Following last week’s blog about how to increase sales, I received some great feedback, specifically regarding checking out your direct competition, and so I decided to focus this week’s blog on getting to know your competition. As the old expression goes: “Keep your friends close and your enemy even closer”.
As a small or medium business, knowing what your competition is doing will help you to define your competitive edge, determine your marketing strategy and plan for what types of tactics will be successful for you in increasing your sales and long term growth.
Competition research and assessment doesn’t need to be complicated, but it can be tricky and time consuming, so you might want to consult with a marketing expert to help you. If you have the time and resources, here are a few tips I’d like to share with you on what should be included in any good competitive analysis.
Write The Names Of Your Competition
Write out who your direct competitors are that largely mirror the products/services you offer. You cannot strategize and learn about your competitors if you don’t clearly establish who they are. Consider adding companies that may indirectly compete with yours, but offer products/services that address the needs of the same target audience. Also, include here where your competitor is located, as geography also plays a role in direct competition.
Perform a SWOT Analysis
No competitive analysis would be complete without a SWOT analysis to analyze the Strengths (S), Weaknesses (W), Opportunities (O) and Threats (T) of your company and competitors. “Strengths” facilitate business growth, whereas “weaknesses” are factors that hinder business growth including low quality products or services, poor customer service, etc. “Opportunities” and “threats” are external factors that can hamper your business’s performance, including (1) economic forces; (2) social, cultural, demographic and environmental forces; (3) political, governmental and legal forces; (4) technological forces and (5) competitive forces. Take the time to look at if the company is expanding or cutting back.
Examine Their Materials
What are the company’s marketing activities?How do they market and advertise their businesses? Look at materials like their quarterly and annual reports, press releases, interviews, website, and SM sites. The annual reports will give you an idea as to their annual sales, and possibly their pricing structure. Check out their SM networks, and see who they are talking to, and what they are talking about. You should be able to determine what their target audience is and what their competitive advantages and disadvantages are compared to your business. All this valuable information will help you form a clear picture about your competitors’ objectives and strategies.
Research The Market
You will have covered some of this in the SWOT analysis, but make sure you’ve looked at the growth potential of the market. Consider whether you have the technical, marketing, or engineering expertise to capitalize on the market’s opportunities to grow your business. Is the market concentrated or fragmented?
As a result of your businesses competitive analysis, you can identify competition, what their planned strategies are, and how to capitalize on your business’s distinctive competencies to achieve business growth.
If you invest in marketing without performing a competitive analysis, you run the risk of creating marketing tools, and product/service offerings that are way off the mark. This can cost you valuable time and money.
Another great saying comes to mind: Knowledge is power. Knowing what your competition aren’t focused on can be very powerful by helping you develop a strong marketing strategy, and dynamic branding with targeted activities that will increase your sales and ROI.
Do you have any questions about how to conduct a competitive analysis? Have you ever conducted a SWOT analysis for your business? If so, was it helpful? What has your experience been in gaining the competitive edge? Please share your questions and comments below.