Do you know who your 'real' competitors are? How to conduct a competitive analysis.
Internet brands such as Amazon.com, eBay, E*TRADE, and Yahoo created major disruptions in their respective markets. They changed forever how customers transact and acquire products. Time and again, I've seen senior management narrow their competitive view only to those companies selling their exact product through the same old channels. This is often a significant strategic miscalculation. I call it "competitive myopia."
In my experience, companies rarely consider their full competitive array. I've seen only one example of a company talking about all its competitors. The reason was simple: Customers left them no choice. It was a high-involvement product in which even satisfied consumers used multiple suppliers and constantly tested new ones. Customers were always telling the company which competitors they were trying.
By not taking the consumer's perspective into account, companies adopt an ostrich approach to marketing. It makes them vulnerable to competitive attacks from new and existing players with interesting new value propositions.
I once worked with a firm that only considered direct competitors in Internet and direct mail channels. Internally, no retailer was ever mentioned, despite the fact traditional brick-and-mortar chains had substantial market share. Consequently, the firm missed a significant competitor: Costco. Costco delivered immediate benefits against which this company couldn't compete.
By not considering retailers, the company never developed effective potential competitive strategies to extend its relationship with its best customers, who often purchased from multiple suppliers. Talk about sticking your head in the sand!
Speaking with senior executives of the third-largest firm in an online information segment, I was struck by how adamantly they insisted they only compete against the dominant firm in their niche. Comparable public measurements show the top two players have a similar number of unique visitors, while the third trails by over 50 percent. Although all three extend existing businesses online, the second player defines delivery differently, enabling it to capture market share below the radar.
To combat competitive myopia, define your competition broadly. This doesn't mean including every e-tailer. Rather, think strategically about your offering from the viewpoint of your customers, competitors, suppliers, and distributors.
From a strategic perspective, analyze your competition as outlined below.
Lay a Strategic Foundation by Answering Specific Questions
Get Further Information on Competitors
Develop a Competitive Analysis
Always think about and consider testing possible line extensions, new distribution channels, and target market opportunities. I use this type of competitive analysis to help companies refine their strategic approach by uncovering untapped opportunities. Since new approaches often run counter to existing and accepted business models, change may be difficult to sell to senior management. Don't let that stop you. It won't stop your competitors!
The only constant in marketing is change. It's up to you to leverage marketplace dynamics to create new opportunities and avoid emerging threats to your business.
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Heidi Cohen is the President of Riverside Marketing Strategies, an interactive marketing consultancy. She has over 20 years' experience helping clients increase profitability by developing innovative marketing programs to acquire and retain customers based on solid analytics. Clients include New York Times Digital, AccuWeather.com, CheapTickets, and the UJA. Additionally, Riverside Marketing Strategies has worked with numerous other online content/media companies and e-tailers.
Prior to starting Riverside Marketing Strategies, Heidi held a number of senior-level marketing positions at The Economist, the Bookspan/Doubleday Direct division of Bertelsmann, and Citibank.
Heidi is also a popular speaker on current industry topics.
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