As simple as it sounds, competition is the key to short-term success, while innovation is the key to long-term success.
To succeed in today's marketplace, you must differentiate from the status quo by offering products or services that are more innovative or competitive in terms of quality, image or price.
It is important to seek information about your competitors and use to innovate. By doing so you will be able to:
Evaluate your own performance against others
Identify and exploit competitors weaknesses
Address competitor strengths
Get new ideas
Identify new prospects
Improve sales forecasting
There are also other benefits, which are arguably more important, but difficult to measure. Competitor intelligence helps you to:
Reduce complacency and improve discipline within your own business
Foster an acceptance of continuous change
Respect that other suppliers have satisfied customers and reasons for it
Create a recognition that the business must continually seek to improve
Here are some key questions you may want to begin with when analyzing your competition:
Who are your competitors? There’s a little more to this question than meets the eye. You may find that you compete with different suppliers in the different product/service areas or markets in which you operate.
What do they offer? Find out what makes up their entire product range or service portfolio. Of course you are more interested in the products and services that you compete with, but remember that they are making decisions about resource allocations to their entire portfolio.
What is their pricing policy? Customers will usually consider carefully the price of your products or services in relation to your competitors. It isn’t always good to have a lower price. For example, if your price is lower, is your quality or are your costs also lower? If the price of your products and services is higher than other suppliers, are you providing additional customer benefits? Do customers recognize and value these benefits?
Who are their customers? Consider the different types of customer groups that your competitors are supplying.
How do they promote themselves? How are they attracting new customers? How active is their marketing activity? What does their marketing mix consist of?
How financially secure are they? Company accounts can provide much useful information, and enable you to make direct comparisons.
What are their strengths and weaknesses? You have potentially collected a lot of information about your competitors. Listing their strengths and weaknesses is a good way to summarize this information in a meaningful and usable form. Perform a SWOT analysis on yourself and your competitors. See: How to Conduct a SWOT Analysis
What is their business strategy? If you understand your competitors, you will be able to predict what decision they are likely to make in a given set of circumstances. This insight is extremely valuable to you.
From all the information you have obtained, you can build a picture of the key characteristics of your main competitors that will enable you to make intelligent deductions about their overall business strategy. From their you can enhance your own offerings that are more innovative or competitive in terms of quality, image or price ultimately gaining marketshare.