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Sunday, 19 August 2018

How Well Do You Know Your Competitors? Make Sure You Are Up To Date!

One of the constant messages that I receive from the members of my Vistage CEO peer group and indeed with most other senior business people, is what can we do about the competition?

A neat approach is to say don’t look over your shoulders at your competitors, run your business to make them worry about you.

That is all very well and good but the competition will always be with us and the clever thing is to understand how genuinely important they are to our business and precisely what to do about it, if anything.

In my consulting days I did a great deal of market research, mainly of the desk variety and spent many happy and not always productive hours in the Manchester Central Reference Library.

We were not permitted to use the copier and consequently we had to make copious notes (which were permitted) of any information that seemed appropriate.

Then back to the office to type it all up and try to use it in the research project.  As this usually included vast amounts of statistics the whole exercise was very laborious and very prone to input error.

I don’t have to labour the point that things are vastly different now. Desk market research for whatever reason is a relatively straightforward exercise.

It may be so, but the question is, if it is so simple how often to we do it and use it on a formal basis?

The ancient Chinese military strategist and philosopher, Sun Tzu, in his great book, The Art of War, coined the phrase, Know Your Enemy.  I once had a member of my CEO peer group who derided the use of this book saying, and rightly so, that we are not at war, we should not compare business to military strategy and generally speaking, no-one gets killed.

Point taken but the basic concepts are very similar and are well worth some consideration.

First of all, how well do you know your competitors and to what level of detail?  I think it very valuable to build dossiers on known and significant businesses that compete with us and this should be an ongoing exercise.

Sources of information are many and varied starting at Companies House (in the UK) to see how their financial position has changed.  Please note, the trend in their financial performance is far more relevant than the latest results so take a five year look to see which way they are going.

Market size and penetration is also useful knowledge.  Again it helps to plot market penetration for your major competitors compared to your business to see how important they and you are to the market.  Anything under 10% penetration is not so significant but as soon as the level exceeds 25% then note that action must be taken. That is a generalisation with some markets being dominated by a major player and with some completely fragmented.  Question is, do you know?

Product information can easily be garnered from the website with price comparisons and in some cases customer reviews.  Where are the differences between their products and yours?

These are simple exercises and any good marketing department should be able to take them on board but if you do, please be certain that the information is up to date and relevant.  If the dossiers are kept online or in hard copy the exhortation is the same, do it, keep it up to date and use it to your advantage.

This enables you to assess and ensure what measure of differentiation exists between you and the competition and how to exploit it to your advantage.

I well recall a speaker once who suggested that we should guarantee something about the business or the product that we supply anyway.  Using that as a marketing ploy ensures that no competitor can use it themselves.

Competitors are not the enemy but they are out there trying to do better than we do.  The more that we know about them the better we can develop differentiation and that leads to better results.

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