Why is it critical to know your competitors and their offerings?
Should we just focus on what we do and do it well?
How often do you survey your competition and respond to changes in your business and market environment?
When setting up your business, you possibly did some form of market analysis to confirm the viability of your business proposition and to identify niche openings and opportunities in your market sector to exploit in order to give yourself the best chance of success. A thorough analysis will also have identified potential risks, including competitors who could undermine that success. It’s important to remember that that analysis was just the first in what should be an ongoing exercise to regularly update yourself and understand:
- Who your biggest competitors are.
(This can change with new companies, products and services coming into the market, or as your target market needs and expectations change.)
- What your competitors are doing in terms of marketing, product pricing, customer service, etc.
- How to act on the information you get to adapt your business plan and remain competitive.
The following is adapted from the article Understand Your Competitors on infoentrepreneurs.org
You need to be aware of possible new competition and respond accordingly. Keep an eye on:
- local business directories
- your local Chamber of Commerce
- press reports
- flyers and marketing literature
- market research questionnaires
- the Internet, for similar products or services
- information provided by customers
- exhibitions and trade fairs – check which of your competitors are exhibiting. Look at their stands and promotional activities. Note how busy they are and who visits them.
You need to monitor the way your competitors do business. Look at:
- the products or services they provide
- how they market them to customers
- the prices they charge
- how they distribute and deliver
- the devices they employ to enhance customer loyalty
- what back-up service they offer
- their brand and design values
- whether they innovate
- the number and calibre of staff they attract
- who owns the business
- how they use IT, e.g, website, apps, email, social media
- their media activities – check their website and social media activity as well as local newspaper, radio, television and banner ads. Are they getting more publicity than you, perhaps through event sponsorships?
- How does their website compare with yours, e.g, for SEO, ease of use, content, etc?
Find out as much as possible about your competitors’ customers, such as:
- who their target customer is
- is their customer base growing?
- What products or services are they buying?
- what do customers see as your competitors’ strengths and weaknesses?
Make the most of contacts with your customers. Don’t just ask how well you’re performing – ask which of your competitors they buy from and how you compare. Also, use meetings with your suppliers to ask what their other customers are doing. They may not tell you everything you want to know, but it’s a useful start.
HOW TO ACT ON THE COMPETITOR INFORMATION YOU GET
Knowing who your competitors are, and what they are offering, can help you make your products, services and marketing stand out. It will enable you to set your prices competitively and help you to respond to rival marketing campaigns with your own initiatives. You should also be able to use the information you get to identify whether there is a saturation of suppliers in certain areas of your market, which might lead you to focus on less competitive areas, or new gaps for you to exploit.
Draw up a list of everything that you’ve found out about your competitors, however small.
Put the information into three categories:
- what you can learn from and do better
- what they’re doing worse than you
- what they’re doing the same as you
What you can learn from and do better:
If you’re sure your competitors are doing something better than you, you need to respond and make some changes. It could be anything from improving customer service, assessing your prices and updating your products, to changing the way you market yourself, redesigning your literature and website and changing your suppliers.
Try to innovate not imitate. Once you’ve got the idea, can you do it even better, add more value?
What you can learn from and do better:
Exploit the gaps you’ve identified. These may be in their product range or service, marketing or distribution, even the way they recruit and retain employees.
Customer service reputation can often provide the difference between businesses that operate in a very competitive market. Renew your efforts in these areas to exploit the deficiencies you’ve discovered in your competitors.
Don’t be complacent about your current strengths however. Your current offerings may still need improving and your competitors may also be assessing you. They may adopt and enhance your good ideas.
What they’re doing the same as you:
Why are they doing the same as you, particularly if you’re not impressed by other things they do? Perhaps you both need to make some changes.
Analyse these common areas and see whether you’ve got it right. And even if you have, your competitor may be planning an improvement, so make sure you have enough information to keep one step ahead!