In the current economy, consumers and businesses have altered their buying behavior. This has caused the online marketplace to grow more slowly and has increased the rate of change in the competitive environment. As a result, marketers must pay careful attention to the dynamic competitive landscape on a regular basis.
Three New Reasons for Ongoing Competitive Analysis
From an online perspective, three main factors drive the velocity of these competitive developments:
- Greater focus on value as customers choose price over convenience.
- Reduced marketing resources in terms of both budget and employees.
- Increased consideration time as customers defer their actual product purchases.
What does this mean for marketers? Competitive assessment must go from an annual or quarterly process to an ongoing one integrated into the regular business analysis. It’s now critical to understand how the marketplace is evolving in response to economic events and their impact on consumer behavior. This lets you react to competitive threats and opportunities quickly and in a well-targeted fashion.
Three Factors to Watch
You need to keep doing your traditional competitive monitoring, just on a more continuous basis. (For a detailed outline of the salient competitive factors to track and analyze, read my column, “What You Can Learn From Your Competitors.”) Pay additional attention to three important areas:
- Altered competitive landscape. Be alert to the repositioning and departures of existing players, as well as the emergence of new entrants. This translates into monitoring a wider selection of competitors, including:
- Direct competitors. These are companies that are in the same markets and channels as your company.
- Similar competitors. These companies may sell the same type of products and/or ancillary ones in different channels or to other audience segments.
- Suppliers and distributors. These include those who may extend their reach to service a broader range of customers.
- Major diversified merchants. These include both retail big-box stores, like Wal-Mart and Costco, and online merchants, such as Amazon and eBay, that may extend their product lines.
- Free or rented product alternatives. Customers may opt for free or low-priced alternatives, such as free downloads, the public library, or used clothing stores (depending on your product line). In the past, many companies may not have paid much heed to these options.
- New entrants. These include new companies that sell products that compete directly or indirectly with yours. They may be new to the market and may be hiding below the radar in the short run.
- Changed business drivers. These can have a significant impact on your competitive landscape. Among the factors to track are:
- Financial and credit levers that help or hurt your peer set, such as funding, suppliers and distributors, cash flow, credit availability, and receivables.
- Management changes, particularly at senior levels where new executives may result in different purchasing decisions, pricing philosophies, and suppliers.
- Redistributed resources, such as employees reassigned in ways that can have an impact on competitive advantage.
- Business closures, sales, and deals that may translate into products with a different value proposition being offered to your customers and prospects.
- Modified marketing. As companies change the way they conduct business in the current environment, look for:
- Altered marketing communications to be in tune with the market. Conspicuous consumption is no longer acceptable behavior. It’s critical that promotional messages be in line with more conservative spending habits.
- Repackaged products that deliver greater value. Remember, this can translate to longer time between purchases.
- Adjusted pricing and promotions that focus on the value message.
- Different payment options (which can be considered part of pricing). Since credit and cash are tight, layaway plans, an old-fashioned option, fits well with the needs of the times.
- Expanded use of social media to leverage and integrate these newer forms of marketing to drive traffic, support sales and customer retention, and reduce customer service costs.
Monitoring these three factors may require support and tracking skills that cross job functions, most notably marketing, business development, finance, and human resources. But such a broad-based initiative is critical to be on top of the evolving market.
Because the current economic climate continues to have an impact on how business is conducted, ensure that your team has processes in place to track and analyze competitive developments regularly so you can react appropriately and in a timely manner.
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