Knowing and mastering your competition
For anyone trying to grow a business, one of the first tasks is to map the competitive landscape,
and then continue to do as long as you stay in business. With a good understanding of the competition facing your business, you’ll be able to spot and exploit opportunities as they develop. Ignoring the competition or lulling yourself into a false sense of security could mean nasty
surprises down the road.
Here is a useful top list to consider:
Define the competition broadly. Your competition includes anything that could draw customers away from your business. For example, movie theaters compete not with other cinemas, but also with restaurants, live music venues, theater – even cable TV, video rentals and video games.
Be a customer. Bring a notepad and pencil to competing establishments and ask a lot of questions. Testing a competitor’s ability to serve you will reveal much about their business. And don’t just pretend to shop from competitors. Buy something. It’s the only way to gain first-hand experience with the company’s products and services.
Talk to your 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. You also can learn a great deal about competing businesses simply by going to their Web sites. Check out individual companies or get information through portal sites such as FreeEDGAR (www.freeedgar.com). Many companies list their annual reports with sites such as Report Gallery (http://www.reportgallery.com Sometimes it is more cost-effective to commission
a report from a reputable compiler such as First Research (www.1stresearch.com).
Attend industry conferences and trade shows. Your competitors’ representatives will be pounding their chests about their products or services. Take advantage of the opportunity to familiarize yourself with their product offerings and strategies and how they sell themselves.
Be aware of the potential for new competition. The competitive landscape can change fast these days. A national chain may not have entered your region yet – but what if it does? Likewise, companies that don’t currently compete with yours might shift their focus and pit themselves against your firm.
Assess the competition’s goals. A competitor trying to increase its market share might lower prices; a company attempting to increase profits may cut costs; and a business that wants to accelerate sales growth might kick off a marketing campaign. If you know your competitors’ goals, you’ll be better able to anticipate their strategies.
Find out as much as you can about the people who run competing businesses. Where did they go to school? Where have they worked? How long have they been in the business? What are their strengths and weaknesses? This information can help you anticipate your competition’s moves. For example, a local lifelong farmer will run a seed company very differently than will someone who is fresh out of business school.
Check public filings. As a business owner, you already know that companies must disclose information to government agencies. Such disclosures are required in order to undertake public offerings, receive building permits and register for patents or trademarks. Many of those filings are public record and contain information about the company’s goals, strategies and technologies.
Source: Ran One Inc. and Shepherd & Goldstein
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