Smart Tips for Identifying and Analyzing a Competitor

By Valentine Okolo

Competition includes all the actual and potential rival offerings and substitutes a buyer might consider. Understand that your competitors include actual and potential offerings from industry operators, new entrants, buyers growing bargaining power and suppliers growing bargaining power.

The ability to identify and analyze actual and potential competitors to your business is key to surviving in a fierce market place, keeps you ahead of them and helps you develop strategies to overcome them.

So how do you identify a competitor?

As earlier mentioned, competitors include all the actual, potential substitutes and rival offerings a buyer must consider. This definition suggests that a company’s competitors go beyond any current competitor they know.

For instance, companies operating similar products within a geographical location may consider themselves competitors. However, the advent of a new company with an enviable track record may pose a major challenge to one or all the current players within the market.

In fact, in a fiercely contested market where either buyer patronizes one company, a new company will have to acquire buyers from current players within the market if it is to have any chance of survival.

A company must identify and examine all actual and potential competitors from two angles:

·         Industry Competitors: These are companies offering products and services that can be classified as close substitutes or closely similar to what they currently offer. E.g. Coca cola and Pepsi.

·         Market Competitors: These classes of competitors are often neglected by companies but do have the potential to do exceeding damage to a company. Market competitors satisfy the same market need. For instance, while Coca cola may consider Pepsi an industry competitor, it would have to consider all companies providing drinks that quench the thirst of its consumers as market competitors.

Now how do you analyze your Competitors?

To analyze its competitors, a company must identify its competitor’s strategies, objectives, strengths and weaknesses.

·         Strategy

Investigate their marketing strategy, production strategy and administrative strategy. Examining your competitor’s strategy will tell you where they want their business to go and how they intend to get there. It will also help you construct strategies to combat them.

A good analysis of your competitor’s strategy will tell you:

·         Where they advertise,

·         Who their distributors and suppliers are,

·         What their market share is and who consumes their product and why,

·         Where they enjoy competitive advantage,

·         Who they employ,

·         What new offerings may be in the piping etc.

·         Objectives

Understanding a company’s objectives and its product objectives will tell you what they seek to accomplish in the market place and what drives their behavior. The latter will explain whether they or their products are more profit oriented, market share driven, service driven or the product exits as a strategy to avoid losing share on its major products.

·          Strengths and Weaknesses

Just as you study your strengths and weaknesses, you must also study your competitor’s strengths and weaknesses. For instance, competitors may have a distinct advantage or flaw in technology, human resources, marketing, product quality, market share etc. Knowing where a competitor is strong or weak will help you know where to attack them or how to improve upon your own competencies.

By Valentine Okolo