For anyone trying to start and grow a business, the competition can be daunting. One of the first tasks of any company is to map the competitive landscape. The pointers below should help companies with the difficult mission of evaluating the competition and the time-consuming task of keeping abreast with every move the competition makes.
Be a customer. Testing a firm’s customer service will reveal much about their business. And don’t just pretend to shop from competitors. Buy something. It’s the only way to gain firsthand experience with the company’s products and services.
Find out about the people who run competing businesses. Where have they worked? How long have they been in the business? What are their strengths and weaknesses? This information can help anticipate the competition’s moves. For example, a local, lifelong farmer will run an Indiana seed company very differently than will a young MBA.
Talk to competitors’ customers. Why do they buy from your competitors? Is it because of the quality of the product or service, the price, the location, or the customer support? What do they dislike about the company? What do they wish that company would provide? Why don’t they buy from you?
Use the Internet. Online services such as Dow Jones Interactive provide information about companies. Or learn about competing businesses simply by going to their Web sites. Another easy way to track down information on the competition is to do a Google search.
Check public filings. Companies must disclose information to government agencies. Such disclosures are required to undertake public offerings, receive building permits, register for patents or trademarks, and so on. Many of those filings are public record and contain information about the company’s goals, strategies, and technologies.
Attend industry conferences and trade shows. Competitor representatives will be pounding their chests about their firms’ products or services. Take advantage of the opportunity to learn about their product offerings and strategies.
Assess the competition’s goals. A competitor trying to increase its market share might lower prices; a firm attempting to increase profits may cut costs; and a business that wants to accelerate sales growth might kick off a marketing campaign. By knowing a competitor’s goals, a business can better anticipate their strategies.
Be aware of the potential for new competition. The competitive landscape can change quickly. A national chain could enter a region. Alternatively, companies that aren’t competitors may shift their focus.
Don’t delegate the job of keeping up with competitors. A business owner might be tempted to delegate the task of competitive analysis, but the entrepreneur is in the best position to appreciate and act on information about competitors.
Define the competitive landscape broadly. Competition includes anything that could draw customers away from a business. For example, movie theaters compete not only with other cinemas, but also with restaurants, live music venues, theater — even cable TV, video rentals, and video games.