When it comes to strategic marketing, competitors can provide the best insights. Brick-and-mortar marketers have shopped the competition forever. You should, too. Competitive assessment should be conducted as part of the annual business planning process at a minimum. Less formally, it should be done continually.
Determine the Competitive Set
The lynchpin of any competitive assessment is determining the competitive set. I often see marketers use too restrictive a competitive set to provide sufficient insights. Cast a wide net when developing a list. Include direct competitors, major players in your market (even if they aren’t considered a competitor due to size), and firms in the same business as yours who operate in different channels or only in a limited niche. To this list, add the dominant broad-line players in your market. If you’re an e-tailer, consider how Amazon and eBay approach your market online and how Wal-Mart or Home Depot approach it offline.
Gather Competitive Insights
Collect information across a wide range of functionality. Consider both the seller and the consumer perspectives. Test and track the consumer experience. Depending on the type of business, this may translate to registering for various newsletters as well as shopping their various services. As you go through each step, consider how efficient and effective the process is.
Among the components to track:
- Business strategy. How does this entity conduct business? What is its business objective? What is its business model?
- Markets. What markets is it in? How does it segment its customer base?
- Offering. How does it define its product offering? Include cost and other aspects of the offer. How does it think about its products? Are products and brands categorized, cross-sold, or both? If relevant, assess its suppliers and distributors.
- Third-party data. Track your ranking within your category as well as relative to your near competitors. Options include Nielsen//NetRatings, comScore, and Hitwise. If your budget’s limited, try Alexa and its newer competitors, Quantcast and Site Snapshot.
- Web site. Assess the major components of each Web site. Are any merchandising components missing? Study how each competitor approaches its site.
- Content. How is information presented and organized? What content is open and available? What content is used to engage the target market?
- Site merchandising. What techniques are used to attract visitors? What techniques are used to convert visitors into buyers?
- Search functionality. Is there search functionality on the site? Research search terms competitors use. Monitor keyword buys and placements in search results.
- Information gathering. How does it collect e-mail addresses? Does it offer information such white papers or catalogs? Are RSS feeds available? Register for these offerings.
- Shopping experience. Shop the competition where it makes sense, and test different scenarios to see how the consumer’s treated. Purchase and return product. Monitor costs, timing, and correspondence.
- Distribution channels. What distribution channels are available?
- Offline presence. Check competitors’ offline presence, where applicable, and integration with online.
- Advertising, press, and buzz. Monitor competition in the press, online and off-. Assess noise in the marketplace. At a minimum, use Google Alerts, Bloglines, and Technorati. Check other forms of on- and offline advertising and PR.
Three Competitive Analysis Tools
After you’ve gathered competitive information, it’s necessary to organize it. Three techniques to help you gain the most insights from the data:
- Develop a competitive grid. A grid is useful for organizing the data and presenting it in a concise format that highlights differences between competitors. It allows recipients to readily grasp the salient points.
List companies on the vertical axis and attributes on the horizontal. Since there’s a lot of information to integrate, break it down into a number of different grids organized by category, such as business strategy, Web site, product and pricing, and offline marketing.
- Build a gap analysis. As you assess each competitor, note areas of difference for which your firm should have equivalent functionality. After you’ve aggregated the information into a competitive grid, seek out other areas where your firm’s offering isn’t equivalent to its near substitutes.
Compile this list of areas for improvement into a grid that shows the gap on the left and the recommended action to improve your offering on the right. Once you’ve finished, organize these gaps by major category.
- Create a strengths-weaknesses-opportunities-threats (SWOT) analysis. A SWOT analysis is a grid that lays out the top competitive issues. Its simplicity is part of its popularity as a management tool. While it may be tempting to place more factors in the strengths and opportunities lists, my preference is for lists that are relatively equal in length. You’re usually less aware of your negatives than your positives.
Smart as you are and as good as your business model is, there’s almost always something to learn from competitors. You aren’t alone in trying to do a better job. At the very least, you want to know if new threats out there. Often, the best business ideas come from seeing something new or interesting your competitors are doing and adapting it to enhance your product line, offer, target market, distribution, or cost structure.
Meet Heidi at the ClickZ Specifics: Analytics seminar on May 2 at the Hilton New York in New York City.
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