Getting to know your competitors
Identifying who your competitors are for some organisations is easy. For example, if there are four widget makers that make your widget worldwide then getting to know them, where they operate, how they go to market is quite easy to do. (If you think four widget makers is on the low side, then back in the 1990s there were four companies – one US, one UK and two Japanese – manufacturing magnetic fluid rotary feedthroughs needed for the silicon chip industry then in 1996 a spate of M&A left two companies (the author was involved at the time, each company was trying to buy at least one of the others!))
However, if you are a carpenter specialising in bespoke hand-made kitchens – who are your competitors? They are not really the likes of Wickes or Ikea kitchens, as they are aimed at a different demographic. With a hand-made kitchen with a price tag of £50K or above then the competitors are as diverse as a worldwide luxury cruise, a new car, a swish garden studio as a home gym, or of course other specialist hand-made kitchen companies.
Why is it important to understand your competitors?
- Market gaps: It may be that your competitor covers a certain geography or specific vertical markets. If so, how about you concentrate on a different area whether geographic or type of industry. For example, if your competitor covers within the M25 and you are based in Egham (just outside of the M25) why not concentrate your efforts on the M3 and M4 corridors heading out of London. Alternatively, if your competitor specialises in providing stationery to schools and further education colleges, why do you not specialise in other areas of local government or SME businesses? By identifying their strengths can highlight an area that is lower hanging fruit so becomes an opportunity on your SWOT analysis. It also helps to prevent commoditisation and price battles.
- Product / service gaps: If you are a small family greengrocer on the high street a couple of hundred metres from a large supermarket. How can you differentiate yourself? Personal service, knowing what your customers’ favourites are, and being able to recommend other replacements if they are out of season, a cheerful hello whenever anyone enters the store. But also, there are services that you can offer that the supermarkets cannot: fruit baskets for when someone is ill (I remember being in hospital 20 years ago, I can’t remember what the flowers looked like, but I do remember the basket of fruit that enticed me to nibble a Pink Lady apple, a few grapes or a nectarine), pre-order Christmas needs so that they are ready to collect.
- Building messages: Your marketing messages need to reflect your business, your strategy. They should not copy your competitors’ strategies – you’ll just end up in a resource hungry war. They should be distinct in terms of branding – don’t use the same colour palette or images. Have confidence to follow your own strategy, if you follow your competitors and action the tactics better than your competitors, you could just end up in the wrong place quicker than your competitor.
- Merger and acquisition prospects: During these difficult times then there are some businesses which need to either merge or be acquired in order to survive. Having detailed knowledge of your competitors could mean that you know when to approach for a merger or an acquisition. It may also be your own exit strategy to build your business to a certain level to be attractive to a competitor to buy you out for your P&L. Here at Cut Through Marketing we have worked with start-up companies who already have the aim that in 5 years’ time their business will be enough of a thorn in their major household name competitor’s side that they will buy them out. But in the first instance they have found a gap in their competitor’s offering that they are going to leverage to become that thorn.
If you need help in formulating your competitor analysis and how it impacts your SWOT analysis then please reach out and drop us a line.