Competitive Landscape – Win, Place, or Show? Part 1of 2
Horse Racing is a great metaphor for the competitive business environment. Each horse (or business) has a different set of attributes and challenges, yet they are all trying to achieve a common goal. Throughout the race their position changes in relation to their competitors as they deploy various strategies. At any given point one horse may be leading the pack while shortly thereafter, they’re caught in the crowd or trailing due their limitations and/or the efforts of their competitors. The biggest challenge to this metaphor is that in horse racing, unlike business, all the horses have the same goal, or finish line.
For businesses to succeed in the race with their competitors, it’s necessary that they have a clear understanding of the competitive landscape. They need to understand who’s in the race and what their comparative strengths and weaknesses are. In this 2 part blog we’ll look at 10 competitive attributes you should evaluate as you strategize to improve business performance.
It’s important that you gather both qualitative and quantitative data to effectively assess your competitive landscape. This must be done with intention as opposed to casual observation. Completing a competitive landscape assessment will provide valuable insight into how your business is performing in relation to others in the market. Follow these steps to implement a Competitive Landscape Assessment.
1.) Identify Key Competitors
As you embark on this assessment it’s also important to recognize that there are direct and indirect competitors. Direct competitors will provide products and services similar to yours, while indirect competitors will provide alternative solutions. For instance, airlines provide transportation to various destinations. Their direct competitors are the other airlines providing similar services while their indirect competitors include other forms of transportation including trains, buses, ships, or automobiles. All these competitors, direct or indirect, compete for your customers.
2.) Use Tools and Resources
You will need to leverage a number of sources to secure competitive information. Research databases, trade association data, industry reports, and public filings, amongst other resources should be used to gain as much information as possible. At the end of Part 2 of the Competitive Landscape Blog there are suggestions on where to look for the requisite information.
3.) Monitor Continuously
This assessment is not a “one and done” exercise. Once your initial assessment is completed you need to monitor your competitors and the environment for changes. Update the plan accordingly so that timely information is available. Establish alerts that inform you of competitor news or changes in products, services, delivery systems, financial performance, etc.
4.) Internal Analysis
Most importantly, evaluate your own business and compare it to the same competitive attributes. This will help you identify strengths and weaknesses and devise appropriate competitive market strategies.
This blog includes 10 competitive attributes you should use in your Competitive Landscape Assessment. The first 5 attributes are presented below. The remaining 5 attributes and a resource guide will be provided in Part 2. The description of each attribute will include why it is important and what are the appropriate measures for each.
1.) Market Share and Company Size
Market Share and Company Size help you understand where your company is positioned in relation to your competitors and provide insight into the resources your competitors may have to compete in the market. Smaller companies might be more responsive and agile, allowing them to respond more quickly to market changes while larger organizations generally have economies of scale that can benefit them in pricing and delivery competition.
To better understand Market Share, look at the percentage of the market your company has as compared to your competitors. Be sure you’re using a consistent and applicable definition for your true market.
2.) Competitive Products/Service Definition
To assess your position in regard to products and services you should first understand your Unique Selling Proposition (USP). Then compare this USP to that of your competitors. This will help you identify key differentiators and may identify gaps in the market. This can lead to the development of strategies to provide innovative products or services that will assist your company in remaining competitive.
In your competitive assessment look at and compare your competitors USP’s. Obviously, understanding your competitor’s price and what it includes is a key component to your assessment. If you find that the pricing is different due to differing product or service features, you’ll need to determine how best to address this in your marketing and sales efforts. Finally, don’t forget to include an assessment of the product or service quality and technical features.
3.) Customer Satisfaction and Brand Perception
Customer loyalty, repeat business, and referrals are driven by customer satisfaction. Your most cost effective sales are typically from repeat customers, and repeat customers only come from satisfied customers. Understanding your customer satisfaction ratings and those of your competition will provide insight into areas that may need improvement or those where you have a competitive advantage. This allows you to adapt or course correct customer service strategies or product designs when necessary; or conversely to capitalize on strong customer service attributes.
In your assessment look at customer reviews, for you and your competitors, both good and bad, from existing and past customers. Consider using a Net Promoter Score (NPS) survey to get your NPS. This will indicate whether your customers are likely to recommend your product or service to someone else. This will help you gauge your customer loyalty as compared to that of the competition. Capture and track customer retention and loyalty metrics over time.
4.) Marketing Channels and Strategies
Identify and capture how your competition markets. This can uncover opportunities in your own marketing strategy and identify where it may be best to invest your marketing dollars. The objective is to increase customer engagement. The company that excels at that will typically capture a greater share of the market.
For your company and your competitors, take a look at the use of digital marketing channels and strategies such as content marketing, social media, Google Ads, SEO, etc. But don’t
forget that it’s also important to look at traditional marketing activities such as print, radio, and television. These perspectives coupled with how companies use influencers or affiliate marketing strategies will provide a comprehensive comparison of how you’re approaching your market versus your competitors.
5.) Pricing Strategies and Positioning
Typically, it’s not just the price that drives customers to purchase a product or service but the pricing strategy as it relates to their perception of value. Just capturing your competition’s price doesn’t give you much information to work with unless you understand their pricing strategy and value proposition. If you have the lowest price but still have a low market share, obviously something else is driving customer behavior.
Take a look at competitive pricing models such as pricing tiers, subscriptions, buy here pay here, etc. Also, identify strategies associated with discounts and promotions as they relate to frequency offered and size.
In Part 1 of this blog, we have identified the importance of assessing your competitive landscape to improve business performance, provided 4 implementation steps to complete your assessment, and a description of the first 5 attributes to include in your assessment
Competitive Landscape – Part 2 will include information on the remaining 5 competitive attributes and a Suggested Resource Guide for finding the requisite information.
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Have a great day!
Richard
