In the wild, animals have to compete for food. In our society, businesses are not exceptions. The difference is that we compete for customers. Thus, understanding our competitors’ strategies will provide us with more advantages.
What can competitive strategies bring back to us?
Normally, small companies will look up to some strongest ones who are threatful competitors in the same field of business and try to copy their strategies. However, big companies certainly will not reveal their marketing plans or be a mentor to others. These following questions about our competitors may help us carry out competitive analysis on our own:
- What are their strategies?
- On what aspect they are doing better than us?
- Is there any disadvantage to their plans?
- On what aspect we are doing better than them?
Those above questions do not need to be exactly included in a competitive strategy, yet should be considered when building our own strategies to lure more customers as well as hold on to the current ones.
Two kinds of competitor:
Companies providing the same product lines or services with us are closely related competitors. The other are those who aim to the same kind of markets and clients but sell different type of goods and services.
Take Pepsi for instance, they have to compete with not only beverage corporations like Coca CoLa but also alcoholic drink enterprises.
Questions which should be answered in competitor analysing:
General questions like:
- Who are the major companies in your business field?
- How is the market share distributed?
Detailed questions like:
- What is the attitude of customers toward those companies’ images? (cheap, luxury, …)
- How are their products or services? (Good, bad, …)
- How is their delivery? (methods, price,… )
No matter what the answers are, try to differentiate yourself to get attention from potential customers.
Competitors’ strengths and weaknesses
Clearly understanding competitors especially their strengths and weaknesses are very essential for any business.
Following things can be considered as strengths or advantages:
- Good quality at a low price
- Huge distribution system – they appear everywhere
- Reputation – consumers know and trust their products
- Good customer services
Following things can be considered as weaknesses or disadvantages:
- The same quality but higher price
- Poor distribution system – have merely one or two stores
- Bad reputation – receive too many negative feedbacks
- Poor customer services
We can learn from these above characteristics to improve ourselves
What about ourselves?
Only understanding about competitors is not sufficient, we also ought to know about our advantages, opportunities and threats in the future.
Advantages like:
- Monopoly – only we have permission to provide that service or good
- Power of supplier – only a few sellers while there are many buyers
- Business secret – secret ingredient or software
- Lower cost – can lead to higher revenue
Opportunities and threats like:
- New entrance – it will be a serious threat if new companies join the market and take place of our position with their products and services
- New entrance – it will be an opportunity if our new images of products can attract customers who want to try something new
It is time to carry out competitor analysis
Competitor analysis plays an important role in business planning and marketing. Thus, it is essential for any company’s survival and thriving in a nowadays competitive economy. Identify all about competitors and make use of that information rationally can help us take more market share. Therefore, it is never redundant to do a competitor analysis.
