“Focusing solely on what you can potentially do better than any other organization is the only path to greatness.” – Jim Collins, author of Good to Great
Every entrepreneur and CEO realizes the critical importance of understanding their market and keeping close watch on the competition. This ability to recognize your own positioning in your market relative to your competitors is essential to building a successful business. The majority of our efforts in Kompyte’s blog section will be devoted to effectively and efficiently managing your competitive analysis WITHOUT succumbing to paralysis by analysis.
Here are six quick tips to make sure you’re covering the basics:
Look in the mirror
Before you can accurately determine who your competitors are and what they look like, you need to completely understand your own brand positioning and identify your core value proposition(s). Stay objective and determine what makes your product or service unique in the market
TIP: Ask your customers and other non-affiliated professionals to explain your brand’s unique selling proposition. It’s difficult for business owners to remain objective about their own company so it’s important to seek out non-biased feedback on what you genuinely do better than everyone else.
Focus on tomorrow, today
Don’t concern yourself entirely with the here and now. The competitive landscape is dynamic, constantly shifting with the changing of the tides. Innovation and disruption are present in every industry and rapid advancements in technology mean your sector may look very different one year from now.
TIP: Keep your eyes and ears open to the underlying themes in your industry. Is there a change in your competition’s marketing strategy or the channels they are using to communicate with their clients? Has there been a rush of patent applications in your industry?
Indirect competitors are often the bigger threat
Just because they don’t operate in your space, doesn’t mean they can’t steal your market share. Remember, customers are measuring you against the “next best alternative”. Don’t let peripheral industries catch you by surprise as they creep into your market.
TIP: Stay alert and continuously scan your market for new entrants or possible alternatives to your product or service. Keep notes and a timeline of when and where these outsiders may try to enter your space.
Okay, okay, you can now draw up your SWOT analysis
You learned in b-school. Your marketing professor jammed it down your throat. It must be good for something, right? It is. Understanding your own strengths, weaknesses, opportunities and threats allows you to pinpoint what you do well and where you need to improve. The SWOT analysis is still the king for “at-a-glance” competitor analysis.
TIP: Create a SWOT analysis for each of your competitors as well. It will help put yourself in their shoes and give you new perspectives of they view your brand and positioning in the market.
Pricing is Perception and Perception is Reality
A successful and sustainable business is built on the promise and delivery of value. Take a hard, objectionable look at your product or service and what the competitors are offering. Ask your customers what they think about their options. Are they reasonable? What would a perfect solution look like? And more importantly, what would they pay for it?
TIP: Focus on understanding your customer and the value they receive by doing business with you. By consistently delivering a reliable and valuable solution to their problems, you protect yourself from price-cutting competitors.
Good Artists Copy, Great Artists Steal
While blatant patent infringement and plagiarism is ill advised, don’t be afraid to “borrow” great ideas from the competition. Great ideas don’t fall out of thin air. Innovative breakthroughs take time to develop and mix with existing resources.
TIP: Break down your competitors offerings into tangible bite-sized value. Choose the pieces of products or services that have real commercial value and reconfigure them to better address a current customer need. Be patient, sometimes the most important ingredient for inspiration is time..
Do you have any other tips to share for constructing an effective competitive analysis framework?
Stay tuned as we’ll use this space to brainstorm, experiment, teach, preach and learn the most effective methods for competitive analysis in our rapidly evolving business world.