When gathering information for your competitor analysis, it is important to consider how businesses compare to your own. Key metrics include their size, number of employees, the length of time they have been in business, how are they funded and level of revenue d generated annually. Revenue can be hard to find if the information is not publicly available.
Let’s say for example, that you want to analyse your business against those in the hairdressing industry. You would need to know the difference in the number of salons they had and number of hairdressers per salon to know whether the items you plan to compare are relevant. Similarly, if the business has been operating for five years, they will likely have a more established brand than one which was set up in the last 12 months.
Product and service
A business often differentiates itself from its competitive through tweaks to its product or service.
- Think of a successful competitor’s product, what features does it have that others in the market do not?
- Is the pricing the same across the market, or do some competitors charge a premium due to extra features or quality?
- What are their customer reviews saying about that product or service?
- What perks does that competitor offer? For example, do you get a free trial for their service, or are there any free gifts given with the purchase of their product?
For example, if you were to compare Uber, DiDi, Ola, Shebah – their service offerings are very similar. However, Shebah has appealed to customers to solve a slightly different problem than Uber by providing safe travel for women and children. DiDi on the other hand only differs with price – the service offering is the same as Uber. With Coles and Woolworths, their pricing is similar but by changing store layouts, introducing new technologies like self-services, and new services like click and collect, the competitors are trying to create added value. Then you consider their loyalty programs and giveaways (Ooshies, Woolies Lego) which are examples of perks provided to customers to try and win their business.
The next consideration when reviewing competitors is what their existing customers think of them. What portion of the market does that business have? Does it have a good reputation? What does its customers like about its product or service, and what do they dislike? Does that competitor only service a particular geographical area? Does it use social media to reach its customers and target market? What sorts of customers are does it appeal to?
For example, while your business may not sell the product or service at the lowest price, in some industries, there can be differentiation in the service level or customer service after the sale. As an example, in some industries where they provide products with safety ratings, they need to be able to provide the full trail of where the products were sourced from, with all of the documentation. There is then a high after-sales service. This is where some “smaller” businesses can differentiate from the bigger competitors in the market.
Airlines typically know who their target customers are. Qantas targets the business market and deals in patriotic messaging, appealing typically to older and regional customers. Jetstar targets a younger demographic and provides cheaper fares to destinations popular with this demographic.
Marketing and positioning
Marketing and positioning are an interesting metric to use when analysing your competitors. Sometimes extensive marketing or a significant advertising presence may not lead to increased revenue or sales but instead, it indicates a false representation of the competitor.
However, its useful to consider how the competitors are leveraging their marketing and advertising budgets.
- Are they using SEO?
- How high do they rank on Google when you search for your product/service?
- Regarding their customers, what are they using social media for?
- What social media networks do they use?
- How much engagement do their posts get?
- What days of the week do they post?
- Do they use influencers to post their products?
While the point of a competitor analysis is not to copy everything that your competitor is doing, it can give you an idea as to where they are interacting with their customers and whether this is something that you could do better.
For example, to launch their products, new businesses will often engage the services of influencers, either by way of gifts for advertising or through payment. This could be a way that your business could reach a wider audience or a section of your target market.
Those reading this article are probably wondering, where do I find all this information? I would start with a Google search. There are existing platforms online that look behind a business’s website to show the structure of their platform. In addition, you can easily find Google reviews for most businesses. You might need to make contacts in the industry to find some of the more private data. The more time spent planning, the increased likelihood of success.
Once you’ve done your research, you’ll be able to identify key areas from which you create a value proposition for customers. You want your customer to know: what’s in it for them, what they going to get from your business that they won’t from a competitor, and, how you stand out from the competition if there is not a lot of distinction between products or service offerings. Remember, your value proposition and point of difference is not a set and forget item in your strategic plan. Rather, it will need to be reviewed over time to ensure it is still relevant to your market and customers. Competitors are also not the only driver for change. You need to respond to your customer’s feedback and requests – at the end of the day, the customer is most important to your business.
If you would like more information on the above or additional help with your strategic plan, please contact your local William Buck advisor.