Understand the benefits of a competitive strategy
Q My business is under pressure from the presence of new competitors in the marketplace. Can you advise me on how I can build a more competitive business strategy?
A Your competitors - the ones you worry about, have successful businesses. They have customers who like what they do, other businesses respect them, and they're probably making money.
They've achieved all the things you want in a similar market to yours. If you think of it that way, they'd make the perfect mentor. However, understanding and researching your competitors will help you see the following: What they're doing better than you? What marketing strategies and tactics are working for them? What mistakes they've made, so you can avoid them? What you're doing better than them? What exact customer base do they have? Is that the customer base you want? Taken together, all of these insights can feed into a competitive strategy.
There are two kinds of competitors to consider - 1.Those who have similar products or services as you; 2.Those who have different products or services but which compete for your target customers. Think broadly when you're listing competitors and think of the following:
- Who are the major players serving this market?
- Roughly how is the market split up between them in relation to sectors?
- How does the market think about these competitors?
- Is someone offering the young person's product? Is someone else targeting the older person? Is someone offering a cheaper solution or brand?
- What sort of experience are they offering? What is the message they give? How do they communicate that message to clients?
- How does their product or service look and feel? How does it work?
- How are they delivering? What do they charge? How do customers order? What testimonials do they get?
And for all of the above questions, keep asking if your business could differentiate or segregate itself in some way.
Identify your competitor strengths and weaknesses. Examples of their strengths and weaknesses may be:
Strengths: -They have great distribution - they're in all kinds of shops, all over the place; huge brand awareness - they've been around forever and people trust them; low price point - it's impossible for you to compete on price
Weaknesses: They have bad service reputation; Cheap packaging - their offering may not attract customers who will pay more?
• Customers aren't impressed with product quality
By understanding your competitors' strengths and weaknesses, you can figure out what differentiates you, where you fit in the market and what your potential market is?
Now-Look at what your advantages are?
- Are you the only business that can produce a certain product?
- Exclusive supply arrangements: You might be the only business in your area that can sell certain products.
- Lower costs: Maybe you can deliver products or services for less money.
- Higher skill base: your staff may be able to offer a more comprehensive service because of the skills you employ?
Competitor analysis will help with your business & financial planning, your product or service development, and your marketing. An honest review of who's out there and what they do well, will help you find a part of the market you can own.