I remember an old adage 'Keep your enemies closer than your friends'. It's true that you do have to have thorough knowledge about your competitors. Before you take a dive with your product in your industry, it becomes all the more important to know about your competitor's activities. In which way are they affecting your business and what can you do to reverse the effects. As I said, marketing field is like a military battlefield where one has to constantly innovate their attack strategies so as to stay one step ahead of their competitor's. How many times have the sales dip, exit strategies of a particular company gone unnoticed. Every time you read the business section of the newspaper, you come across endless number of articles reporting about financial losses due to competitor creating an innovative product or service which leaves others high and dry.
Companies striving to make a mark and who are at the top, do require to analyze their competitor's strength and weakness so as to win a major market share and maintain their dominant position. According to a marketing expert, competitor's open up windows of opportunities. Below is the detailed competitor analysis:
Identify Your Competitor
Every business has to keep a tab on their competitor's. I remember in one movie where the actor had quoted 'To see through the eyes of your opponent is like knowing you are going to win'. Whether you are a local or a global firm, you need to have detailed information about the planning strategy, new product launch and various promotional mediums undertaken by your competitor. Like product innovation strategy launched by your competitor may attract the customers of your firm to try his product. Therefore, it is important for you to study your competitor closely and gain knowledge about the products, services offered by him, pricing and distribution strategies adopted by him and the goodwill the rival firm carries in the market.
Research on Competencies and Incompetencies
After studying your competitor's strategy, it's crucial to understand the weak points as well as the strong points for obtaining a competitive advantage over your competitor. According to marketing experts, conducting market research on your competitor's strength and weakness will help you to evaluate the areas where you can successfully attack your competitor. For example, if your competitor has a strong product offering but has a weak distribution network, you could strengthen your logistics by which your product can easily reach the customer within no time. Many marketing experts prefer creating a table by which they can do a strengths and weakness analysis of your competitor. Apart from SWOT and Porter's five forces table, you can also prepare Juran Matrix wherein you can outline the competitor names on the vertical side and the process on the horizontal side. Attacking on your competitor's weakness will enable you to attract his customers too.
Though opportunities and threats are the factors which are beyond a company's control, these can be used by the company to strengthen their marketing strategies. 'Prepare for the Worst' policy is something which the marketing department of every company should keep in mind while planning the next step. Opportunities can act as a boon to the company and threats can hamper the growth of the company. Take a case of a soft drink company - when it entered in a developing country the company was not allowed to market it's product extensively. It could only market the product if the name was changed. Also, because of protectionism policy followed by that country, the soft drink company faced a lot of problems regarding sales and ownership issues. But the company exploited the opportunity of entering into the new market and designing the strategy according to the customer's needs. It further took advantage of loopholes in the legal system and differences among the political parties and easily entered the emerging market. The various strategies used were price reduction, promotional strategy which targeted the local youth, strengthening the distribution network with help of joint ventures with local companies, etc.
Establish your Territory
For any company, it's important to adopt such positioning strategies which will help the company to determine their standing in the market. Also, it will be beneficial for the company to advertise themselves and reach out to the target market. Different positioning strategies can be followed by the firm like attribute, uses, product, price and competitor positioning. According to 'marketing guru' Philip Kotler, it's essential for a company to position it's product or services using dual positioning which can further specify the target market. Like an automobile company positions itself as environment friendly and safe. When a company decides on the strategy by which it will market itself it becomes easy for the company to attract customers who can easily identify themselves as brand ambassadors of the company.
Lastly, as your company understands the competition it will become more easy to succeed over your competitor's game plan. Competitive Analysis is now becoming an important subject area which needs thorough research on your part in order to prepare a full proof blueprint. Even though your company has to face cut throat competition or an easy competition, it's always wise to prepare for the battle so as to maintain a dominant position in the market.