Building competitor profiles
Build a profile of your key competitors. Gather information on:
- the names and locations of local competitors
- their brands, their product range, the services they provide
- the type of customers they target
- their percentage of the market
- how they promote their products or services
- pricing
- who their distributors and stockists are
- geographical areas covered
- their other partners or alliances.
Be prepared to discover competitors as you go. Businesses often have ‘preferred suppliers’. These may be very hard to dislodge – even if you have something better to offer.
If you cannot locate any product or service that is a substitute for your product or service in the market, it is likely that there is no or very low demand due to factors unique to that market. Make sure you have correctly identified the reason for the absence of competition. “They just don’t have it yet” is rarely the correct answer.
Competitor pricing
How your competitors price their products will affect the prices you can achieve for your products in the same market. Be aware that local competitors will not have the same cost structure you have. This could be due to lower product to market costs, as they do not have to transport products long distances or adapt them to the local market.
Could your competitor employ defensive pricing strategies (cutting prices) when you enter the market and would this affect you?
If your product is superior to what is available on the local market, and you can convince the buyers of this, you may be able to sell at a premium price.
Assess competitor strengths and weaknesses
Look for customer reviews on websites, on social media, and on their own websites. Why do customers use their services or buy their products? Remember that customer perception can be as important as fact.
Create an action plan:
- What can you do to reduce the impact of key competitors strengths?
- How can you take advantage of their weaknesses?
Benchmarking will give you some idea of the relative performance of you and your competitors in some key areas. List your main competitors and rank factors relevant to your business such as price, service, quality, expertise, reputation, design etc.
External factors affect both you and your competitors – both positively and negatively. A “PESTLE” analysis is helpful for this. Consider Political, Economic, Societal, Technological, Legal (or regulatory), and Environmental conditions and changes that could occur.
Assess your business
Why would a customer change their behaviour to purchase from your business instead of your competitors? Assess your company using the same criteria you used to rank your competitors.
