Knowing your Competitors
This is the second of three blogs that describe the underpinning all businesses need to have to enable growth in their business. We talked last time about getting an in-depth understanding of your consumers, and – if appropriate – the customers in your supply chain that actually buy from you.
Today we cover knowing your Competitors. In the third blog, we’ll cover understanding the Commercials.
As part of your understanding of your Consumer, you will hopefully work out how much they know about you in comparison to your Competitors. But you need to ‘go up a level’ and find out what they want from the market, and that might be more than what is there at the moment – there may be so-called “Unmet Needs” on which you can capitalise.
It is vital that you understand what consumers want in your market, otherwise it’s impossible to know how you need to compete – how you will win, your strategy, your tactics. Market Research companies will know how to get at this, and it doesn’t usually include starting with a blank sheet of paper and saying “ok guys, what would you like?” Henry Ford is attributed to saying in the context of market research for a car, “If I’d asked customers what they wanted, they’d have said a faster horse”. It’s best to take a proposal, and get feedback on that, and by doing this, broader needs from the market will emerge. If you can’t afford a Research Agency, that’s fine, do it yourself, perhaps with a few brutally honest friends and relatives chatting over your kitchen table!
What do you need to know?
- Know the MARKET
- Which market are you in – it may be a simple question, if you’re selling pet food, you’re probably in the pet food market, but if you’re selling a Shirt and Tie gift pack, are you in the Shirt and Tie market, the broader Clothing market, Men’s Clothing Market, or could you actually be in the Christmas Gifts for £20 market which might be a whole lot more than just clothing?
- What are the trends that are going to impact on Consumer behaviour in the future – near term and long term – and how will this affect the market?
- Know the CATEGORY
- Which segment of the market are you participating in? Be precise to start with – if you’re selling Hair Colour Remover, that’s the market, which is a segment of Hair Colourants, which is a segment of Haircare, which is a segment of Beauty. If you’re selling Air Conditioning Units to businesses, are you just in the Air Conditioning Segment, or is it all about how to keep the workforce cool and comfortable, and so you could include other things such as Water Coolers and so on.
- How important is the segment you are in? What size is it? Is it growing or declining and why (the insight)?
- How would you map your brand, product or service versus competitors? For example, if you know that consumers are interested in ‘Performance’ and ‘Price’, then draw up a 2x2 matrix, and plot your brand and competing brands on that – e.g. high performance and low price, or vice versa! Make sure you use axes that are drawn from Consumer needs in the category.
- Which brands, products or services are ‘winning’ in the market and which are losing, and again - why? This insight is all-important.
- What do you bring to the category? Is it something the Consumer has not got, or is it something better or at least different to your Competitors?
- Critically, what is your USP? Why would a Consumer buy yours and not another?
- Know the COMPETITORS
- Who are your direct competitors, and which of them is ‘winning’ and which are losing, and of course why?
- How important is on-line to the way people shop this category and is it suited to your business?
- In a retail business, which Competitors stock which products and brands, and why, and does that relate to how well they are performing?
- What price ranges are covered by which Competitors? Can you look at how the market is performing by price segment? What might that tell you?
- Where would your brand fit in and is that space already occupied?
In summary, you should know your market, your brand, product or service, and the category you are in. You need to know which is winning and why, and whether this puts you at an advantage or disadvantage in the market. Once you establish that, you can decide your course of action so that more people buy from you.
Ross Crombie (@rosscrombie) is the Owner, Crombie Consulting Ltd and an Entrepreneur-In-Residence at Nottingham Business School.
Ross's next blog will be about 'Knowing your Commercials'.