Who is the most influential competitor to your business?
What marketing techniques are your competitors employing?
Are their staff happy and motivated? Are their customers satisfied?
This article aims to encourage you to ask, and more importantly answer these questions, gain an advantage on your competition and therefore increase your own business potential.
Understanding the marketplace will help you to target your own products and services effectively to the right audience.
Your business will more than likely have two groups of competitors.
Direct competitors
A direct competitor will offer the same or similar products or services and will therefore pose a considerable threat to your business.
Two hairdressers in the same locality may have separate customer groups, but will ultimately provide the same service. The customers’ loyalty depends on their satisfaction with their favoured hairdresser.
If one business develops a new hair-cutting technique, receives positive PR or renovates the premises, that hairdresser may acquire customers from the other.
It is important to be aware of what your competitors are doing – stay one step ahead of them and find innovative ways for your own business to flourish.
Indirect competitors
Indirect competitors offer a product or service which fulfils a similar need to your products and services without being a direct replica of them.
For instance, a taxi company would be an indirect competitor of a bus company. The consumer wants to travel ‘from A to B’ and they can opt for the economical bus option or the more expensive taxi.
It is important to review both direct and indirect competition on a regular basis and outline in your marketing material the features and benefits of using your business. For instance, without spelling out that the bus service is inefficient and time-consuming, a taxi company will ensure the customer is aware of the positive aspects of their service – namely speed and convenience.
To monitor a competitor, analyse their performance in various areas.
Who are your competitors?
Firstly, search the internet for competitors through general search engines and directory listings. You can also look at the relevant trade association or industry body to identify competitors in your area.
Look at market research reports, directories and survey reports available free in most business reference libraries. The local council will sometimes also be able to provide information on businesses in the local area.
Once you have identified a general list, identify those which are the major competitors based on location, reputation, customer base and so on.
What products and services do they provide?
Once you have identified your major competitors, view their websites to gain an insight into the products and services they provide. Business websites often reveal much more information than they did in the past – from company history and staff biographies to new client wins – and this can be valuable knowledge.
The most effective way to gain an insight into your competitors’ products and services is to experience them as a customer, if at all possible.
Visit the place of business or call to ask for copies of their marketing literature. How were you treated and did you feel like you received an adequate level of service?
You could also consider conducting a questionnaire on your current and potential customers. Ask if they have used competitor products and services and seek feedback.
How do they market their business?
Search for information about competitors in local press, trade publications and journals. If they have a presence in these publications they may have a public relations campaign as part of their strategy to raise their profile.
What other marketing methods do they use? Monitor where they advertise, the quality of their marketing literature and how high their website is listed on search engines (google page rank).
At exhibitions and trade fairs check which of your competitors are also exhibiting. Look at their stands and promotional activities. Note how busy they are and who visits their stand.
What prices do they charge?
It can be difficult to gain information about a competitor’s pricing policy, and if a price list is not publicly available you may need to experience their service as a customer. If your pricing is higher, assess if there is any additional value to your product and service.
If you cannot justify your prices you may need to lower them, but keep in mind that your pricing may be set at the right level and competitors may be under-pricing.
How many staff do they employ? What calibre and how motivated are they?
You could ascertain staffing levels from the company website or by visiting the premises. Try to gauge how contented the staff seem to be in their role.
Also, review recruitment websites and local press, which may detail current roles and salary costs in the business.
How much revenue and profit do they make?
If your competitor is a registered limited company their financial information may be available through the WebCHeck service on the Companies House website.
Acting on the results
It is important to act on your findings and make changes to enhance your standing in the marketplace. Draw up a list of the findings, however small they seem.
If you're sure your competitors are doing something better than you, you need to make some changes. This could be anything from improving customer service and redesigning your literature to changing your prices and updating your product portfolio.
Exploit the gaps you've identified. The gaps may be apparent in competitors’ product ranges, service standards or even the way they recruit and retain employees. Also, don’t be complacent about your current strengths – your competitors may also be assessing you.
Finally, conduct a competitive review on a regular basis, to monitor changes in customer views and identify new market entrants.
