing what your competitors and their decision-makers are most passionate about. 
  • How they see their resources and capabilities
  • How they use these resources and capabilities within their strategy

This analysis is easier said than done. After analysing what makes their decision-makers tick, take a look at a recent decision they have made. Start at the decision and work backwards. 

  • Understand where their pain was?
  • What did they do to come to that decision?
  • Did their market environment like influence their decision?
  • What forced their hand to make a decision.

Company resources include tangible assets. These assets include people, real estate, equipment, technology and money in the bank. And intangible assets like their brand, reputation, intellectual property and knowledge.  And then their’s current market position. Which includes who are their customers, prospects, experience and economies of scale. Capabilities are those abilities to identify and exploit opportunities. Better than others in their market do. Now this sort of thinking could be then moved into the future tense. Once you have found patterns in historical deviations, they will likely do the same in the future. Build some scenarios and anticipate their actions. And then look at what you would do. 

Conclusion

How Competitive Analysis forecasts your competitors’ future actions

Getting inside your competitor’s head is not easy. This article was called how Competitive Analysis forecasts your competitors’ future actions. We explained how you have to think about how they will use their resources and capabilities through various scenarios. And then take the personal characteristics, motivations, personal ambitions. And combine them with market perceptions of the decision-maker into account.

What will it take to get inside your competitors head?

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