Careful Competitor Analysis

Generally, your competitors will fall in to one of three broad categories –

Direct – those companies who offer a similar or even near-identical product or service to a similar target group of customers. At first glance, their products might seem to be similar to yours but you should always delve a bit deeper to assess whether their products are really pitching for the same type of customers or whether they are targeting a different niche altogether.

Indirect – those companies who offer products or services which can be deemed to be close substitutes or are targeting a similar customer base with slightly different products or services within the same market.

Future – companies who don’t yet sell into your target market but who could enter at any time.

Find these competitors using social media, local press and local marketplace websites. If you have contacts within the market, you can ask them who the main players are.

You will undoubtedly have some awareness of your major competitors but you can find out more about them, and some of your less familiar competition, by looking at trade association websites, sales literature, trade press, local directories, local press, trade fairs, 3rd party research reports, shared suppliers and, of course, their own website.

You could also commission market research which, whilst expensive, will give you a detailed, thorough understanding of the market place and the competitive landscape. As this type of research can be time-consuming and, potentially, very expensive, it will have to be fully scoped and well-planned, based on a clear set of objectives.

Some of the specific things you will want to assess include

• what is the range, price and quality (perceived) of the products or services?
• what market share do they have and have they made a significant push recently to increase it
• how do they reach their customers and what channels so they focus on to reach them
• why do local customers buy their products or services.

It would also be useful to research and understand how they actually reach their target customers. Do they use social media and online content and social media strategies or is the local market more suited to a promoting at events such as trade shows? You can also sign up to any promotional newsletters they regularly send (language permitting) to get some useful tips about the style of marketing used.

It may seem obvious but working out what your competition is good at (better than you?) and what it has, so far, failed to do is a useful step to understanding how your product or service will fare in the market.

It may help to create a table, listing their strengths and weaknesses and identify the source of your information. Have disgruntled customers told you what they think? Have they recently put up prices or changed their product? Are they getting poor reviews from customers that create an opportunity for you? Are they likely to bring an upgraded or new product to market that could out-compete yours?

Alternatively, are you entering a highly competitive market with well-established, well-resourced competitors who have great brand awareness and loyal customers? If so, you will need to have a very credible business plan and a very clear value proposition in order to ensure you have the best chances of success. Carrying out a SWOT analysis (strengths, weaknesses, opportunities, threats) can help clarify your analysis.

There are a number of tools that you can use to help you analyse your competitors. In today's digital world, social media is a vital channel for companies seeking to connect with customers and there are a number of tools (they require subscriptions) that you can utilise. Given the overall cost of exporting the cost can perhaps be justified if they help your entry to the market to proceed more profitably.

Some of the most popular tools to analyse social media reach and content include Sprout Social, SEMRush, Buzzsumo and Brandwatch. 

Being honest about your own products or services will be vital. Have you got a fully developed product that meets the needs, or even exceeds, those of customers in the market? If the market is less developed, is your product or service too complicated to meet local needs? In terms of pricing, you need to understand what the sensitivity of the market is to pricing and whether your product or service is competitively priced. Are your competitors likely to respond to your market entry with a price war and can you survive a potential price war?

It is also vital to understand whether you have got sufficient resources to build a presence in the market and to counter the likely response of existing competitors (such as discounting)? Also, are you able to adapt quickly if regulations in the market change? Being nimble and responsive could provide you with a competitive edge.