Once you know what your competitors offer, you can compare your similarities to identify your points of difference, then develop these into a compelling competitive advantage.
Uncover their strengths and weaknesses so you can make your product or service seem more desirable, more urgent, more practical or more appealing to the customer.
- Use the internet and social media – competitor websites, Facebook profiles, and customer reviews can reveal a great deal about who you are up against.
- Visit or mystery shop them – visit their business or consider employing a ‘mystery shopper’ (someone the competitor won’t recognize) on your behalf.
- Order something – try ordering a product by phone or online to assess service levels. What did they do that was good/poor?
- Talk to their customers – why do customers stay loyal to the business and what don’t they like? How can you use their weaknesses to your advantage?
- Talk to their suppliers – suppliers can often reveal what competitors are up to, such as opening a branch, expanding or laying off staff. You may discover competitors you didn’t know existed.
- Attend trade shows – competitors exhibiting at trade fairs will typically be handing out lots of useful information. What can you do better?
- Use ‘foot research’ – spend time watching how many people enter a competitor’s business. Are they attracted by the location, the store design, or a combination of the two?
- Their own advertising and marketing campaigns – anything they’re promoting or saying in the media or online. Often, they say too much!
- Join business networking groups – this is an important part of keeping alert to market developments. Joining industry associations or business groups is a good way of discovering more about competitors.
What to find out about direct competitors
You’ll need to know:
- Prices – it’s useful you know all about their pricing strategies so you can match or better or be able to explain why you’re different.
- Distribution – the methods they use for delivering their products or services to consumers.
- Brand – the values and messages they’re trying to convey with their images and branding.
- Products/services – what they provide, how these are different from what you offer, and how they market them to their clients.
- How they advertise – Where they advertise and the channels they use can expose market assumptions you can exploit or give an indication of whether they have a better understanding of the market than you, or simply tell you they have a scattergun approach that might extend to the rest of their business.
- Loyalty – the techniques they use to get customers to return and purchase again.
- Ownership – who owns the businesses you compete against and what kind of people are they? Research the owner and the industry as well as the company. Check out LinkedIn for a profile of the owner that might give a business track record, and use any statistical data on your industry you can find on the web to compare you and your competitor to industry norms.
- Their customers – characteristics, why they buy, when they buy and anything you can learn to lure them away.
Be aware of indirect competition
Indirect competitors are those offering products or services that aren’t the same as yours, but could still satisfy the same need. You’ll have to think ‘outside the box’ to spot your indirect customers as they may not be immediately obvious.
One example of indirect competition to a newly opened restaurant is the local cinema (rather than another restaurant). Potential customers could choose to spend their money on a movie (increasingly a downloaded movie with Uber Eats) instead of a meal out.
There are always other options for customers to spend their money so it’s important to be aware of these alternatives.