Conducting a competitive analysis is probably one of the most important reports you should spend time doing for your business. The main reason is that clients now have quick access to your competitors’ perceived or actual product/service benefits. The second reason is you maybe promoting one feature on a product or on a soft skill like customer service as your company’s brand differentiation. in the age of digital marketing, this isn’t enough to keep your customers loyalty.
Competitive Forces Increase Due To Digital Marketing
The consumer has changed, we’ve changed, we want choice. We want to know why we should buy from you and continue to buy from your company. Even a new advertising program or social media campaign can change your customers’ mind to buy from your competition. A simple share can change everything!
On the upside of things, as someone in marketing, it has gotten easier to read the competition thanks to the Internet. Granted, you may not know about an upcoming advertising campaign from your competition, but what competitor tracking will do is to help you understand the current industry environment.
Know how to track the competition
But you’ll need to know what you are looking at to be able to build a marketing plan and it starts by creating a competitive analysis spreadsheet.
What you are looking for is the ability to understand what next, what will be your competitor’s next move. This skill set takes time to develop, so don’t give up just yet.
The next area to track is how you compare against your direct competitors based on actual product features as well as clients’ perceptions of your product and your competition. It is these gaps and opportunities across a range of factors that you are looking for to either help define your brand message or educate your target audience should their perception be incorrect or skewed.
Below are the major factors you should be tracking either weekly, monthly or daily depending on your industry. These factors include financial stability, type of clients, marketing investment, staffing, product and service offering and brand positioning and messaging.
A competitive analysis includes the following:
- Who are your direct and indirect competitors
- Understand the threat of substitution
- What is the ease of market entry
- Supplier Power
- Buyer Power
At the start, create an excel template listing the top 5 to 10 factors, benefits and features your customers believe to be important and are factors for your company’s success.
You’ll need to set at least 10 hours a week to stay on top of your competitive reporting; it comes with a lot of reading competitor’s annual reports, press releases, product brochures, patent applications and much, much more!
Also, you’ll need to travel to trade shows, check out how the competition presents their brand, attend all seminars and speak with the trade show organizers – the good ones will have a vibe on the industry’s outlook based on exhibitors and attendees comments, attendance and promotional programs.
Look in and out your industry
I like doing a competitive analysis. It allows me to understand clearly my company’s position in the industry, as well as my company’s strengths and weakness. During a competitive analysis, you need to remove any bias. You need to think analytical because you won’t be doing your company any favours by listing brand strengths that are still not developed. Also, brand strengths need to be relevant since you’ll be using these strengths to create a truly unique brand message that is relevant to your target market.
Real benefits in competitive analysis
Yes! It will help you formulate the marketing strategy, discover opportunities in new markets or product development and create a unique brand message that will help you stand apart from your competitors.
DEALING WITH UNKNOWNS
My biggest frustration is when I read posts that insist that you can know your competitor’s marketing strategy by reading a press release. By the time you’ve read the press release, it’s too late. You are in reactive move.
However, you can find out a lot from a public company from their annual shareholder report, especially in which product saw growth, which markets they are focusing on and why they’ve spent so much money. Here is a list on how to track your competition:
- Subscribe to their newsletter
- Speak with your sales people
- Speak with your client / customers
- Track lost sales and find out why they chose to go with the competition
- Understand your market trends and political environment
- Be curious, don’t accept the status quo
- Visit trade shows, speak with the competition
- Follow them on social media
- Visit their website – often
- Write up a monthly report, it will help to see changes before it comes to a full blown problem.
Sales forecasting from competitive analysis
The second area is sales forecasting. There are two types of sales forecasting, a) when you’ve just launched a business and need to know your cash flow and b) when you’ve been in business for a few years and need to know how much sales you need to stay profitable.
The idea that you can track your competitive and help you with your sales forecast is naive. It will only help you understand how much work, like marketing, promotion, sales, and product development you need to do if you plan on entering ‘their territory.’
Or, it will help you determine whether you should enter their landscape, or not and go somewhere else.
NOTE: As much I appreciate the importance of a monthly competitive analysis report, I also know that big client wins, overnight a competitor enters your niche market, and new product introduction can and does arrive as a big surprise and changes the market space. It happens, no matter how much competitive tracking you are doing. It what makes business so exciting.
Need more? Check out The Business Toolkit.
[Updated: March 2018]