Kara Stanford
Strategic Marketing Consultant with over 25 years of experience.
CEO & Founder of The Marketing Spaces.
Kara Stanford
Strategic Marketing Consultant with over 25 years of experience.
CEO & Founder of The Marketing Spaces.
Every business has competitors.
‘Competitors’ are any other business or person who offers a reasonable alternative to what your business offers.
As a small business, it can be hard to know how much valuable time and resources should be spent on assessing your rivals, and you’re probably wondering how to do a competitor analysis properly.
So, we’re here to help you. Follow this step-by-step guide on how to conduct competitor analysis that works for your business.
Identify your real competitors
It’s too easy to skim this thinking: “It’s obvious who our competition is.”
Many small to medium businesses say something like: “We offer professional accountancy advice and services to businesses turning over £2m-15m. Therefore, our main competitors are other accountancy firms like us.”
This isn’t the whole picture.
Competitors might be:
- the business employing a Finance Manager
- the business with a piece of accountancy software
- not engaging a professional but keep muddling through as best they can.
To help you identify your real competition, answer these three questions:
- What problems do we solve for your clients?
- Who / what else solves those problems?
- What / who else have we actually lost business to?
From the above, make a list of your real competitors – where possible, put down company names, but groups of competitors are fine, e.g. all accountants within a 25-mile radius.
Assess each competitor in relation to your business
Go through your list. Decide what each of your “competitors” are to your business. Assess them as one of the following:
A Threat –the competitors that you know, or strongly suspect, you’ve lost business to. Put in here up-and-coming threats, too, e.g. a new online version of your services that are being launched.
An Opportunity – they aren’t actually threats; perhaps you aren’t operating in the exact same market, or you’re after slightly different customer groups. However, as you operate in the same space, can you make an opportunity out of them?
Inspiration – some competitors are market leaders. They’re the best in their field, way ahead of your business. Choose to be inspired by them; it’s called adopting a market-follower strategy and can be a highly effective use of your time and budget.
Irrelevant– these are competitors that you’re happy to let have that business or are geographically too far away. For example, the clients who would much rather buy a “DIY” book off Amazon – leave them to it. If a competitor operates in a totally different geographic marketplace to you, and they offer no opportunities, don’t inspire you, and aren’t a threat, keep an eye on them in case they choose to expand.
List your reasons for assessing them in this way.
Set your competitive strategy
Now that you know where each competitor is in relation to your business, you have to decide how you are going to deal with them. This will be your Competitive Strategy.
Create a table to see this properly.
Your approach, or competitive strategy, depends on:
- How much resource do you have for competitive strategies?
- Which of the above categories most of your competitors fall into (if you had a lot of “threats”, for example, you would need a very active competitive strategy to counter them).
- Your company’s own business goals and how much business you stand to lose from competitors.
This is a simple competitive strategy example to help you understand what to do.
Take action
As with any plan, you then have to put it into action. Ensure each competitor strategy is someone’s responsibility.
Decide how often you monitor and report back on each competitor, and make sure that when the competitive environment changes, your company also changes its approach to competitors.
Conclusion
Developing the right approach to your competitors is important to maintaining good business health. You want to dedicate the right amount of resources to it and be confident you’re finding out what you want.
If you operate in a competitive marketplace, then you need to read more than this blog. Start with Chapter 12: Creating Competitive Advantages in “Principles of Marketing by Kotler, Amstrong, Saunders, and Wong”. This is the book and thinking upon which most other competitive theories and management are based.
