Always Look Over Your Shoulder – The Importance of Competitor Analysis
It’s easy to get wrapped up in what’s happening inside your own company, after all there’s a lot to juggle – profits, margins, new products, employees, tax, cashflow and so on.
Every so often you need to look over your shoulder to monitor your competitor’s activities.
One question I ask all my clients is – “Who are your main competitors?”
The response is often – “We don’t have any competitors because our product/service is unique”
Wrong answer – You’ve just not done your homework.
Regardless of your industry or company – you always have competitors. Yes your product/service may indeed be unique but you will have competitors, often offering a substitute or alternative.
Begin an analysis of your competitors by conducting a SWOT analysis.
Identify the main strengths of your competitors, what do they do well?
Cast a critical eye over your competitors products/services, their website, Marketing and social media activity. You will be able to identify areas you consider to be inferior to what your company offers.
Focus on identifying opportunities from 2 points of view.
1) What opportunities might my competitor pursue?
2) What opportunities can my business capitalise on?
Use the information gathered from identifying your competitor’s strengths and focus on how these strengths may pose a threat to your own business model. Form a strategy to counteract any threats posed – Do you need to:
- Change your pricing structure?
- Focus on different benefits of your product/service?
- Do you need to delay or accelerate a new product launch?
By spending time on analysing your competitors you should be able to identify any gaps in the market, particularly from the opportunities section of the SWOT analysis.
Homogenisation blights every single business in the world so you need to be unique in some form or simply do what your competitors do – but better. Sounds easy in theory but having a genuine USP is a problem area for many businesses.
You’ll never know if what you offer is unique, unless you know what your closest competitors are offering. If you want to gain a competitive advantage in your market then you need to have a differentiation strategy, some areas to consider are:
- Product/service uniqueness
- Minimising expenditure to improve margins
- Leveraging your employee strengths and skills
- How you promote your company – Focus on benefits rather than features
To gain a deeper understanding of how to apply a differentiation strategy I’d highly recommend reading the work of Michael Porter – A true master of business strategy.
Steal ideas, mash them up and make them your own. What benefits do your competitors promote? How can you match or improve on these? And one of my favourite areas is Marketing – How are my competitors Marketing their company?
Competitor or Ally?
Your competitors don’t have to be your enemy, consider striking up a relationship with your rivals to embark on a referral programme. Refer clients to each other depending on what speciality areas you both offer.
For small businesses consider collaborating with rivals on larger contracts that you would not have been able to fulfil on your own.
Just remember to always keep an eye on your competitors.
Is stealing ethical? Do you collaborate with your rivals? Tell me your thoughts.
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