Assessing Your Competitive Edge

While the two things no person can ever escape are death and taxes, a business owner has a third thing he/she can’t escape: competition. Keeping a close eye on your competition and assessing your strengths and weaknesses with respect to it should not only be part of your business and marketing plans, but also part of an ongoing process for continuous improvement. Today, we will discuss how you can monitor your competition thoroughly and seamlessly.

Identify Sellers of Products Similar to Yours

Let’s assume you own a children’s toy store. Who else sells toys in your area? The Yellow Pages can give you a listing of many other toy retailers. You might even obtain a list of other toy retailers through local Chambers of Commerce, industry trade associations, and the like. But toys can be purchased in several places outside of toy stores. Depending on the type of toys you sell, you’re also competing with mass merchants like Wal-Mart and Target, department stores, supermarkets, and catalog retailers. You first have to know your product, and who it is aimed at, in order to determine your relevant competition.

Determine the Factors Driving Customer Perception

When buying toys like the ones you’re selling, what do customers look for? What factors influence their decision? Certainly the features of your product; but also the retail price, quality, perceived value, novelty (especially for toys!), convenience, and the customer’s experience at your store, and the store’s location, hours, and credit policy, to name several.

Next, you need to determine how much weight to assign each factor in terms of its importance to the customer. After all, you could have the longest store hours of any toy store in town, but what good is that if store hours is of little importance to your customers?

You can estimate the weight of each factor by interviewing members of your target market, conducting surveys, mystery shopping your competition (to see if there’s a pattern of factors they seem to be emphasizing in their sales pitches), and looking at past customer complaints and inquiries.

Determine the Factors Driving Operational Advantages

Many companies may sell the same product or service, but rarely do they operate the same way. Most businesses have more financial resources, use different marketing tactics, or distribute their products differently than others. Much like customer perception factors, you need to compare these different operational factors between your business and your competitors. You also need to weight these factors.

Collect the Data

Mystery shop your competition. Visit their Web sites. Visit their stores (or have your spouse, children, siblings, or friends do so), and compare their customer service, the quality of their merchandise, etc. Ask casual questions that can elicit clues about the competition. Read up on any news about your competition. Check to see if they are located in Dun & Bradstreet’s Million Dollar Database, or in ReferenceUSA. These sources can provide information about the competition’s sales volume, square footage (sometimes), and employee counts.

Talk to their customers (discreetly, casually, and unstructured, of course!); and if you and your competition sell several of the same toys, suppliers can provide valuable information about your competition. Populate your weighted factors with the data you’re learning about each competitor for each of those factors.

Compare and Contrast

Where are you strong with respect to your competition? Where are you weak? Sometimes, your strongest areas can offset your weakest ones. For example, price may be an important factor in the sale of your toys. Maybe you can’t beat your main competitor on price. But your store might offer easier credit terms, a layaway plan, or better customer service. Perhaps you specialize in getting certain toys on your shelves before the rest of the toy stores in town do. Your strengths are your selling points.

Never Stop Watching Your Competition or Your Industry

Now that you know where you stack up against your competition, you must keep checking it regularly. Business is dynamic and nothing stays the same. Set a time frame to re-evaluating your business with respect to the competition. Will you do it monthly? Quarterly? Annually? It depends on the nature of your industry. The frequency you choose is generally not as important as the consistency in which you do your evaluations. Also, keep monitoring changes in your industry. New regulations on the sale of toys, shortages in manufacturing supplies, and tariffs on imported toys can easily and drastically alter your competitive position.

In summary, assessing your competition is not something you do just one time for your business plan; you need to monitor your competition on a consistent basis. Consistent competitive intelligence keeps your business nimble, gives you ideas for improvement, keeps you abreast of changes in your industry, and most of all, keeps you focused on your customers.

Analysights Can Make Competitor Intelligence a Snap!

Monitoring you competition – whether it’s for your business plan – or for ongoing purposes can be a daunting task. If you need to better understand your competition but have no idea where to begin, or if you need to set up a system for ongoing competitor intelligence, call Analysights. We can help you design a competitor monitoring system that is both thorough and easy to maintain. For more information, visit www.analysights.com or call us at (847) 895-2565.

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