Using competitor analysis to stay ahead

The benefits of competitor analysis

If you know the right competitors' strengths and weaknesses, you can apply this competitor data to:

• Keep up with specific competitors in terms of marketing tactics and product development to help you stay relevant and up to date with market trends.
• Reduce the chance a competitor will lure your customers away. If you know what your competitors are good at, you can identify opportunities to offset this advantage.
• Increase the possibility of customer acquisition by knowing what your competitors are poor at, so you can point out to new prospects how you do it better.
• Find out how they target their audience. Identify your competitors' marketing strategies for promoting or advertising and their approach to customer service.
• Identify any market gaps and develop and introduce new products and services, so you can differentiate and offer a truly unique value proposition.
   

With a successful competitive analysis framework in place, you should have a company overview of what they are good and bad at doing. Then you can work out how to reduce the impact of their strengths and identify any opportunities from their weaknesses.

Competitor research in three steps
 

Step 1. Identifying direct competitors
 

A competitive analysis will identify trends and insights into an industry's competitive landscape. It's usually best to focus on competitors who sell directly to your target customers. A company may make the same product, but they are indirect competitors if they target a different customer segment or foreign market. For example, the café serving locals shouldn't be worried about the business strategies of another café in the next town or by a fast-food chain nearby. Only record major competitors that are an immediate danger to your own business. A longer-term threat analysis can come later.
 

Step 2. Work out what they're up to
 

When conducting research, going online to search competitors' websites is a great way to see what they're doing. However, the best way to find out is to see their business from a customer viewpoint. This isn't always easy. Knocking on the front door of a competitor in disguise may backfire if they recognise you. But there are some things you can do to get a feel for what your competitors offer and potentially add similar tactics to your own strategy:

• Any social media channels that reveal your competitors' marketing efforts for brand awareness. For example, check out your competitor's product ideas, Facebook Ads, how followers interact with their brand, products, press releases or pricing. It's incredible how much a competitor may share across social media platforms.
• Their E-newsletters. Sign up for their business updates (if you need to, use a Gmail account) to get regular correspondence and announcements.
• Any advertising can reveal a lot about competitor knowledge and attitude to their (and your) target market. List where their marketing team advertises and the channels they use. Suppose your competitive intelligence research doesn't reveal any information about how your competitors market their products. In that case, this can tell you they're either relying on word-of-mouth referrals or have a different direct approach (that you need to try and uncover).
• Buy from them, or have someone else complete the purchase either in-store or online.
• Use ‘mystery shopper' agencies like www.customercare.co.nz to conduct this direct competitive analysis for you.
   

The information you can glean from this analysis can include:

• Their sales process, returns, queries (even about you), if they up-sell, or sign customers to their database.
• Your competitors' pricing for the same or similar products and services.
• Specific products and services they sell, after-sales service and how they compare to your offers.
• The methods they used to earn customer loyalty.
• What suppliers they use in the buying process and the quality of what they're selling.
• Any partners, backers, or strategic alliances in business.
   

This information will paint a detailed picture of your competition's business. Of course, you can't know everything, and that is fine and should be expected. However, as long as you can compare your business to theirs with these meaningful comparisons, you'll be equipped to take decisive action to maintain your edge.
 

Step 3. Take action
 

Knowing the state of your competition is fine, but you need a strategic plan for that information. Then, after your competitive analysis, decide what action you need to take to safeguard your revenue.

Think about
 

• Confirming your unique value proposition is valued by existing and prospective customers. Therefore, regularly ask or survey customers to check you still have an edge.
• Making exclusive arrangements with suitable suppliers.
• Listing any unprotected intellectual property, then decide which you want to protect legally and which you'll keep secret.
• Realigning your prices to maintain a price advantage in critical areas of your business.
• Providing superior customer service and unique customer experiences your competition can't match.
• Positioning yourself as a current market leader or industry expert that the owners of your core competitors cannot rival. This could include being selected to industry boards, being involved in your local community, writing blogs, participating in webinars or writing whitepapers.

On-going effort
 

A competitive analysis framework is a powerful tool to keep your business one step ahead. And, online research makes it much easier to keep up with the latest industry trends. The best way to put this into practice is to consistently keep tabs on your competitors' strategies every year (and any new competitors that might arrive on the horizon) rather than when you're under pressure. The information you gather will make it easier to take meaningful actions early in your business plan to protect your market share and keep your edge.

Next steps
 

• Start implementing your competitor analysis framework to ensure it's part of your own marketing strategy each year.
• Read about protecting trade-marks, patents, designs, plant varieties, geographical characteristics and copyright at the New Zealand Intellectual Property Office website.
• Interview some customers to find out why they buy from you and not someone else. Their reasons form the basis of your competitive advantage (even if it's different to what you think).