Marketing, in its purest form, is based on a thorough understanding of the arena in which your brand competes. That understanding enables you, as a marketer, to successfully promote and sell.
Successful marketers understand their markets, competitors and customer wants and needs. That understanding gives those marketers an opportunity to be competitive.
Identifying and analyzing your direct competition is an important first step prior to making a decision about your marketing strategy. It’s vital to the success of a brand because it reduces risk, time required, resources and expenses.
Picture your competition as a series of concentric circles, like a target with a bulls-eye in the middle. The bulls-eye represents your direct competitors and moving outward from the center the competition grows less direct.
Bull’s eye, center of target—the specific businesses in your marketing category that offer products interchangeable with your brand in the customer's view. For example, if you market a regional brand, you may compete against the other regional brands within a 5-state radius.
Second ring—competitors offering similar products in a different category or who have achieved less significant distribution. Using the example of a regional brand, a product that can be substituted for yours is also your competitor, as is a major national brand. None of these competitors provides exactly the same product as you, but they may be winning lucrative portions of your business.
Third ring—competitors who compete for "same-purpose" dollars. To the degree that your regional brand, perhaps a beer, is a refreshing product, third-level competitors might be companies that provide other types of refreshment; competitors might be marketers of wine, wine coolers or other alcoholic specialty beverages.
Carefully consider, from the customer's point of view, all the alternatives there are to buying your brand. Knowing that, you can assure your brand provides real or perceived advantages over your competitors, beginning with those who market brands that most directly compete with yours. In fact, you can even borrow tactics from second- or third-level competitors to compete more effectively against your first-tier competitors!
It's to your advantage to know as much as you can about the details of your competitors’ businesses. Study their advertising, promotions and brochures. Analyze their pricing strategies and distribution methods. Talk to their channel partners and end users to determine what your competitors are doing well that you can imitate and what they do poorly upon which you can capitalize.
Secondary data, as well as information from your sales force or other contacts including your suppliers and customers, can provide rich information about competitors' strengths and weaknesses. Basic information every marketer should know about his or her competition includes:
Competitor's market share, compared to yours.
How customers and prospects perceive or judge your brand, as well as your competitors'.
Your competitors' financial strength, which affects their ability to invest in advertising, promotions, and abilities to invest in equipment among other things.
Each competitor's capabilities and speed of innovation for development of new products.
There may be other facts you need, depending on the type of product you offer. For example, if you're in manufacturing, you'll want to know how quickly your competitors can fill a typical order, their return policies and what they charge for shipping and handling, etc.
Once you identify your most direct competition and have a firm grasp on your second- and third-tier competitors, project which actions they’re likely to take in the next year or so. Forecasts of competitors' future activities depend on your knowing and understanding their objectives, strengths in the marketplace and resources. Key intelligence for your brand's success:
Annual forecast of sales, spending and profit, promotion and advertising strategies.
Introduction, support rollout and success of new products.
Market segment, product category and sub-category trends.
Direction for future growth.
Gathering competitive intelligence can make a difference between realizing your company's annual plan or losing business that may never be won back.
About The Author
Mark Levit is managing partner of Partners & Levit Advertising and a professor of marketing at New York University. For more information visit www.partnerslevit.com or call 212-696-1200.