Understanding Your Competitive Landscape
October 2003 - BEK Best Practices Newsletter
If you were a customer, would you choose your
product over those offered by your competitors? Not sure
how your products stack up against the others? Then you
need a competitive landscape. Many companies think they
know what their competition is up to, but they only take
a close look once per year, or they only do serious research
when they get into "feature wars" (what they have vs. what
we have).
Understanding your competitors - which means
any organization that offers the same, similar, or substitutable
products or services in the business area you operate [1]
- is a fact of life. Successful companies conduct ongoing
competitive research that shows them the big picture - why
they win or lose deals, where the strengths and weaknesses
are, where the next milestone on the roadmap is.
If you don't have competitors, it is likely
that you are in a radically new market (and competitors
are likely to follow) or you are in a market so unattractive
that nobody else wants to play.
However, if you are like most companies, you
have some generalized awareness of who offers similar products.
And that generalized awareness is not enough to leapfrog
ahead into sustained growth.
What is a competitive landscape?
A competitive landscape (also known as "competitive intelligence")
provides cohesive, detailed information on what your competitors
are doing including:
- Who your real competitors are
- What their products are
- How your customers perceive the competition
- What your competitors' business model is
You and your company need this vital information
to plan and market profitable products that beat the competition.
According to the Society of Competitive Intelligence Profession,
a competitive landscape is a necessary business discipline
for effective decision-making. The information enables management
to make informed decisions about everything from marketing,
R&D, and investing tactics to long-term business strategies.
In short, a competitive landscape provides actionable intelligence
that will provide a competitive edge.
Why do you need one?
Does a competitive landscape really make a difference? Yes!
Studies show that companies that have active competitive
intelligence programs generally outperform those that do
not in sales, market share, and earnings per share. These
studies suggest "there is a positive relationship between
emphasis on competitive intelligence and successful financial
performance."[2]
How do you create one?
First, get organized. In gathering competitive intelligence
and creating your competitive landscape, you will gather
a significant amount of information over time. You'll need
to create a file for each competitor, as being able to stay
organized is critical.
Next, you need to know a variety of things
about your competitors. At a minimum, you need to know:
- What makes your competitors the choice of some of
your customers?
- Is it their overall perception of value for money?
- Quality?
- Price?
- The way they do business?
- What, in the eyes of your customers, differentiates
"them" from "you"?
- What do their financials look like? How do your competitors
make money and profits?
- Do they make their profits from having created
better products and services?
- Have they established excellent financial deals
with their suppliers?
- How much cash do they have?
- Can they react to impacts that you might make
in the marketplace?
- If they are private, how much funding have they
raised to date? When was it raised?
- What are their future intentions? This is not an easy
question to answer, but it should be one of the most
important questions that you try to answer.
- In the next three years, which segments will
your competitors be targeting?
- Could they be acquired or are they looking to
acquire?
- What could they do in order to achieve growth?
Where do you get all this information?
Need information on a private company? Think you can't get
the information? Many think that because a company is privately
held there is no information available. That is a myth.
The information is out there, sometimes in the most unlikely
places. Here are a few ideas for finding information –
on both public and private companies – ethically:
- Analyze competitors' websites
- Subscribe to competitors' newsletters and attend webinars
- Attend trade shows, exhibits and conferences
- Talk to receptionists, salespeople and people in human
resources in your competitors' companies.
- Check out local news outlets
- Review 10-Ks, 10-Qs, annual reports and credit reports
- Collect press releases
- Read general business publications (Forbes, Wall Street
Journal, Economist, etc.) and trade magazines
- Listen and talk to industry analysts
- Talk to vendors, partners and customers
- Use on-line information services (e.g. Hoover's Online - www.hoovers.com,
Dialog - www.dialog.com
and LexisNexis - www.lexisnexis.com)
- Buy your competitors products
- Use third party services (e.g. BEK Enterprises –
www.bekteam.com)
How Much Should You Invest?
Unfortunately, the answer to that question is an unsatisfying,
"it depends." The amount of time and money you need to spend
in competitive research depends on your purpose.
If you are entering new markets, targeting
new customers, looking to acquire or merge with another
company, the time and effort is significantly greater than
if you are creating a feature/benefit matrix. At BEK, we
often hear the cry, "it's costs too much." But the real
question is: "Compared to what?"
If your competitors are consistently beating
you, how much revenue have you lost? How expensive is it
to send a sales rep to the client, and then lose the deal?
How much have easily-avoided strategic and tactical mistakes
cost your company over the past 12-24 months? If you could
step around those mistakes and shut out your competition,
what would that be worth?
Quality information is the basic component
to making solid decisions, but it isn't free. The public
library is good, but it doesn't cover all the bases, and
even the best of business libraries have a limited amount
of information. You need to plan to invest money and time
to flesh out all the details in your landscape.
How long will it take?
Competitive analysis is an ongoing process – a discipline,
if you will – rather than a once-a-year or ad hoc
occurrence. Some companies have entire teams dedicated to
the gathering of competitive intelligence.
However, if you don't have the resources to
dedicate to tracking your competition on a daily basis,
don't worry. Depending on your market, it is possible to
successfully monitor your competition and use the information
in decision making if you update your competitive information
on a less frequent basis. Many companies do thorough updates
on a monthly or quarterly basis.
The Bottom line
Acquiring competitive information is not easy, and turning
raw data into a meaningful picture of your competition is
an ongoing process. However, you can take solace in the
fact that your competitors have the same challenges as you.
If you have a better view of the competitive landscape,
you can beat them at the game and see the difference that
it makes on your bottom line!
Please feel free to send us your new product
stories and questions. We encourage you to forward this
email to others using the link below.
For more information, contact BEK Enterprises
at:
Web: www.bekteam.com
E-mail:
Phone: 650-631-2800
Did you enjoy this article? Let us write one
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1 Terry Kendrick and Julian
Blackmore, Ten Things You REALLY Need to Know About Competitors,
Competitive Intelligence, September/October 2001.
2 Cappel, James; Boone,
Jeffrey. A Look at the Link between Competitive Intelligence
and Performance, Competitive Intelligence Review, 6(2),
1995, 15-23.
Copyright
Unless otherwise attributed, all material is written
and edited by
Blair Koch, BEK Enterprises. All rights reserved. 2003
You may reprint material from this newsletter in other electronic
or print publications provided the above copyright notice
and a link to http://www.bekteam.com
is included in the credits.
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