Successful companies conduct competitive analysis on an ongoing basis. It is important to review how you compare to like companies with respect to the product or service you offer – Market Share, SWOT, Customer Experience, and Pricing. In theory, consumers make informed and rational decisions based on their perception of what you offer. Following are some ways to understand their buying decisions –
MARKET SHARE ANALYSIS (Management Focus) –It is very important to understand your success at attracting customers, compared to the entire population of opportunity, i.e. your share of the market. Depending on your business, you may find that data providers already exist that generate statistics on the size of your industry. If this information is not available by a third party resource, attempt to capture information from your local industry group. Study frequency – quarterly.
SWOT ANALYSIS (Operational Focus) – The result of this analysis is a four quadrant matrix which shows your company’s Strengths, Weakness, Opportunities, Threats compared to your competitors. A common mistake I have seen is when a new company enters a market with a product, that they believe is superior. Their product goes beyond what is offered in the market today, but does not offer all the features provided by current competitors. This approach is dangerous. You run the risk of being considered a product in a different category, by potential customers. Successful companies offer customers everything that is offered by its competitors today and more! The SWOT analysis should show what you may be missing. Study frequency – annually.
MYSTERY SHOPPING (Marketing Focus) –This type of activity could be used for multiple reasons, i.e. understanding sales approach, product features, pricing, Marketing positioning. But the most valuable information learned with this technique – “What is the customer experience?” In addition to calling competitors, be sure to also call your own service center/office. What deficiencies can be addressed by increased training? Study frequency – monthly.
PRICING SURVEY (Finance Focus) –If this information is not easily obtained through purchasing data from a third party vendor or industry group, include this area in your Mystery Shopping. Your goal should never be, to be the low cost provider. The middle price point is a great place. Study frequency – monthly.
Be confident in the information collected. It is important to make sure that the approaches used are the same every time, i.e. script for performing Mystery Shopping. Trend the data. One data point should not cause you to rethink your business model.
Once you have collected information for a reasonable period — Set Strategy!
What is your experience?