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Understanding what is going on outside your business is an important part of strategic planning. There are some useful analytical tools that help to understand important factors in the business environment and competitive drivers in your industry as an initial step in undertaking competitor analysis. In addition to this, many businesses try to understand, in some detail, what its competitors are doing.
Understanding what is going on outside your business is an important part of strategic planning. There are some useful analytical tools that help to understand important factors in the business environment and competitive drivers in your industry as an initial step in undertaking competitor analysis. In addition to this, many businesses try to understand, in some detail, what its competitors are doing. Steve McGrady, managing consultant with Meridian 1 Consulting explains how a simple process of competitor analysis can help your business.
Some businesses think it is best to get on with their own plans and ignore their competitors, maybe because they think their proposition is unique or they believe they are too small to waste precious resource on analysis when there are so many other demands on their limited time.
At the other extreme, some organisations can become obsessed with tracking the actions of competitors (sometimes using dubious methods to do so). Many businesses are happy simply to track the competition, copying their moves and reacting to changes.
Keeping an eye on your competition can:
What questions should we ask when trying to find out more about competitors? The following list contains some basic ideas:
Sources of information can be grouped into three categories:
Published: This is easily available in published form either internally or externally. Good examples include:
Unpublished: This has to be deliberately sought and often pieced together from several sources. Information in this category includes:
Hidden: To get hold of this kind of data either requires a lot of planning and organisation or being open to data falling in to your hands by luck. Much of it will be verbal rather than written, coming from discussions with suppliers, customers and, perhaps, previous managers or employees of competitors. This data is often protected by contractual obligations such as non-disclosure agreements for employees and, therefore, needs to be approached very carefully:
Like a jigsaw puzzle, each individual piece of data does not have much value. The key is to collect as much as possible and assemble it into an overall picture of the competition.
The sources listed above can provide a good understanding of what our competition are doing now and, maybe, plan to do in the future. You can probably think of more pieces of information about a competitor that would be useful. However, an important challenge is working out how to obtain competitor information that is reliable, up-to-date and legal. The types of information we can usually find through these sources include:
In addition to these items, there is more that we might really like to know about competition if we could find out:
The key is to work out how much to invest in obtaining the information given the resources we have available. Whatever the level of effort we put in to understanding the competition, developing a better understanding gives us information we can use to win more business and retain existing customers. As with many other areas of business, when it comes to keeping an eye on the competition, knowledge is power.