Getting to know your competitors is essential for any business – whether big or small, an established brand or new start-up. Love your competition because not only does it keep you on your toes and motivate you, but knowledge is power and understanding your competition provides you with lots of interesting information that can be used to mould your business and shape your marketing strategy.
I have always loved the competitive forces in this business. You know I certainly have meeting where I spur people on by saying “Hey, we can do better than this. How come we are not out ahead on that?” That’s what keeps my job one of the most interesting in the world. Bill Gates
Competitor analysis is simply the process of monitoring and reviewing your competition, the products and services they offer and their adoption by their customers. Through this gathering of ‘competitor intelligence’ you can gain real insight that can be used to feed into your business strategy and marketing plans.
When undertaking competitor analysis keep in mind that your overall goal is to collate useful information that puts your business in a better position and gives you a competitive advantage over other companies in your industry.
The competitor landscape
There are a number of questions you should think about being able to answer from the competitor research you undertake. Beginning with a good understanding of who your competitors are. Your competitor landscape is made up of both direct and indirect competitors. For example in the world of film magazines, Empire probably considers Total Film its most direct competitor, however its competitor landscape would include film bloggers, Guardian film online and even other interest magazines that may get chosen by a potential customer as an alternative reading choice that day.
Identify who your key competitors are but keep in mind the wider competitive environment and don’t forget to include international competitors if they are relevant. Remember if your selection of competitors to research is too narrow or excessively large you will struggle to get meaningful results.
Competitor SWOT analysis
Carry out a competitor SWOT analysis on each of your chosen key competitors. What are their strengths and weaknesses – what do they excel at and what could they improve on? Are they doing anything that could be a threat to you? For example have they just launched special price promotion, new product or brand extension? What are they not doing (or doing) that provides a potential opportunity for your business?
When researching and comparing your competition,here are some questions you might find useful to think about including in your analysis:
- Where are you in position to your competitors? Who are the major players and who is the market leader. Where does your business fit in? Are you competitors growing or shrinking?
- The four P’s. How do your basic four P’s (product, place, price and promotion) compare to those of your competitors.
- What are they doing well and what could they improve? How do your products or services compare with those of your key competitors – for example on quality, price and customer service.
- What is your USP and your competitors USP? What might make a customer choose your product or service over your competitors’ offerings?
- What partners and affiliations do they have? Are there opportunities here for you to develop similar affiliations with suppliers or associations?
- Brand and reputation. How strong is their brand? What is their brand image? What is their reputation within the industry (both with consumers and trade)? How successfully are they promoting their brand?
- Trends. What market trends do your competitors appear to be following (or not following)?
Start by researching online
A great starting point for small business is to do some website analysis by looking at your competitor’s websites. Creating a simple comparison table and undertaking an online competitor benchmarking exercise is a good way to get the ball rolling. Think about and compare competitor websites. From this you can get a great overview of your competitors’ online presence and start identifying potential gaps, opportunities and areas in which you could improve your own site.
And don’t forget, any kind of competitor analysis should be continuously reviewed and monitored at regular intervals. Enjoy getting to know your competitors, and remember the better armed you are with valuable information the stronger position you are in for being both reactive and proactive in your business planning.