|There are competitors for each commercial activity. Therefore, it is important to identify these competitors, even if your product or service is innovative or unique. You need to identify what other items your customers may potentially purchase. In light of this, the following tasks must be carried out:
Identification of the key competitors operating in the market, specifically the companies currently enjoying the greatest market share.
Identification of indirect competitors. These consist of the organisations that may not directly compete with your offering, but target the same general market.
Step Two: Competitor Analysis
Identification of potential competitors. These are companies who may potentially encroach upon your market, and with whom you must be prepared to compete.
After identifiying the key competitors, analyse the competitors’ strategies in terms of the following factors:
Objectives: It is important to precisely determine the competitors’ objectives in order to anticipate how they will react in this market. For example a company whose objective is to focus on maximising profits in the short term will increase pricing and secure fast profits. Alternatively, a company that is focused on maximising long term profitability will reduce prices relatively speaking to increase its market share through greater long term sales, and so on. Examples of marketing objectives are increasing a company’s market share, securing cashflow, or achieving technological leadership in the market, among others.
Determining competitors key strengths and weaknesses: This is obtained by collecting information about what products and services they offer, in addition to understanding the key reasons customers buy from them, and customer opinion of their products and services. Competitors are evaluated on the basis of the key success factors that must be delivered by companies operating in this market. These success factors are determined by experts in the industry or field in which this company operates.
Mystery Shopper studies are one of the key methods used in obtaining competitor information. INCOME Marketing has a team of market researchers who are experienced in gathering this type of competitor intelligence information.
Step Three: Identification of Opportunities and Threats
Strenghts and weakness are often factors that can be controlled by the competing company. However, it is important to also examine the extent to which competitors are able to deal with factors outside their control. These factors are called opportunities and threats.
These opportunities and threats often consist of technological advancements, regulatory/legal procedures, economic factors, or even a new potential competitor.
Step Four: Competitive Strategy Development
Based on the results of the competitive analysis and understanding of the key competitor strengths and weaknesses and comparing them with your company’s strengths and weaknesses, a company can develop its competitive strategy. This strategy is developed to achieve a competitive position in the market by focusing on your company’s competitive advantages over the other competing companies.
For more information about how to achieve a leading market position
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