How To Assess Your Competition (Part 1)
Assessing your competitors serves four useful purposes:
It requires you to assess your existing market share
and current business methods.
We all operate in a competitive environment, and it's
most likely that your competitors are planning to take
customers and market share away from you. How will they
do it? What strategies will they adopt? Who will they
target? All these questions will be considered when you
begin a serious competitor analysis review. Your prime
objective is, of course, to secure "home base" before
you seek new markets.
It can identify new market opportunities.
Most mature markets tend to be static in size and
opportunity. Market share can only be won by attracting
customers away from your competitors. How can you do it?
Where are your competitors vulnerable? Do you have a
competitive advantage you are not exploiting?
You can learn from
the strengths and weaknesses of your competitors.
"Respect your competitor's strengths and capitalise on their
frailties" was an adage used in the Middle Ages, and it still makes
good sense today. By studying your competitor you can avoid
potential pitfalls and save valuable time by not having to re-invent
It allows for an early review of potential changes in the market
Through competitive analysis, nasty surprises can be avoided or at
least, minimised. Changes can come from many directions, new
technology, personnel changes, production processes, etc.
why you should consider a competitive analysis program
Regrettably, there are plenty of examples of businesses which have
ended up on the scrap heap because they were made redundant by their
competitors. Frankly, competitive analysis can be a question of life
and death in cut-throat industries, such as computers.
To counter the effect of slow growth.
In a shrinking market caused by external economic factors, the only
way to maintain sales and profit results is to attract market share
from your competitors. In knowing your competitors' "Achilles heel",
you can attack with confidence. In knowing their likely counter
strategies you can put in place a "damage control" program.
To eliminate "complacency".
It's a common trap into which many business people have fallen in
the past. They lose a customer and it comes as a complete surprise.
They mistakenly thought they were providing a good service, but were
unaware of the standard of their competition. A competitive analysis
program will provide a good "litmus test" for your goods and
services and ensure that you are kept informed of the products,
service and standard of your competition.
To spot opportunities.
Through studying your competitors and their methods, opportunities
may emerge. Opportunities to purchase cheaper or better,
opportunities to sell through a different medium, opportunities to
produce more efficiently etc. Every competitor can teach you
something which can make or save you money and you should approach
the competitor review in this light.
To keep the business "going forward".
Many action-orientated business people thrive on a challenge... and
whither away once it becomes mundane and humdrum. One way of keeping
their interest fresh and invigorating is to make the competition the
target. Get your "action dynamos" to understand that not only do
they need to ensure your existing customer base is secure, but also
that real progress must come at the expenses of winning customers
away from the competition.
To stay competitive.
A final compelling reason why you should consider a competitive
analysis program is because you have to assume your competitors are
doing it to you. Let's assume you are the manager of a manufacturing
business. Imagine for a moment what the executives of your largest
competitor could do with the following dossier of information on
They've performed credit and finance checks on both the business and
the key people. From this information they have a strong idea as to
the financial position of your company. They know what future
ability you have to raise capital, they know what assets are pledged
as security, etc.
They can second guess your ability to withstand a downturn in the
economy, a price ware or new competition. From the personal
information they've gleaned on your key people they can second guess
the salary levels, the level of the employees' personal debts, etc.
This kind of information has been used in the past to offer
attractive salary packages which pander to the known financial
position of the prospective employee. As you are no doubt aware,
there are limitless uses for this sort of information ... and it's not
difficult to obtain. To get you started, we suggest you contact some
of the larger credit collection agencies for details of their
confidential finance reviews, (example: Dun and Bradstreet). The
Credit Reference Association of Australia can provide you with a
CRAA report on individuals and companies. This report will allow you
to build up a model of the finances of your competitors. The various
Corporate Affairs Commissions may hold financial information on your
competitors' companies which is available for public inspection.
They've reverse-engineered your products. They have a complete file
on your material components - where it was purchased, the likely
price, the delivery times, etc. They know your plant capacity, the
state of your plant and equipment. In short, they know your product
almost as well as their own.
With this kind of information they can give their salespeople a
decided advantage in the field. They can modify their own product to
capitalise on the weaknesses in yours. They can interfere with your
production cycles by placing large orders of their own with your
suppliers at crucial times.
This information wasn't difficult to get. They bought your product
and pulled it apart.
They made searches at the Patents, Trademarks and Design Office.
Other searches at the Titles Office and Local Council revealed
details of the factory site and layout. Casual discussions with
plant suppliers revealed details of the capacity and condition of
your machinery. In casual conversation, your factory employees
unknowingly gave vital information about the management, production
bottlenecks, large orders, and internal problems, among a host of
In a competitive environment, you can't afford to wait until the
Next week, we'll discuss how to get information on your
Can't wait until next week?
Read the entire