2. Before Proceeding

RESEARCH - COMPETITION - Know the Competition that you have

Do You Know Your Competitors?
It goes without saying - if you are in business you need to know your competitors. Knowing your competitors should be a key ingredient to your marketing strategy. For your business to be successful, knowing the market, including your competition, (whether direct or indirect competition) is critical.

  1. Direct competition means a business is offering the same product or service as your business, in the same market.
  2. Indirect competition is a business who is offering the same product or service you offer, but in a different market.

Make sure you research every bit of information about your competitors. This will give you an edge that will be beneficial to your customers and to your profitability and therefore to the success of your business.

Some questions to ask include:

  • What does the competitor offer in the way of services?
  • Who are your competitor’s customers?
  • Is your competitor’s service prompt and efficient?
  • How does their company image compare to yours?
  • Does your competitor accept credit facilities?
  • Are you familiar with your competitor’s products and services?
  • Are your customer records better than your competitors?
  • Is your customer service better than your competitor?
  • What plant and equipment does your competitor have and is it better than yours?
  • Does your competitor markdown and discount their products?
  • Does your competitor advertise very often or carry out other types of promotion?
  • Do your competitors accept credit cards or charge cards? Do you accept those?
  • From your research, do your competitor’s products sell quickly, compared to yours?
  • Does your competitor’s name and business appear frequently in the news or in the newspaper?
  • How many times has your company name been published, for announcements, promotions, or speeches etc?

How to Check Out the Competition

It is important for you to know what your competitors are up to. You have to be familiar with the tactics and strategies of the "enemy"..

If you are starting a new business you will need to find out at the start, before you open your doors, whether there was room in the market for you to be successful. i.e. You need to identify if there was a niche for you to fill.

This will involve a little research and some friendly spying on your part. If you are unable to do it yourself, instruct a research firm to investigate for you.

If you intend to do your own research, here are some tips:

  1. Identify your competitors:
    By name, address, telephone numbers, etc and find out whether they have a web site, and whether they conduct business online. This is available in the Yellow Pages and Business Directories, as well as research magazines and industry business publications. Some of these publications are available at your local library. Try and calculate the firms that you have lost sales to. Ask around the industry, or ask employees who have worked in the industry about your competitors and how successful they are.

  2. Make up a schedule of information;
    This called an “information database”, detailing information and features about your competitors.

    • You need to know about their products and services.
    • You need to know how their business is structured.
    • You need to know about their staff and the prices of their products and services.
    • You need to know about their area of speciality and how successful their customer service is.
    • You need to know if there are any vulnerable areas.
    • You need to find out about their reputation in the marketplace and also assess their image in the marketplace.
    • You need to find out about the quality of their products and services.
    • You need to investigate whether there is any point of difference between what you supply and what they supply.
    • You need to find out their reputation, as far as paying their suppliers, etc, is concerned. You need get a credit report on the company.
    • You need to look at their market and sales activities and find out their promotion and advertising strategies.
    • You need to find out if you have an edge and what competitive advantage your business has.

  3. Start to gather the information.
    Put together all the literature, brochures and other material with information about your competitors. It’s amazing how this information gathering can build up and before long you will have many facts about your competitor’s business. You will probably pick up the talk in the marketplace about the success of your competitor, their reputation and credit worthiness. If they have a web site this will probably provide information.

    Other general sources, such as publications and newspaper reports, as well as trade directories and annual reports (if the company is public) will also provide information. In fact, there is a great deal of information available in the marketplace if you are prepared to put some time into researching your competitors. This is especially necessary before proceeding with a sizeable promotion or increasing production to launch new products on the marketplace.

  4. What to do with the information:
    Now that you have the information, it should be analysed. It can be the basis for making business and marketing decisions. Hopefully these decisions will take your business into areas not covered by your competitors and where your business will do well. The investigation and analysis of the information should be put before a management team for brainstorming, based on the data collected. The extra time put into the research can mean mistakes avoided and money saved.

Analyse the Competition – the 5 Steps to follow
The best way to assess your competition is to evaluate their strengths and weaknesses. Also check out their product quality, their services and marketing methods etc. You need to gain a full understanding of what your competitors are doing at any time, so you can change direction (if necessary) to maintain or lead the market.

The steps you can take to analyse your competition are:

  1. Full Research. Carry out a full research on your competition and what they have to offer. Also check out how they do things.

  2. Identify where you are at: Find out the position of your company in the marketplace. Look at your business and see whether you are number one, two or three. Identify what you need to do to improve your standing.

  3. Assess strengths and weaknesses: Once you are familiar with your competitors’ methods of operation and their business services etc, carry out a detailed analysis. From the analysis, you should be able to identify areas where they are vulnerable. Pick up on those areas where you can take advantage of their success.

  4. Use your advantage: If you come across any weaknesses in the competition, take advantage as soon as possible. If you find they have strengths, then take advantage by improving your own operation and reaching their level of strength. In other words, make decisions based on the opportunities that arise when you see how they do things.

  5. Full Review: You should constantly monitor your competitors and review what is happening in the marketplace. Your analysis should not be static. It should be ongoing so you can make any necessary changes, depending on the circumstances and activities in the marketplace.

Do Comparisons with Competitors

The best way to compare yourself with your competitors is to rate each area of business operation on the basis of a scale of one to ten.

Prepare two columns - one column with your business and the other column with your competitor. Alongside each column rate the various features on a basis of one to ten and see how you line up.

Some of the areas to rate include the following.

  • Location of the business.
  • Size of the business.
  • Years of trading.
  • Target market.
  • Terms of payment offered.
  • Hours of operation.
  • General prices.
  • Experience of owners.
  • Range of products.
  • Quality of products.
  • Marketing methods.
  • Promotion and advertising.
  • Quality of service.
  • How the phone is answered.
  • How the staff perform.
  • Perceptions of the business by the public.

Importance of being different

Every business has competitors. It is not enough to demonstrate that you can deliver what your customers want. You need to push for the quality that makes your business different. Position your product or service to show a unique value. It is having a point of difference that will give you a competitive advantage.

Differentiating what your business does, as well as its product range, will keep you from stagnating. It may even motivate you to improve what you have to offer. Make sure that you know exactly what you are offering, compared to what your competitors are offering.

One way is to ask your customers directly.

If they can differentiate your offer against the competition then you will be able to look at the situation and make directional changes, if necessary. Feedback from your customers is important because your whole business is based on satisfying their requirements.

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