Doing Your Research
Take stock of your primary products or services. You will compete for consumers with other companies on these products. List the products in a column on a spreadsheet and piece of paper. While you may have some tangential products or services that boost your sales, you are not in competition with other companies that sell those. For example, you may include complimentary key chains with your company name in every order of t-shirts you ship. This is a nice bonus for the customer, but it doesn’t put you in competition with office supply stores. More generally, let’s say you have a pizza restaurant. You sell pasta, but this is a very small portion of your profits. Pizza is where you make most of your money. You are not in competition with Italian restaurants that specialize in pasta dishes, but other pizza restaurants instead.
Find companies that sell that product or offer that service. Pretend you are a consumer. Search for those products or services using a phone book, an internet search on more than one major search engine, on online marketplaces, and through social media sites. Write five to 10 names of competing businesses in the rows on your paper or spreadsheet. Even if you deal primarily in local business, anyone who sells a product is in competition with internet sellers. Looking in the phone book may help you identify local competitors. Looking on social media accounts will help you to identify new, emerging competitors. It is important to search both locally and nationally. With the rise in the global economy, there may be a company in another country that offers the most similar product to your own. You may not be able to compete with the low prices of an offshore manufacturer, but knowing they exist can help you focus your local marketing campaign.
Identify your competition. The kind of product or service you offer determines who your competitors are. This is divided into your industry, market and strategic group. Your industry is made up of business that offer the same or a similar service. Your market is made up of the locations where your product and services can be bought and sold. Your strategic group is made up of businesses that share a similar business model with your business. You may have competitors in more than one of these areas. You need to evaluate the strengths and weaknesses of all these companies when assessing key competitors. You can determine industry competition based on your service, such as supplying foreign tea imports. You can determine your market based on tea sellers in your area. You can determine your strategic groups as all stores offering the same prices and marketing strategies to sell their tea. You should also consider your demographic or geographic market. Your demographic market is made up of people of different ages, socioeconomic classes, and genders. Your geographic market is made up of people from different cities, states, regions, and countries.
Do word-of-mouth market research. Ask consumers in your area as well as your own customers who they buy from or which services they use. Word-of-mouth is often the best way to tell the success of other businesses. Ask friends and family, and then consider employing a market research firm to survey a wide array of people. This may reveal customers’ logic behind choosing your product or service in one situation, and someone else’s in another. For example, you may find that customers prefer your pizza restaurant for a nice, family experience. They may, on the other hand, prefer another pizza chain when they have the late night munchies.
Do a simple survey. It is important to survey not only your customers, but your competitors'. Try to get a list of your competitors' customers, even a partial list is great. Asking your competitors' customers instead of yours shows you why people chose others' products or services over your own. It also shows you what you can focus on in marketing to win over new customers. There are a few main areas to craft surveys around: Customer satisfaction Competitor's performance Customers' expectations and desires
Determine if your market or industry is growing or shrinking. It is important to figure out not only how well your company is doing, but all companies like yours. Knowing this will tell you whether or not the product or service you offer is stable enough for you to reach into adjacent markets to look for more sources of profit. You may also need to redesign the products and services you offer if they are becoming obsolete. Stay on top of local and national news. Read the business section of the newspaper. There should be articles from time to time about your market or industry sector. Check with the US Bureau of Labor Statistics for data. They compile and publish a huge amount of data about all areas of the American economy. Read history books. If your business sells a product or service that has been available in its basic form for a long time, you can learn general trajectories, slumps, and spikes in sales from knowing your history.
Assessing the Competition
Determine their competitive advantages. Go down your list and use the market research you have done to determine competitive advantages. Some may offer promotions, bundles, free shipping, extra services and more. You should have a good idea of whether these competitors offer exactly the same thing, or a slightly different product. Knowing your competitive advantages and weaknesses relative to your key competitors gives you a leg up in crafting your local marketing campaign.
Investigate your competitors’ sales process. This is important in determining how their entire sales process works. In some businesses, such as retail merchandise, this will be easier than others. If you do not have the option to analyze the competition from website through sale, then you should read reviews and peruse the Better Business Bureau website.
Use internet business software to track your competitors’ success. There are numerous web tools that allow you to track how often a business gets searched for on the internet, and what people's keywords were. Some are free, and higher powered versions cost money. It is useful to know where people are located when they are accessing your competitors' webpages, and what time of day. The so-called sales process consists of determining what you will sell, the demand, the valuation, and how you will deliver the good or service. Having an idea of your key competitors’ thought process at each stage of the sales process helps you determine your and their competitive advantage. If you are looking at local companies that offer the same thing, you may be able to call them and inquire about their sales practices. Do not to mislead them into thinking you are a buyer, as this is considered a somewhat unethical business practice. Look at your competitors’ social media pages to get an idea of their marketing strategies. Your competitors may advertise specials and give people a chance to tell them what they liked and didn't like. Since this is a platform intended for anyone to use, there is not anything unethical about doing this kind of research.
Sign up to receive your competitors' catalogs, mailings or e-newsletters. It is important to be well versed on your competition at all times, since businesses are always changing and growing. If you can mention what other companies offer, and how your business does it better, it is likely to help during the sales process. This will keep you up to speed on what kind of specials and other advertising campaigns they make use of. This is not necessarily unethical since you are getting a letter that is sent out as common knowledge to anyone who submits their email address. However, if you are contacted to ask about your interest in the company, don’t lie or mislead them.
Compare yourself to your competitors. Put your strengths and weaknesses next to each of the competitors you have researched. Be honest with how well you compete against your competition, so that you can strengthen your weaknesses and thus your marketing strategy. You will want to target customers based on your competitive advantages, and spend less effort on the areas in which you have a disadvantage. Complete a SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats and completing one can help you to identify key issues that require your attention.
Look for companies with a competitive advantage. Your key competitors are the ones who take your customers, even if those companies do not sell the same exact product or service as you do. Before you begin developing print and online advertising campaigns that highlight an advantage or unique service, make sure you are the only business, or original business, providing that advantage or service. For example, your family-friendly pizza parlor is in competition with other sit-down pizza restaurants and other fast food or fast casual dining options.
Determine if you have any barriers to competing with others. There are many different types of barriers to business. Take stock of your business and identify any potential barriers. For example, is your location a potential barrier? Do you have the appropriate licenses to do business? Are there any potential issues with your supply chain? You will also need to look for ways to overcome your barriers. For example, if your location is a barrier, consider moving to a new location or look for ways to bring more customers to you. If you lack a necessary license, find out what you need to do to obtain it. If you are having problems with one of your suppliers, contact them about the problem you are having or find for a new supplier.
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