When considering how to position a product in the market place or developing the ideal go-to-market strategy, a small business owner needs to examine a number of market factors. Chief among those factors will be the product’s primary competitors. Understanding them gets you one step closer to knowing how to deliver better value to your customers and defining your niche.
Like most B2C product categories these days, your product may compete in a very crowded environment. Just think about the last trip you made to the grocery store…how many brands were in the beverage aisle? Probably too many to count; beverage giant Coca Cola has a portfolio of more than 3,500 beverages: diet, regular, sparkling, still, fruit juice, fruit drinks, waters, sports and energy drinks, soy-based beverages, etc. And that’s one company!
Even if you compete in the B2B arena, many product and service categories are saturated with competition. Manta, an online compiler and business data provider, has 3,265 companies under the category, Wholesale Office Furniture and Equipment Dealers in United States. If you’re marketing chairs and desks to the business world, that’s a lot of competition.
The takeaway – know your competitive landscape before jumping in, both at a strategic and tactical level. A good place to start is to build a profile for each of your primary competitors. Let’s review the top things you need to look at.
Sources of Intelligence
You can glean a lot of insights from a simple review of your competitor’s online presence. Review their web site, social media presence and, of course do a Google search.
You should include a rough estimate of the size of your competitors in the profile. It’s doubtful that information such as sales volume will be readily available so in this case, you’ll want to rely on your ability to roughly estimate how big or small they are based on pieces of information you’ve picked up during your time in the industry. On the other hand, number of employees may be a little easier to find.
In the dog-eat-dog world of contract manufacturing, paying close attention to competitors can pay dividends. A former client of mine was interested in the operational activities of a rival that served one of its customers. This customer had mandated that its suppliers research offshore production. Through simple Google searches we gleaned enough data about the rivals’ moves that we were able to create a timeline for their plans to move some of its production offshore.
Some of your customers may be a good source for intelligence. However, not all of them will be comfortable in this situation. You may want to consider a third party in this case. Be sure to focus their efforts on only the most important intelligence needed for the profile.
Trade shows are another good source for better understanding your competitors’ moves, especially when it comes to their new product strategies. Trade shows are where many companies launch a new product to their market.
Also, most of the players in any given industry are visible at a trade show. I had a client that understood its primary competitors but wanted to know more about second tier competitors. The client wanted to assess whether any of them had been developing into primary competitors.
It’s up to you to know your competitive landscape; however, there are numerous sources for competitive intelligence. Ask your staff for input, especially the ones that are on the front lines. They are in a good position to provide commentary on your primary competitors.
Your competitor profile should include a review of what marketing tools they use to support their business development efforts. This analysis will help ensure that you aren’t missing any opportunities to reach prospective customers. You should consider:
• What tradeshows do they attend
• What magazines do they advertise in
• Do they use press releases to make important announcements
• How frequent do they post on Facebook and what types of content do they post,
• Which channels of distribution do they utilize
• How large is their sales team
• Do they have a dedicated sales force
Ideally this is done prior to making any long range infrastructure decisions about how you’ll set up your marketing and sales. A former client of mine did their analysis of the competitor’s go-to-market strategy after they had set up much of their marketing department and found they had to catch up on certain aspects of marketing like social media. They were in a heavy metal industry in which most players assumed social media was for consumer brands. The analysis showed them quite the opposite was true and that manufacturers like them were using social media quite extensively to support their relationship building efforts.
This is a trap I’ve seen several companies get caught up in. It happens when a company spends most of its time collecting data and thinking about it instead of acting on it. Or even worse…just putting the data in a file, never to be looked at again! Be sure to gather only data that you can act on and make sure it informs your decision-making. If a piece of data doesn’t support decision-making, then don’t waste your time on it.
A good practice to get into is evaluating the intelligence by asking “what are the implications for us?”. You must think through how the major findings will affect your business.
Another way to fall into the Analysis Paralysis trap is to examine too many competitors. While it is helpful to give some consideration to indirect competition, don’t get caught up in collecting data on too many competitors. After a while you will reach diminishing returns.
There are many forces outside your company’s walls that can influence your business decisions, including the “other guys” that are out there going after the same customers you are. You need to scan the competitive landscape, stay objective and understand your competitors’ strengths & weaknesses based on the data presented to you. Most importantly, you’ve got to answer the question, “How can my company or product deliver better value than the other guys?”. Your competitor profile will give you the clues.
Like this article? Please share it:
How LivePlan makes your business more successful
If you're writing a business plan, you're in luck. Online business planning software makes it easier than ever before to put together a business plan for your business.
As you'll see in a moment, LivePlan is more than just business plan software, though. It's a knowledgable guide combined with a professional designer coupled with a financial wizard. It'll help you get over the three most common business hurdles with ease.
Let's take a look at those common hurdles, and see how producing a top-notch business plan sets your business up for success.Click to continue