Competitive Analysis in Industry and Marketplace

Tuesday December 30th, 2003

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What Are My Competitors Doing and Why Does it Matter?

Knowing everything possible about your competitors helps you develop your competitive edge. Once you know their pricing, customer service strategies and marketing approach, you are prepared to develop your competitive advantage ?how you are not only different, but better!

Identify the Competition
When identifying competitors by group and individually, use a broad interpretation; if you own a McDonald’s franchise, for example, your competitors are not only all fast food hamburger franchises, but every restaurant where food is prepared quickly and offered at a reasonable price; i.e., El Pollo Loco, Taco Bell, Denny’s, Sizzler, and the local gas station mini-market. In other words, every establishment where your customer could choose to spend his or her money for an inexpensive meal is your competitor.

Determine Areas of Competition
Areas of competition involve issues like price, quality, location, customer service, convenience, range of products or services, marketing strategy delivery/turnaround time, etc. Consider the reasons your customer has a need for your product or service and the factors they consider before making the purchase. These are the areas of competition.

Obtain the Information
Information about your competitors can be obtained in a variety of ways. If they are publicly-held companies, annual reports, news releases and other information is readily available. Other resources can be used:

1	Go Shopping. Visit the competition. Sample their products. Experience their customer service.
2	Designate an Intelligence Operative. Assign a staff member or colleague to become a competitor’s customer periodically. Gather brochures, catalog, price lists. Read their ads carefully.
3	Read your industry’s magazine or newsletter. Pay close attention to new products or services being offered, customer service policies being touted, etc.
4	Be visible at professional meetings. People are love to talk about their businesses; what’s new, what’s working for them.
5	Attend your industry trade show or conference. Note the issues being discussed in groups and individually.
6	Survey your customers. Develop a simple questionnaire that asks what they like and don’t like about your business. You’ll learn a lot about your business and your competitors.

Prepare the Analysis
Once you’ve identified your competitors, chosen the areas of comparison and obtained the information, compile a chart to compare yourself to each of your competitors. In what areas do you shine? Where do you need to focus more attention?

Develop Your Competitive Edge
Your competitive edge is the one or perhaps two areas in which you rise above the competition. Remember the advertising strategy “hot, fresh pizza delivered to your door in 30 minutes or less or you don’t pay for it!? Domino’s Pizza considerably enhanced their market share by not focusing on the product at all, but on the one area where they could outstrip the competition: quick delivery. If you manufacture solder paste and your strength is in quick turnaround because your factory is located nearby, then your competitive edge is convenience.