In the past, collecting data on your competitors for the purposes of strategic planning was difficult. Today’s overabundance of information makes this important analysis much easier. Now you can collect data legally and ethically and through a plethora of sources available to you. Check out the following table for a list of sources.
The sources for competitive analysis are broken into three groups: online, physical, and undercover. Information online is the easiest to secure, followed by physical, and then undercover.
| Online Sources | Direct or Physical Sources | Undercover Sources |
|---|---|---|
| Corporate website | Pricing, pricing lists | Hire an ex-employee |
| Annual reports | Advertising campaigns | Talk to vendors |
| Press releases | Special promotions | Interview customers |
| Newspaper articles or stories | Brochures, sales kits | Attend their seminars or conferences |
| Analysts reports | Purchasing their products | Attend social events or networking where they’re present |
| Government reports | Trade show booth | |
| Online presentations | ||
| Blogs | ||
| Newsgroups | ||
| Patent applications |
Undoubtedly, you or someone else probably knows some things about your competitors. However, knowing about the CEO’s favorite lunch spot or the receptionist’s name isn’t going to get you very far.
Here’s what you do need to care about and know about your competitors:
Their profiles: Who are they? What products or services do they sell? How many employees are in the company? See the following table for more ideas.
Their strengths and weaknesses: What do they do well? What don’t they do well or need to improve?
Their competitive advantages: What are they best at in the market or industry?
Their strategies and objectives: Where are they headed, and how are they going to get there?
Take the time to formalize what you know and what you want to know in writing. With this list in mind, you can more easily sort out what’s important when you conduct your competitive analysis. You can also make a small SWOT grid for each of your competitors. The following table offers more specifics on what you need to know about your competitors.
| What You Probably Already Know | What You Want to Know |
|---|---|
| Overall sales and profits | Sales and profits by individual product or service |
| Expenses levels | Cost of goods sold |
| Organizational structure (number of employees and positions) | Customer profiles |
| Distribution of products or services | New product or service ideas |
| Identity and profile of the senior management | Size of customer database |
| Marketing strategy and messaging | Effectiveness of marketing campaigns |
| Customer retention | Future investment plans |
| Terms and partnerships with vendors |
After you collect data on your competition, what do you do with it? Follow these steps to develop a Competitor Grid similar to the figure that follows:
Select the product or service or customer segment to focus on.
If your competitors are the same across product or service lines or customer segments, skip this step.
Narrow down your playing field if at all possible.
Look closely at your top three competitors or groups of competitors. Add your organization to the list.
Determine your competitors’ key strengths and weaknesses.
The factors can be customer service, pricing, quality, operations, resources, personnel, and so on. Develop a good understanding of likely changes your competitors may make in the near future. Use the information collected during your intelligence gathering.
Summarize each competitor’s key point of differentiation.
Answer the question, “What is XYZ competitor great at?”
Critically review your Competitor Grid to summarize themes to add to your opportunities and threats.
Add your thoughts to your list of opportunities and threats you’ve developed. You use this information to develop strategies, strategic objectives, and goals.
If you find your competitors lacking or missing some obvious opportunities, this opening is a perfect chance for your business to fill the void. To do so, you need to figure out the best strategy. Review different strategies for ways to differentiate yourself from your competition. Your competitive analysis guides you to select the one that gives you an edge on your competition.
