Profiling Your Competitors

by BNET Editorial

Tags: competitive strategy, competitive intelligence

To pull ahead of your business competitors, you need to build a detailed profile of their strengths, weaknesses, and relationships with customers. With that information, you can compare the performance of your business with that of your main competitors, measuring factors that are important to quality of service, and use the comparison as the basis for performance improvement.

Competitor information can be obtained from many different sources, starting with what your competitors say on their own Web sites and in their brochures and annual reports about their capabilities, resources, and plans. You can find information about competitors in the press, trade publications, industry surveys, and on the Internet.
What You Need to Know
Who are my competitors?

Depending on the size of your company and the products or services you offer, you probably already know your competition—from advertising, trade shows, or even your customers. Never assume, however, that you know everything you should know about the competition. Who else is offering what you offer? Many products and services could be classed as non-essential and so customers may be choosing to spend their discretionary budget between two very different market sectors. Are you losing business that way? Is a larger company hurting your business by giving away a competing service as a promotion device? Always be alert to the different ways that others could be taking business away.
Why is competitor intelligence so important?

You need to understand what competitors are offering so you can offer at least as much to customers. Your marketing campaigns or product launches can be affected by what your competitors may be doing at the same time, so learning what you can about their plans is important. You also need to be aware if a competitor is threatening to take away your important accounts. Unless you monitor competitor activity and take appropriate action, your business faces an unknown risk.
Should we use an independent research company, or conduct the research internally?

You can conduct the research internally, provided you or your staff has the time. Much of the source material is in the public domain, so you should be able to obtain it yourself. Don’t overlook the wealth of information you already have in your company or can gain through your own contacts. If you wish to research customer attitudes toward your company versus your competition, you may need to use an independent research organization. Customers may not be completely honest with your own representatives.
How reliable is published competitor information?

Use your critical thinking skills to assess the accuracy and quality of any published information that is used for research. Make sure the information you find is current and that it comes from reliable sources.
What to Do
Identify Your Competitors

Competitor information helps you to identify how you can gain a larger share of the business from your competitors and how to protect the business you have.

Ask yourself:
How many competitors do you have? Do they compete directly or indirectly?
Who are your major competitors—those that threaten to take away your most important customers?
How much of your business do these competitors threaten? Quantifying the threat helps you to prioritize your own activities.
Where are your main competitors located? How do they compare in size (to your company and to one another)? Are they growing?
How do your products compare with your competitors’ offerings? Think about price, methods and quality of distribution, brand image and reputation, service quality etc.
What are customers’ attitudes toward your competitors and toward your own company? Can you (or your customers) identify any weaknesses in your competitors?
Who are your competitors’ main customers?
Which of your customers might switch to your competitors, and why?
Which of your competitors’ customers do you want to win?
How strong are your competitors’ relationships with key customers or key decision makers? How long have they been dealing with them?
Have your competitors invested in links with customers that would make it difficult for other suppliers to make inroads?
Does your company have the skills and resources to overcome the competitive threat?
Compare Your Key Competitive Factors

Listed below are a number of factors that are important to meeting customer needs. On a scale of 1 to 10 (where 10 is the best in the market), how does your company rate? Consider each factor carefully, then use your results as the basis for a program of performance improvement. Emphasize the things that matter to your customers rather than to your own opinions:
Evidence of an excellent service culture, for example, problems quickly resolved by frontline staff rather than referring customers to higher-level managers
High levels of after-sales service and support offered
Product adapted readily to meet customer specifications
Evidence of commitment to quality measurements, for example, measurements from your industry
Commitments made to customers—for example, offering money-back guarantees or precise delivery schedules
Evidence of feedback encouraged—for example, comment forms or toll-free telephone number made widely available
Flexible approach to pricing, such as the use of price incentives or financing plans to appeal to different types of customers. Willingness to negotiate prices for important customers.
Staff knowledgeable about the product and willing to use knowledge to help customers
Good reputation with agents, distributors, and other intermediaries
Overall good reputation with employees as well as customers.
Make Use of Your Sales Force

By talking to customers, your company’s sales representatives can find out about competitors’ direct sales calls, marketing campaigns, special offers, and new developments. They can obtain similar information from retailers or distributors. Crucially, they can get a feel for the customers’ awareness and attitude toward your competitors.
Monitor a Variety of Public Sources

You can learn a great deal about your competitors from their own public information: corporate brochures, annual reports, and exhibitions. Check your competitors’ Web sites frequently for updates on their products, plans, and capabilities as well as any customer case studies or news releases that may be posted on the site.

Monitor trade publications (many are available on the Internet) and the general press for useful information about your competitors. You may have the staff resources to maintain a file of press clippings on your competition, or you may wish to hire a clipping service to gather material for you.

Look for published results of industry surveys, which can provide useful insights into your entire market as well as your competitors.
Analyze Competitors’ Promotional Activities

By monitoring your competitors’ advertising, promotions, exhibition presence, press activities, and Internet information, you can assess their strategies. These are some of the possible scenarios:
Heavy advertising expenditure could indicate a competitor trying to win greater share or attempting to remedy losses in that market.
Price promotions may indicate that your competitors want to be perceived as value-for-money suppliers, or they may be an emergency response to declining sales.
Press announcements about new production facilities could indicate that your competitors are trying to increase their business significantly. They may become more cost-effective and able to offer lower prices, or may be taking on additional overhead that they must finance.
Announcements about new branch or dealership openings could mean that competitors are expanding into new territories.
Recruitment drives may signal a change in direction, a growth strategy, or a sudden loss of staff.

To gain a better idea of your competitors’ financial health, you may be able to obtain information from credit reference agencies.
Hire a Research Company

If you do not have the internal resources to monitor competitive activity, you can hire an independent research company to perform all the tasks outlined above. You can also ask the company to survey customers to reveal their attitudes toward your company versus your competitors. Customers may be more willing to discuss their attitudes with an independent researcher than they are with someone from your company.
Consider Benchmarking

Once you have assembled detailed information about your competitors, you can benchmark your performance against theirs. Competently done, benchmarking will give you a baseline assessment of your company’s effectiveness in the marketplace and some insight into where competitors may be gaining the advantage over you.
What to Avoid
You Overlook the Obvious Sources

Some competitor intelligence is freely available from the Internet, the press, and other public sources and—most important—from your staff, your customers, and your competitors themselves. Information from these sources can provide a valuable starting point for developing detailed competitor profiles.
You Fail to Make Use of Competitor Information

Competitor information is valuable only if you use it to refine your own strategies or take defensive action to protect your business. Simply gathering information without analysis or action is wasteful.
You Act on Incomplete or Out-of-date Information

Be cautious about acting on competitor intelligence until you have as much complete, accurate, up-to-date information as possible. Published sources can provide only a partial picture, and more strategic information is likely to be confidential. This means that you may make incorrect assumptions in planning your response to competitor action.
Where to Learn More
Books:

Gilad, Benjamin. Early Warning: Using Competitive Intelligence to Anticipate Market Shifts, Control Risk, and Create Powerful Strategies. AMACOM, 2003.

Rothberg, Helen N. and G. Scott Erickson. From Knowledge to Intelligence: Creating Competitive Advantage in the Next Economy. Butterworth-Heinemann, 2004.

West, Chris. Competitive Intelligence. Palgrave Macmillan, 2003.
Web Sites:

Marketresearch.com: www.marketresearch.com