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Competitive Analysis – Don't Take it for Granted.
By Dr. Rick Johnson, CEO Strategist, LLC
Tuesday, 14th October 2008
 
I still remember the days when I was extremely active in organized sports - I'm talking about baseball, football & yes, I even played soccer. Today, my mind still thinks I could play like I did when I was 25 years old but my body disagrees.

Consequently, my total sports activity today is golf and pickleball.

The point I'm getting at is simply how athletes' prepare for a competition. The very first thing they do is study the competition. I mean really figure out exactly who they are going up against. They know their statistics, their records and most importantly they study both their strengths and their weaknesses.

Doesn't that make sense? Really, if you plan on being better than your competition, the more you know about them the better chance you have of defeating them. Now, if you agree with this concept, doesn't it make sense that the very same principles apply in the business environment? Let's face it, even Tiger Woods studies his competition and golf is much more of an individual sport where the competition is often the course itself.

A Key Component of Your Strategy

When working with companies in the development of their strategic plan it is essential to create a comprehensive competitive analysis. Most companies rarely take this as seriously as they should. Oh, they know who their competition is generally but rarely do they really understand their competitor's strengths and weaknesses. More importantly, they often just guess at the competitions value propositions.

This can lead to false assumptions or what I call "Cherished Beliefs". A cherished belief is something that is taken as fact but really has no data or information to validate the accuracy of the assumption. As an example many companies believe they demonstrate or strive for "World Class Service" when in fact compared to the competition it is often just average.

Competitive Analysis Starts with a Comparative Analysis
 
In order to create competitive advantage it is critical that you understand what value propositions your competition offers to your customers. The ability to get a potential customer to switch from your competition depends on their perceived value of your company, your product and you personally as compared to your competition. It's a simple concept:
 
"Perceived value drives customer expectations"
 
"Performance value drives customer satisfaction"
 
The higher you raise a customer's perceived value of you, your company and your products, the closer you come to creating competitive advantage. It's competitive advantage that will motivate customers to switch vendors and I am not referring to price.
 
Be careful……….. Raising expectations so high that you can't perform and you shoot yourself in the foot.
 
Where Do You Start
 
The first place to start is on your competitor's web site. It often amazes me how much information can be obtained simply by utilizing the Google search engine. Don't stop with just their web site. Surf the net looking for any and all information you can find.
 
Other good sources of information include both your customers and your vendors. Find out exactly how your services and value propositions stack up against theirs. When taking on this task, think of your customers SODS (Service Output Demands). Knowing exactly what the customers' expectations are will lead your research into determining exactly what the competition is offering. SODS can include but not be limited to the following:

  • Terms
  • Discounts
  • Rebates
  • Seasonal buying schedules
  • Co-op advertising
  • Packaging
  • Quality
  • Service & delivery including fill rates and on-time deliveries
  • Inside & outside sales expectations on coverage
  • Customer service preferences
  • Product knowledge
  • Technical support
  • Warranties
  • Returned goods polices
  • Buy back- policy
Trust but Validate

You cannot build your competitive analysis strictly based on the opinions of your sales people.  You need to know what the reality of the situation is, because THAT'S what you will be actually competing against. Utilize all resources and options to determine the reality of your competitors offerings compared to yours. This can be accomplished by using a variety of tools including:

  • Customer focus groups
  • Customer surveys
  • Voice of the customer – phone interviews
  • Outside sales feedback
  • Inside sales feedback
  • Internet research
  • Executive feedback
  • Historical data
  • Competing sales person interviews (This is opportunistic in that it only applies if you are interviewing to fill a sales position and a competitor's sales person happens to apply.
Most businesses over rate their customer service, without knowing what their competition actually does. This can prove to be a big mistake – especially in
today's challenging economy!

Some ideas to start your competitor analysis

Caution-------Be careful with conversations with suppliers.
Some conversations with suppliers, who also supply your competitors, can be of minimal value.  Also, be extremely careful what you say to anyone who gives you too
much information.  Remember, they may be talking about you to your competition as well.
 
My Competitive Analysis is Done….. Now What?

After researching your competitors, take a good close look at
your own business and highlight both the differences that point out your weaknesses and the differences that point out your strengths. When it comes to your strengths, make sure your sales people and your marketing is emphasizing the right message. As for the weaknesses, make it a priority to address each one of them to not only match your competition but to improve your position against your competition.
 
Once you understand your competitive advantage (strengths) and you have addressed your weaknesses to turn them into strengths, take that message direct to your markets. You now have real competitive advantage and you can gain market share, increase revenue and improve profitability.
 
Check out CEO Strategists Learning to Lead So Others Will Follow Planning Workbook and CD set.
www.ceostrategist.com/resources-store/real-world-leadership.html
 
www.ceostrategist.com  – Sign up to receive "The Howl" a free monthly newsletter that addresses real world industry issues. – Straight talk about today's issues. Rick Johnson, expert speaker, wholesale distribution's "Leadership Strategist", founder of CEO Strategist, LLC a firm that helps clients create and maintain competitive advantage. Need a speaker for your next event, E-mail rick@ceostrategist.com.
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