If you are in a service business - such as a staffing agency or a legal practice, it is possible that you don't bump into the competition very often. You serve your clients well, get most of your work through referrals, and have little insight into the market.
Other businesses might be in a more overtly competitive environment, such as a beer brewer who competes daily for shelf space, customer loyalty, and share of the beer drinker's wallet.
In either case, you and your firm could benefit from a good competitive analysis.
Done right, a competitive analysis should give you an understanding of trends in your industry as well as the competitive landscape. It should identify current and potential competitors within your market, assess their strengths and weaknesses, and determine their target market and ability to deliver.
Ideally, the evaluation should highlight your firm's strengths relative to the market - those qualities that should be promoted, as well as any competitive blindspots - weaknesses within your firm that need to be shored-up in order to compete effectively.
Approach
Completing a competitive analysis should be systematic and structured. Outlined below is an approach that works.
To begin, develop a list of your company's competitors. To stay focused, you may want to stick to analyzing companies that are direct competitors, realizing that there are other indirect and potential competitors.
For instance, if you are a clothing store you could expand your analysis beyond the boutiques in your town to include Amazon and other on-line retailers. An indirect competitor for a restaurant might be eating at home or take-out food. While it is critical to understand macroeconomic and industry trends, analyzing these indirect competitors may not yield any actionable strategies.
Then, segment your competition in descriptive terms. Perhaps there is a group that targets the broad consumer base with generic products and lower prices. Maybe one targets a niche market with highly differentiated products. If you are a service provider, perhaps some of your competitors target a specific industry or geographic area. This will help you hone in on your most direct competitors - those who target the same customers!
Next, try and articulate the key success factors in your industry and the buying criteria of your customers. Key success factors vary by industry, but might include: reputation, marketing, efficient operations, location or customer service, to name a few. With these in mind, analyze your competitors' business to determine their strengths and weaknesses.
Here are some other attributes to consider:
- General: size and longevity in the market, growth plans
- Products and services: price, features, quality, value, depth and breadth of product line
- Marketing: advertising, strength of brand, online presence, distribution channels
- Customers: target market, customer service, convenience
- Facilities: location, capacity, upkeep
- Personnel: strength of management, experience and skill set
Lastly, profile your competitors against these attributes to see how they rate.
While this is conceptually easy, it takes time and effort. Y
ou need to be systematic and objective as gathering the information can be a challenge.
Unlike public companies, private companies do not publicize company information. That said, here are some ideas for obtaining information on your competitors:
- The company's website
- Mystery shop
- Trade press
- Media scanning
- Key word search
Outcome
Ultimately you will want to adjust your business and marketing plans to incorporate the information garnered through the analysis. After your analysis is complete, see if you can answer the following questions:
- Who is my strongest and most direct competitor?
- What market do my current competitors target?
- Are competing businesses growing or scaling back their operations? Why?
- How is my company different form the competitors?
- How can I take advantage of my firm's strengths unique abilities?
- Which areas in my operations and delivery do we need to strengthen?
If you can answer these questions you have completed a successful and worthwhile competitive analysis. If you would like assistance developing a competitive analysis for your company, please give me a call. I would be happy to help
