Thorough knowledge of your competition is essential to staying ahead of your competitors. And Competitive Analysis is precisely what’s needed. In this article called who does Competitive Market Analysis, we answer the question and tell you why. We show you how you’ll manage and maintain your competitive position.
First off, the answer to who does Competitive Market Analysis? It’s a simple one. Everyone should. Anyone who has a business which has competitors and wants to grow rather than wither on the vine. And who has competitors? This answer is simple too. Everyone. Not you? I’m sorry, but you do.
What is Competitive Analysis?
Competitive Analysis helps you identify competitors, understand and then compare their strengths and weaknesses to yours. Competitive Analysis shows you the route to catch up, get ahead and beat your competitors. How to refine your strategy and create a competitive advantage. Hopefully you can see why our answer is everyone to the question who does Competitive Market Analysis?
Competitive Market Analysis is an essential element of your business because you will gain an understanding of what your current and potential customers think of your competition. Develop a great picture of what your customers actually want you to provide for them. Gain a better idea of what your advantage is over your competitors. Allow you to develop effective market strategies within the right market and being in a better position to develop expansion strategies to create new markets.
Who are my competitors?
The first place to start is to define who your competitors actually are. To keep an open mind do this before commencing collecting any information. Look at those who work in the same industry and offer similar products or services you provide. Most competitors will be obvious to you, but when you start looking you will find new ones. Search for companies who offer different services/products but are designed to satisfy a similar target market or resolve problems that your customers come to you to solve. These could be your indirect and substitute competitors.
A competitor’s target market sector is a great indication to determine if you consider them a competitor or not. They may offer a similar product or service but target a totally different market. So are they considered a competitor? How easy will it be for them to move into your market tomorrow? Best keep an eye on them.
Any business offering a similar product or service to you, or as a substitute for your own offering that is in the same geographic area should be considered as a direct competitor.
How many competitors should you look at?
In many markets it’s relatively easy to name the majority of competitors, so take a look at as many as possible. If you have dozens of competitors, it’s unrealistic to collect, analyse and maintain information on everyone. You can perhaps break things down like we do into how we define our competitor landscape:
Your key competitors and those who are just living off their reputations.
The next big thing, those who have the potential to become key competitors. Including software solutions
Potential competitors who have the resources to smash a hole in the market — For instance, Google developing a product you sell or Apple buying a key competitor.
Gathering Competitor Information
If you know where to look, most of your competitor’s information is readily available. Time is usually the issue, so make sure to plan what you are looking for before you start your search. Maybe begin with answering these questions:
- What’s their product range or service offering and which markets do they satisfy? How do they compare with you?
- Are your competitors profitable, expanding, or struggling?
- What’s their sales and marketing strategy?
- What do their customers think of them?
- What is their reputation in the market in terms of quality, image, price, brand recognition, customer service, ease of buying from them, geography, tone of voice, market share and sales processes?
Now turning to your own business. Ask questions about your company in comparison to your competitors:
- How do my current customers rate your business compared to them?
- Do you have a competitive advantage; if so, what is it?
- How can I differentiate yourself from your competitors?
Where do I find information?
- Access databases for free in public and college libraries. You can often get the basic information for free and then spend time building the info up. Buy access to paywall databases but these can be expensive and you will need more than one, unless your direct competitor is Unilever, Apple or Shell type organisations.
- Their advertising and websites may offer up their pricing strategy, product information, indications of their sales and marketing strategy and budget. And remember to look for what they are not saying too.
- Talking to your competitors. If you have a question about your competitors then sometimes it’s just as easy to ring them up and speak to them. Salespeople are trained and encouraged to talk, so let them talk. Good salespeople will ask you the questions so you may not get very far. However, other salespeople will want to speak and think the conversation is about them. Like most things, it is how and when you ask the question, not what you ask. And how how persistent you are or course.
- Your team working throughout your organisation will come up against your competitors on a day to day basis. They will find stuff out about competitors, and some may like you enough to tell you without a great deal of encouragement and incentive.
Once you have collected the information on your competitors, it’s time for the analysis.
Identifying their objectives and strategies
Analyse the information you have collected and lookout for your competitors business objectives and strategies. You can use this information to determine if you are missing out on something or they are missing a trick you can exploit. Also, try asking questions like:
- Are they trying to maintain or increase their market share? Are they succeeding?
- What about their recent and historical profits?
- Are they using or introducing technology to improve products into your market?
- Have they established themselves as market leaders?
- Developed new markets for their existing products?
Identify what your competitors are trying to achieve, then understand the strategy they have in place so you can strengthen your own proposition and strategy. What strategies can you bring into play so you understand how your competitors are working? Well, the first and obvious action could be to reduce your prices. Or, indeed, increase them. Be smarter with your digital marketing and traditional advertising than them. You could also look at acquiring the business and its associated customer base. And look to innovate to improve your product or service and the overall experience your customers receive.
Digging deeper into what they sell
Isolate all your competitors’ product features and benefits and put them into their order of importance. Do the same exercise but put them in your order. Are there any differences between them and other competitors in the market and of course your own offering?
Do your competitors fulfil what your business thinks are the most important features and benefits? More to the point, what does your customer think of your and their features and benefits? Benefits that come from customer feedback and discussions. If you or your competitor are offering a benefit which the customer does not see or want, then they are not real benefits. Now determine how your own products compare to your closest competitors? Do you offer any unique features and benefits? The more unique features and benefits you have, the stronger your market position will be.
Current Market Share = Company Sales / Industry Sales
Your competitor may not sell the best product or service. But, if they generate a significant sales figures compared to market expectations, they may be in a position where they define the standard for their industry. Think Jaguar or Heinz Baked Beans. They use this to influence a popular market perception from within its customer base (Think Apple). And devote significant resources to maintain and increase their market share, like UK supermarkets.
Customer preference is very important, but there are other factors to consider, such as:
- Financial resources — Are they in debt after financial setbacks? Are they funding new product development and improvement through debt, cash in the bank or Private Equity?
- Operational efficiencies — Are their supply chains smooth and well run, tried and tested saving them time and costs with innovative production and delivery techniques?
- Strategic partnerships — Who do they work with to create a further competitive advantage? How strong are their relationships with other companies? Why do they work with them?
- Morale — Is the company well run with happy, motivated, committed and productive teams?
- Price — What’s their pricing strategy? Do they have a pricing strategy? What’s the general trend of their pricing over the years. How does it compare with today’s current prices?
- The product line — How easily can they increase revenues by upselling other related products or a new version of what they are already offering?
Determine your market position
After all this work you should now have a good understanding of where you are in your market. Are you the market leader or in the pack just behind in the field? Or are you way off the pace? Remember it’s better to know the bad and good news early so you can do something about it. Then you can kick to the front by adjusting your tactics and pace.
Once you have isolated, researched and analysed your competition, you will have a better understanding of your competitive position. So now you can identify and discuss your competitive advantage and disadvantage with your teams. Review the competitive environment your product or service is operating in and understand the potential new entrants and substitute products out there to keep an eye on them. Determine the key issues and opportunities facing your business together with the action required.
Understand and be clear about what to do about your market penetration, new product lines, new innovation, distribution coverage, price revisions, cost reductions etc. Take your competition analysis and combine it with demographic and Segmentation Analysis to create and implement a robust marketing strategy that will further strengthen your position in the market
Thorough knowledge of your competition is essential to staying ahead of your competitors. And Competitive Analysis is precisely what’s needed. In this article called who does Competitive Market Analysis, we answered the question, told you why and showed you how to manage your competitive position.
About Octopus Intelligence
Octopus is a global Intelligence service company. Answering the questions to help you grow. We help you beat competitors, increase sales, be disruptive, enter new markets and invest with more certainty with our Strategic and Competitive Intelligence, Due Diligence and good old common sense. We live in an increasingly uncertain, competitive and ever-shifting world. What you need is active real world business development strategy, where deep expertise combines with Competitive Intelligence based actions to answer the what and the how, for the now and the next.