Getting to know your competitors
Q . MY INDUSTRY has changed a lot in the last few years and I seem to be facing new and different types of competitors, to the extent that I am not sure what competition is out there now. What is the best way to go about researching competitors, and what type of information should I look for? A . It is a good idea to try to collect and analyse information on competitors on a regular basis. It allows you to benchmark your performance against peers in your industry, to understand the alternatives that are being offered to your customers, to identify competitor weaknesses that you may be able to exploit, to find new customers or product/service ideas, and to fine tune your business forecasting. Following is some advice to help you on your way. WHERE TO FIND INFORMATION
In simple terms, there are two types of research you can use – primary and secondary. Primary is research you carry out yourself. It can include feedback from your customers and suppliers about competitors gained through dialogue with your sales or purchasing team, or information you gather by calling your competitors to request information/a brochure/a price list.
Secondary refers to research that already exists. It can include directory listings to identify competitors (chambers of commerce, business directories, web listings), competitors’ sales and marketing literature (including brochures, ads, direct mailshots, press releases), competitors’ web presence (websites, blogs, social media updates), market research reports published by research companies, trade exhibitions and company accounts, which companies must file with the Companies Registration Office (www.cro.ie).
You could also keep an eye on internet forums and social media discussions (Facebook, Twitter, etc.) as these are now key placers where consumers share information on and with suppliers. WHAT YOU NEED TO KNOW
The type and level of information you will need will vary depending on your industry and business, but there are basic things every business would benefit from knowing about their competitors. They include:
- Whotheyare - In addition to existing businesses that offer the same type of product or service, there are also new entrants that may emerge in the market, or businesses that compete indirectly by offering a different type of product or service that could be bought instead of yours. For example, a restaurant and a cinema may not be obvious competitors, but they are both competing for the same “entertainment spend” or disposal income. Internet trading means you may also be facing competition from other parts of the country, or from other countries.
- Whatthey offer - This includes the product or service, but also the experience that they are offering the customer as this can be the main reason customers buy (or would buy) from them.
- How much they charge - It is not advisable to set your price solely on your competitors’ (your price must cover your costs and give you the margin you require), but it is good to know what they are charging and to take this into consideration.
- Who they sell to, and how - Are there any customers you share? There may be an opportunity for you to win more of the business. Do they have customers that you don’t sell to? There may be new business potential. What is their go-to-market strategy – retail, online, business distributors?
- Theirmarketing strategy - What are the benefits they are promoting and how? Do they advertise? Do they have a strong presence in local radio or press and at networking events? Do they have a loyalty scheme?
- Where they source raw materials/products/services - Do they use the same suppliers as you and at what comparable price? Or, do they use different suppliers that you may consider using also?
- Theirfinancial position - Company accounts are useful for benchmarking your own performance (although be careful of making direct comparisons as it may not be a like-for-like situation) and for getting an indication about costs, wages, sales, profit margins, etc.
- Theirstructureand organization - You may be able to learn from the way in which competitors structure their operations, in terms of finding more efficient ways of doing things, as well as gaining an understanding of the customer experience. For example, how do they manufacture, distribute, deliver or look after service/returns? How many staff do they have? THE SWOT ANALYSIS
All of the above should allow you to get a good idea of your competitors’ strengths and weaknesses. The next step is to identify opportunities and threats for your own business.