Why knowing your competitors helps to grow your business.
4 months ago
When starting a new business, conducting new product development or developing your marketing strategy, one of the most important things to do is to understand your competitors.
Neglecting to keep on top of what your competition are up to can cause serious issues further down the line. For example, if your strategy is to be a market leader, you need to ensure that you are always one step ahead of the competition, complacency is not an option.
How do you define who your competitors are?
The easiest way to find and categorise your competitors is by direct, indirect and replacement, examples of which are below.
A direct competitor is one that offers a similar product or service to you, to the same target audience. If you are a coffee shop owner, you would seek out other coffee shops within your local area that will potentially attract customers away from you. It doesn’t matter if they offer different types of drinks and/or food – they are still classed as direct competitors if they are selling coffee with seating.
An indirect competitor is one that is in a similar category to you offering an alternative product or service offering. An example of this would be a Coffee shop and a milkshake take away shop, both offer drinks but different types.
A replacement competitor is one that can quite literally push you off balance. Taking the example of the coffee shop, a replacement competitor would be choosing to go home and have a coffee at home. So, consider home, instant coffee, domestic coffee machines as your replacement competitors.
Based on the above, create a list of competitors. Once you have this list analyse how much of a threat they are to you by creating a SWOT (strengths, weaknesses, opportunities, strengths) analysis for each of them and benchmark against your own business.
Using a spreadsheet, database or project management system you can keep a track of the main ones.
The types of questions that are useful to keep asking are:
- Who they are?
- What do they offer?
- What they do better than you?
- What do they not do that you can do?
- What do they do that you do better than them?
- What is their pricing strategy?
- How do they promote themselves?
Beating your competitors.
Keep on brand. Make sure your branding is coherent and consistent so that your target audience really understands what it is that you do, who for and how you solve their problem better than the competitors.
Story telling is a powerful tool in marketing. It helps to connect with your customers whilst crafting stories around your product or service that resonates with them, and they can visualise their pain point being solved.
Define your strategy. This might be to compete on price, customer service, the launching of a new product or entering new markets or it could be to become the market leader within your sector or category.
Above all else, offer a fantastic customer experience with customer service at the heart of everything that you do. This will not only help you to attract and retain customers but also a great way to gain referrals.
If you need help to define your marketing strategy based on the understanding of your competitors, contact us.