I know how hard it is to run your business, keep customers happy, generate new ones, and that doesn’t include the operational and human resource side of things.
However, today I wanted to share with you some advice on making your life easier.
There are plenty of things you can, and should be doing, but there is perhaps nothing more important than understanding your competition.
Why should you care about your competition?
When I say ‘care’, I don’t mean in the sense of becoming their best friend or going out of your way to be super friendly.
What I mean, is that competition only makes us better. Whether that’s the competition out on a tennis court, lawyers as they face each other in the battle of law, or it’s McDonalds and Burger King’s friendly banter, competition is crucial.
In fact, it goes back to our innate desire to tell and experience stories. It is the battle of two forces to see who can be the best in whatever they are competing in.
For your business, your entire operation will be influenced by many factors:
- Your budget
- Your target audience
- Your product / service
- Your expertise / team
- Your competition
Competition breeds better outcomes for your audience / customers, and after all that is what matters, really. A happy customer makes for a healthy bottom line.
And when you are setting out your strategy, competition plays a role again:
- You assess your internal resources
- You look to who your competition are
- You establish your target audience
- You forecast potential revenue and expenditure
- You define tactics on reaching your audience and creating customers
- You plan how you will keep these customers and prevent churn
Your competition can inform your pricing, how you present yourself on social media, your packaging, the content you create, everything.
So, what is a competitive analysis?
Undertaking a competitive analysis means you follow a thorough process of categorising and evaluating your competitors to understand what their strengths and weaknesses are in comparison to yours.
How do you complete a competitive analysis?
There’s no need to overthink your competitive analysis. At its core, the process looks to:
1. Identify your existing competition
This begins with direct. So, if you’re Coca Cola you know Pepsi also make the same product, so they’re direct.
But, this is also peripheral, so if you’re Coke you know that Vimto is also a competitor because they, likewise, make soft drinks.
And, if you go further down the river, you’ll turn to the likes of Fiji Water, because they are in the field of beverages.
This will help you create a clear picture of who is in your competition.
How can you find out your competitors? Well, head to Google and type in the product you make. You’ll get a good sense right there.
2. PESTLE analysis
Don’t just leave it at your competition in the plainest sense.
No siree. Now you need to look at the political, environmental, social, technological, legal and economic factors which will impact you.
A political factor could be that in one country there is a policy in place to cut down on sugary drinks, whereas in another this is the case but there is an incentive for sugar free drinks to be produced. That will inform whether your drink is sugar free or full fat, as they say.
An environmental factor could be that the country / market is plastic free, so this environmental commitment will inform how you package your drink.
A social factor could be that the government’s pledge to cut down sugary drinks means that a full sugar drink isn’t ‘cool’. So, you would have to decide, based on your target audience, if it is younger in age then you may want to be sugar free, if the audience is older, then you may want it to be sugary, and package and promote this in a way that calls upon people’s nostalgia of the way ‘good’ soft drinks used to taste.
A technological factor could be that your competition has an agreement in place with a mass plastic bottle manufacturer, but actually the growth of 3D printers means that, in the long term, and keeping in mind your environmental commitments, is better for your brand to produce smaller batches of drink using 3D printing with recycled materials.
A legal factor could be that the name of your product in country A is already used in country B and you simply cannot trademark that now. Here you would look to the competitor (direct or peripheral) who is using that, and consider whether it is worthwhile buying out that trademark from them.
An economic factor would be something such as covid-19. If the economy takes a downturn, you have to make a decision about doubling down on your investment in producing stock, the number of employees etc. That will have a direct impact on how your market yourself.
3. Ask the questions and find the answers
- Who are my competitors?
- What products or services are they selling?
- How much market share do they have?
- What is their strategy? Has it changed? Is it working?
- What is their pricing?
- How do they package up their product?
- Do they conduct PPC? How much content do they release? Do they have any influencers?
- Are their strengths and weaknesses the same as mine?
- Are they a big threat?
- How have they impacted my business?
Don’t reinvent the wheel
A competitive analysis isn’t unprecedented. In fact, there are plenty of templates that you can, and should use as you get started.
Try this template from Smartsheets as a starter for ten.
Put your analysis to use
As with anything in marketing, conducting an analysis isn’t enough.
You must use what you’ve learned to improve and inform what you are doing.
If you know that your competition has invested in content, that doesn’t mean that you should avoid this at all costs. In fact, look at what they’ve made, how you can do it better (with the help of SEO tools to analyse this, such as Ahrefs) and that then creates a content strategy for your business!
Likewise, if you know that their pricing is lower than yours, then you can infer some conclusions from this:
- They need to drive more revenue in the rest of the financial year
- Their quality doesn’t compare to yours
- Their supply chain is optimised, so it might be time to look at who’s charging you what and to what quality and make some decisions here
- Their product is better than yours or can be mobilised quicker, so they can charge less and increase their volume of customers
Another example could be that your competitors are showing up when you search for your brand name. That tells you that you need to invest in PPC to cover any search terms that involve your name.
Your competition may be the ‘enemy’, but actually they’re there to make you better.
If you know how to identify the competition, consider the factors impacting you and them, and then put this into action to inform your campaigns, product and brand, you’ll reap the rewards.
As always, the key is to be agile. Keep trying to improve. Never stay stagnant and you’ll soon learn to love thy competitor.
Flamingo Marketing Strategies Ltd is a marketing agency in Leamington Spa. We work with small to medium-sized businesses, creating bespoke marketing ideas for B2B and B2C. If you are targeting a local audience, we won’t work with any other companies from the same industry within an agreed milage radius. If you’re targeting a national or international audience, we won’t work with any other companies from the same industry at all. Our job is to make sure we position YOU as the flamingo of your marketplace.