Tuesday, January 19, 2010

Competitor analysis or competitor intelligence

CA or CI?
Most of the literature on this topic refers to 'competitive intelligence' ('CI') - in many ways the terms CI and CA are interchangeable. CA can be viewed as a highly specialised subset of CI, as the latter covers a broader spectrum of activity to monitor aspects of competitive environment including general industry, economic and regulatory trends.
Why bother?
There are various approaches to gaining and maintaining the edge over your competitors. At one level this can mean ensuring that your products and services are actually better than theirs. At another it can mean ensuring you are better at marketing your products/services, even if they are very similar to those of your rivals. But succeeding in these areas requires you to actually know how your competitors are operating. Certain basic information about them - their products/services, list prices and the features/benefits they are pushing to clients - can be obtained relatively easily. This at the very least gives you a starting point for positioning your prices appropriately, and setting out your selling points. But it stands to reason that the more you know about your competitors, the better equipped you are to stay ahead of them. This is particularly true of CAD, which is a mature market where Resellers need to be innovative to remain competitive. However, if you try to dig out inside information yourself on competitors' strengths and weaknesses the barriers can go up; for example it is simply not in the best interests of a potential customer to tell you the exact price they paid for the product or service of your closest rival. Independent, external B2B research is usually more effective in producing accurate, unbiased responses.
you had access to information on your main competitors on some or all of the following areas:
1.structure, strategy, motivations and objectives
2.financial and operating analysis, eg. return on sales, gross profit margin etc.
3.marketing strategy, eg. messages and tactics, price flexibility, new services or products, distribution models used, names of key customers
4.market perception, eg. why their customers buy from them and their satisfaction levels i. e. what are your competitors' best practices and key strengths?
5.future directions
... then you would be in a strong position to:
1.understand their mission and objectives and develop your own accordingly
2.develop realistic sales targets through understanding the scale of their operations and turnover
3.implement product/service improvements to counter strengths/weaknesses and innovations in their product portfolio
4.position your prices appropriately
5.target your direct sales policies through knowing their distribution channels
6.offer competitive discounts and payment terms
7.develop an appropriate marketing communications strategy in response to their messages and where they put them across
8.strengthen your products/services and marketing strategy by adopting and adapting the best practices observed in your competitors' armoury. Not in a blind 'copy-cat' way, but creatively shaping those practices to your own circumstances