Competition defines a company’s market share in every sector, but the majority of businesses behave as though they are working in isolation. If pressed, many will remember the names of their major competitors and can tell an anecdote or two about them. A few may hold files in which they collect brochures and press cuttings of the competitors. Far fewer, however, generate competition dossiers that are updated periodically and include marketing consequences and action recommendations.
Business is about overcoming the competition for an even greater slice of the cake but this does not mean that relations should be tense and warlike with rivals; quite the opposite. Competition profiling plays an important role in three major areas of decision-making: product planning, future strategy setting, pricing policy.
Key Aspects to Market Evaluation
While coming up with new ideas for the product range, it is important to make comparisons and determine options for improvement, and to do so, the marketing team needs a thorough understanding of the products and prices of all competitors. Of course, this must be done in conjunction with the technical and manufacturing departments, who can give the opinion on what they think can be produced effectively. Nevertheless, it is the marketing department that provides the idea of what could be sell and for how much. Knowing the new products of the competitor before they are launched can give strength to any marketer’s arm. This information is not difficult to obtain if the sales force is alerted to keep their eyes and ears open for news of products out on test.
It is important to consider external factors, such as the competitive environment, in addition to internal factors when crafting strategic plans. The competitive analysis involves taking stock of the number and nature of competitors presenting a direct or indirect threat to a business. The competitive analysis may provide a better view of the business dynamics of emerging entrepreneurs in a sector they are considering entering into or help established companies refine their strategic path. In strategic planning, understanding the value of competitive analysis will carry your strategic plans to the next level.
In the market, no one is capable of manipulating the market price through his actions, because everybody has access to a complete and immediate awareness of the price at which trading is currently taking place. Instead of pricing based on consumer analysis, demand or value, competitor prices are used as a benchmark to price the product. To arrive at your pricing plan, it needs extensive research into what your competitors are doing, what they sell, and at what price they offer. There may not be enough data to understand the pricing fit from your consumer base when you are only beginning to attract your first few customers. Therefore when testing the waters, your competitor data that has been on the market for a while will help you with the same.
How to map the competition?
To derive insights into the competition, you don’t have to be devious. Many sources are legitimate, cost little to tap and if you know where to look and what to look for are typically easy to find.
The consumer is a good starting point, and the explanation for that is: consumers are among the first to learn about new offerings, they have free access to the pricing of competitors, they have regularly visited the works of competitors and may have seen their production lines in operation. Consumers build an impression of the competition over some time and form opinions on their strengths and weaknesses.
The biggest challenge most businesses face while tapping consumers as a source of information is the fear of asking questions. There is, of course, a right and a wrong way to address the question. When searching for competitor data, representatives who have built up a good relationship with their customers need to use diplomacy: a brash approach might offend. A structured market research survey is a tried-and-tested process, but it involves an interview program and is therefore expensive. A salesforce that is asked to report on important issues regularly does not provide the objectivity of an impartial survey, but it will provide free data and provide the members with information that would be useful in their sales effort.
Here are four questions about competitors reps should regularly ask their customers:
- What are their current prices, discounts, and offers?
- What are their deliveries (promised and actual)?
- What news is there of any new products or services?
· How does the buyer rate the quality and design of their existing products?
Identifying Market Drivers and Devising Plan of Action
There is a lot of job mobility between companies in a similar industry, particularly between sales, marketing, and general management. These individuals bring a wealth of information about competitors with them, and they often do not understand the depth or importance of their expertise until it is drawn from them. Competitors’ former workers are very much a hit and miss source of data as they may have worked there recently or many years ago, and memories can prove inaccurate even within short time scales. Therefore, it is critical that they are questioned properly and the data committed to filing if the opportunity presents itself to speak to an ex-employee.
Customers and former employees are useful sources, but haphazard fragments are likely to be produced and not necessarily in the appropriate way for you. It is often important to formally set out to seek knowledge about a competitor. Different methods must be used in these situations.
Microfiche, particularly the accounts of earlier years, is often worth studying. Financial accounts are an excellent guide to company performance, you can restrict the data to a summary profile showing five years’ figures of total sales, exports, net profit, and net assets. In this way, all the main operating statistics and ratios can be seen as a pattern. Total sales turnover may be too broad to be of use, so most companies derive their revenue from many sources. An estimate of sales in a particular field of interest can provide a statistic that can be cross-checked against those obtained from other sources.
Sometimes financial records cannot provide that all-important “feel” for the company. It is also possible to acquire this from promotional content.
Brochures, catalogs, and websites are an important source for competitor profiling, as they often provide information on brands and crucial background data. House journals too are an extremely helpful source of inside information.
Getting hold of brochures and newsletters does not need the assistance of a super-sleuth. A simple request by letter to a corporation would produce a response nine times out of 10. After all, these inquiries are usually handled by a junior clerk who is most unlikely to know that the request is from a competitor.
It has always been said to never undermine the competition, and the same holds even for big markets. Competitor analysis can be a crucial step to strategic planning by careful evaluation of strengths, weaknesses, opportunities, and threats concerning the potential competition. For any existing or upcoming name in the market, it can help gain a better view of the business dynamics in a sector they are beginning to venture or widen into to refine their strategic approaches to fit right in like a puzzle piece in the vast matrix.