Competitive analysis: know your enemy, know yourself
How much does your competition weigh in your decisions? Your closest competitors may not be giving you feedback on your packaging or commenting on your blog to add additional information, but they are playing into your strategic decisions whether you realize it or not.
How could your competition not be considered? How could you ignore pricing, product design and delivery, or other key elements without knowing how your target market is already solving the pain you seek to alleviate? They may be doing it with a direct competitor or with some complementary good or with some innovation that they themselves dreamed up.
No strategy can be made independent of the enemy.
There is a lot of media that supports the attitude that your competition is your enemy. We are taught that your competition is hostile and eager to meet you on the bloody battlefield of the marketplace. There are many examples where this happens. The major cola manufacturers have been struggling for longer than I have. We’ve seen these two leading brands go head-to-head on streets and in vending machines across the country. For as long as I can remember, there have been problems with taste buds in the form of blind taste tests.
The strategies of these two leading brands must be closely linked. Soft drink manufacturer A cannot do a nationwide promotion for the 4th of July on a 2-liter bottle without expecting soft drink manufacturer B to do the same. Major event sponsorships and Super Bowl advertising are likely to coincide.
However, the only thing that stands out to me is that they have been fighting…for decades. They have stood side by side and built a cult following that few brands can rival. They have remained at the top of the soft drink leaderboard by coexisting as frenemies within the space.
While not every brand in every competitive space will fit this mold well, I think viewing your competition as friend-foe is a better way to look at the competitive landscape.
The positive side of competition
If you are lucky enough not to have any competition, haha! You are bathing in the beautiful Blue Ocean of strategy. If you’re in the Red Ocean, well, hey, there’s still money to be made, but you might have to be a little more rudimentary about it.
There is an advantage to having competition:
You have others who are educating your market, as opposed to entirely new ideas or products where consumers may have to do extensive research to “understand” what your service or product is all about.
Your competition targets your market and communicates with that market through traditional or new means. This communication is excellent market research for you because now you know what messages and keywords to explore.
It has a baseline for pricing and product features that you can use to ask your target market what they think about the value they perceive they’re getting.
It all comes down to preference
What makes competition healthy is that it drives companies to define why they are different. You can’t be everything to everyone. Know that there are others serving the market with variations in product features, service levels, price points, etc. means you don’t have to.
Your friend-enemies are doing you a great service by serving customers who might not otherwise fit into your service model or make demands you can’t or won’t meet. If you’re an Italian restaurant, you’re not going to hire a driver just because 1 or 2 customers want pizza delivered to their door. Okay, maybe that’s overkill, but you get the idea.
When you target and segment your market, you are identifying those customers to whom you can deliver the kind of value they want in a way that you can profitably deliver. All other customers can be better served by the friend down the street.
I am in no way advocating taking your eyes off the competitive landscape and putting competitive analysis on autopilot. Actually, I’m supporting the opposite. I say, eagerly consume your competitor’s media, buy products stealthily, and understand their after-sales support. Get to know your friend-enemy and you’ll be better equipped to define your differentiation.
by marciela ross