Every start-up business will face some form of competition. Understanding who your competitors are and what they do will help you stay ahead.
What is competitor analysis?
Competitor analysis is the process of identifying, analysing and learning from your competitors.
It is a critical part of your marketing strategy and will enable to you to establish what makes you product or service unique in the marketplace and help you work out how to attract your target market.
Competitor analysis should be part of the planning process before your business starts. You should then continue to review your competitors regularly once the venture is up and running, particularly if you’re planning to operate in a fast changing business sector.
Who are my competitors?
The instant answer is businesses like yours. If you’re planning to set up as a painter and decorator for example, then it would be other people who offer the same service or sell decorating products.
It’s not just established businesses that you should include in your research – competition could also come from a new business that is offering a similar service or product to you.
You can start to find out where your competitors could be by:
walking around the area in which your business operates
looking through local directories
reading industry magazines and press advertising
talking to customers
attending exhibitions and trade fairs
searching on the internet
collecting flyers, brochures and marketing literature
When carrying out your analysis, it’s worth bearing mind that with increased internet use potential customers now have more choice in finding services and products and you could find yourself competing with businesses from further afield.
What can I find out about my competitors?
By conducting a competitor analysis you can find out:
who and where your competitors are
what they offer
how they advertise
whether or not there is something that you can learn from them to inform your own start-up idea.
It may help to draft up a research planning sheet. To get started ask yourself the following:
Who are my customers? Age, gender, income level etc
How often often do the purchase? How much do they spend?
What do they expect in terms of service? What support will they want after they have brought from us?
An internet search is a great place to start as even the smallest businesses may have some web presence. You’ll be able to locate companies offering similar products quickly and easily by running are search online (if you are a painter and decorator operating around the Leeds area then start by searhing for ‘painters and decorators in LS10′ for example). A company website will give you a lot of information too. This could include the business’ history and staff biographies, the products and services it offers, including prices and how it distributes its products.
It’s worthwhile taking a look at any feedback or testimonial pages to get an idea of how satisfied customers are with their services. Blogs, social networks, forums and feedback websites are a perfect way to find out what people are saying about them. Consider approaching customers directly. Ask then what they like and dislike about competitors, what would they like to see improved and are they any gaps they aren’t filling?
Take a look at how your competitors are promoting and branding themselves. Do they promote special offers on their website? If they send out newsletters, consider joining their mailing list or request a brochure or media pack. Look through trade magazines or local press for advertisements, special offers or articles relating to them and also check it see if they have entries in directories or phone books.
Trade fairs and exhibitions are useful places to go to. Here you’ll be able to take a look at products and promotional materials from a few competitors, see how busy their stands are and who visits them.
A good way to get a real feel for your competitors and your potential location is to have a walk around the area. See how busy it is at different times of day and what the mix of potential customers is. Print off a map of your competitors, this will help in the planning of any research visit. You can also use directories such as Yellow Pages or their web based equivalent, www.yell.com, to find out where they are located.
How can I compete?
Once you find out who your competitors are you have an idea of the areas you need to compete in.
Firstly you’ll need to think about whether you want to stand out from the crowd or are happy to operate in a similar way to your competitors. Essentially, you can compete in terms of price or quality. If you’re competing on price, you’ll need to consider your how much it costs you to provide the product or service very carefully and whether you’ll be able to survive if a competitor lowers their prices.
The following can help you to stay ahead of the competition:
Differentiate. Make yourself different from the competition. Work on your USP (unique selling point). Think about why customers would choose you rather than a rival. Are you offering a product at the lowest cost or the best quality? Is it the first-ever product of its kind? If offering a service, for example if you run a garage, you could look at opening earlier or later than your competitors.
Know and look after your customers. What motivates your customers? Is it paying the lowest price, keeping up-to-date with the latest products or flexibility in service? Look after your customers by offering the highest standard of customer service you can. Be responsive to their needs and expectations. Look at rewarding customers with discounts, loyalty perks or improved credit terms.
Promote yourself. Tell people who you are and what you do. This can be done by advertising in the local press, distributing leaflets, putting up posters in your shop window, or handing out business cards. For a wider reach, look at promoting yourself online through social media, on your website or by email.
Be forward thinking. Look at your plans for growth – have a clear idea of where you want to be over the next year and beyond. Keep up with developments within your sector and look at consumer trends.