Art of Marketing
Chapter 07. Competitive analysis
Ask yourself if what you’re doing today is getting you closer
to where you want to be tomorrow. ― Paulo Coelho
In military strategy,
every decision is made
as a result of the process of thinking and understanding
what the enemy is doing and is capable of doing.
That’s sometimes called a “competitive response.”
It is an important factor in your decision making in a competitive market.
For this reason,
competitive analysis is one of the important activities
that you need to keep an eye on.
That’s the starting point of differentiating your product or service
from all your competitors.
It forces you to understand your competitors
and understand the benefits
and qualities of their products or services on a deeper level.
Taste the relish to be found in competition in having put forth the best within you. ― Henry Kaiser
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Identify competitors
Who are your rivals?
Competition determines your price,
market segmentation,
size,
quality,
product and service mix,
and profitability.
It also determines your success or failure,
sales,
profits and return on investment.
Knowing your competition is essential.
Again, let’s use the military example:
You can’t win on the battlefield
without carefully examining and studying your enemy,
then using that understanding
to defeat your enemy on the battlefield.
Same in the marketplace.
You also need to seriously ask yourself
why people are buying from your competitors.
What benefits and advantages do they see
when buying from your competitors?
What strengths do your competitors possess
and what can you do to offset those strengths?
Without the spur of competition we’d loaf out our life. ― Arnold Glasow
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Why should they change suppliers?
“Why should they change suppliers?”
is another question related to your customer
who is currently using your competitor’s product.
Why should people switch from a supplier
they are satisfied with to buy your product or service?
You must answer the question in 20 words or less.
If you can’t answer quickly and convincingly,
that means you may not know what the answer is.
It is generally agreed that you need
at least three reasons for customers
to switch from a supplier they are quite satisfied
with now to buying your product or service for the first time.
What are these three reasons?
How do you present them to stimulate a purchase action
in a segment of potential customers?
One of the most effective sources of competitive analysis is
to ask people who aren’t your customers
why they prefer your competitor’s product.
Sometimes their answers will give you more insight
to tailor your products
and services to neutralize the advantage your competitors have.
“If you’re not as rich as you’d like,
there’s something you don’t know.”– David Wood
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What are your competitors?
“What are your competitors?” different from
“Who are your competitors?”
Typically, your competitor is not another company selling a similar product
or service that competes with you;
Instead, there could be market neglect:
People don’t know about your product or service
and what they benefit from using it.
It could mean that you don’t need advertising
or marketing to compete with your competitors,
but rather increasing market awareness through public relations,
advertising,
and promotions.
When I worked for Carnival Cruise Lines
as a speaker and trainer,
I asked company executives,
“What are your competitors?”
They know the answer very well.
Those are not other yachts at all.
It is people’s habit of traveling on land instead of at sea.
They feel that only about 5%
of the total cruise tourism customer market has been tapped.
A lot of people are convinced that vacations on land are superior.
Their real competition is the perception of the difference
between a vacation on shore and a vacation at sea.
When speaking to an audience of entrepreneurs,
I have shown that 80% of their potential customers
don’t even realize the existence of their company
or product in the market.
Even with all the advertising,
promotions and sales your company is doing,
the entire 80% of potential customers don’t even know you exist.
Link to your competitors and say nice things about them.
Remember, you are part of an industry. ― Robert Scoble
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Challenge your assumptions
What are your key assumptions about your competitors?
False assumptions are at the root of all marketing failures.
Could your assumptions about your opponent be wrong?
If so, what should you do differently?
We are living in an era
Apple’s iPhone and Samsung’s Galaxy.
In 2006, before these phones came out,
Nokia accounted for 49%
and BlackBerry had 29% of the mobile phone market.
When the first iPhone was announced in 2006
and released in 2007,
both Nokia and BlackBerry made the same fatal mistake.
They say:
“iPhone is just a toy;
No one wants a device that can help them communicate,
connect with friends,
and integrate reading,
messaging and applications.
It’s a passing passion that we don’t need to keep an eye on.”
Today, both companies are on the verge of decline
because they made false assumptions about the impact
of the iPhone on the mobile phone market.
They took down two of the biggest brands in the world market
and threw them in the trash in just five years.
What are your assumptions about your competitors
– including what they are doing
and what they might do in the future?
The biggest mistake most of us often make in relation
to our competitors is “misjudgment”.
We underestimate intelligence,
perseverance,
and the desire to stay ahead in the race
for market share and profits.
Always assume that your competition is as smart,
skilled,
careful,
innovative,
and thoughtful as you are in terms
of customer acquisition tricks.
Never underestimate them.
Ask yourself: “What are they doing right?”
Once you know the right things they’re doing,
which allows them to achieve sales and market share,
ask yourself if you can creatively imitate your competitors
to impress your potential customers.
How?
The time your game is most vulnerable is when you’re ahead.
Never let up. ― Rod Laver
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Who is not your competitor?
A final point in competitive analysis is to examine those
who are not your competitors.
Who is selling products and services
to your customers but not competing
with you?
Observing people who are not your competitors will sometimes
it helps enlighten your mind
and allow you to spot potential market opportunities.
Today, the use of strategic alliances
and joint ventures with non-competitive companies
is a powerful marketing technique.
Look for a successful supplier,
a company that is not your competition,
who is selling products and services to customers
who are definitely your potential customers.
Approach this supplier and make an offer.
Tell them that if they refer you to their customers,
you will refer them to your customers.
Dell provided the majority of its computer products
by the Internet and by telephone.
One day, the company entered into a strategic alliance with Walmart.
Its sales grew to billions of dollars
and made Dell temporarily the world’s largest maker
of personal computers.
What kind of strategic alliance can you join
to reach a mutually beneficial agreement?
The great military strategist Sun Tzu famously said:
“Knowing people know me,
a hundred battles will not be miserable;
know people who don’t know me,
win one lose one;
If you don’t know me,
don’t know you,
a hundred battles will lead to a hundred defeats.”
When you know the strengths and weaknesses
of your products and services,
and know the strengths and weaknesses,
as well as the actions or behaviors of your competitors,
you will be “one hundred battles,
one hundred wins” in the marketplace.
Never ever compete on prices,
instead compete on services and innovation. ― Jack Ma
