Competitors'
Strengths and Weaknesses
You should be very aware of your first-level
competitors— in many cases, you'll know them by name and
may even belong to the same business associations they do. If
you don't know much about their business operations now, make
sure that you do soon! It's to your advantage to know as much as
you reasonably can about the details of their businesses. Study
their ads, brochures, and promotional materials. Drive past
their location (and if it's a retail business, make some
purchases there, incognito if necessary). Talk to their
customers and examine their pricing. What are they doing well
(that you can copy) and what are they doing poorly (that you can
capitalize on)?
Secondary data,
as well as information from your sales force or other contacts
among your suppliers and customers, can provide rich information
about competitors' strengths and weaknesses. Basic information
every company should know about their competitors includes:
- each competitor's market share, as compared to your own
- how target buyers perceive or judge your competitors'
products and services
- your competitors' financial strength, which affects their
ability to spend money on advertising and promotions, among
other things
- each competitor's ability and speed of innovation for new
products and services
There may be a wealth of other facts that you need to know,
depending on the type of business you have. For example, if
you're in catalog sales, you'll want to know how fast your
competitors can fulfill a typical customer's order, what they
charge for shipping and handling, etc.
Every competitor has definitive weaknesses and strengths that
may be points of potential advantage for your company and
products. In most cases, larger companies cannot make decisions
or allocate resources, personnel, and materials as fast as a
smaller company under changing market conditions. Smaller
companies may have to be content with a limited, but profitable,
objective of taking what they can from the market before larger
competitors catch up later.
It is also important for smaller companies to decide when the
cost of direct
competition is both unwise and ineffective. For example, a
small, local soft drink company cannot afford to match every new
flavor and size of soft drink that larger national companies
introduce and support with marketing programs. It must develop
its own unique flavors and stick to selling and distributing
only the sizes that sell rapidly in its own markets, with
limited marketing spending support.
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