I started to work with a new client recently and they asked me to prepare a marketing plan for how to take their new software product into the UK small business space. It was particularly pleased with this project and certainly because the product seemed strong and relevant – it was all about increasing efficiencies, managing finances and essentially creating a smarter back office for your small business.
One of the first tasks I advised the client to work on was to look at the competition. It seemed to me the product was good, but it would be entering a hectic market place and therefore the positioning had to be spot on. By positioning I essentially mean which market segment, at which price point and selling what benefits.
Like most small businesses, the client had not even looked at this area, but instead had focused on developing a strong product and some solid client credentials.
So what is competitor intelligence and what should you do about it?
Well, first of all, it’s not spying on your competitors, it is gathering information you can use to make informed decisions. From a quick web search I found this great quote from Cipher :
“Competitive Intelligence is the ethical gathering and analysis of competitor and market information from open sources. This analysis is used by organizations to make better strategic decisions.”
I like another quote too, this time from oft quoted Chinese Philosopher Sun Tzu:
“If you know yourself but not your enemy, for every victory gained you will also suffer a defeat.”
Ok so this is from the Art of War, but none-the-less it is interesting to think about.
So as a small business owner / marketer, what should I do?
Well I’ll tell you. You could employ a professional and the Society of Competitive Intelligence Professionals has a useful directory.
Alternatively If you would prefer to have a go at this yourself, you might want to have a think about these core steps:
1. Set your objectives – what information do you want to find out?
You could easily spend a lot of time looking at every possible sphere of competition to your business. Be realistic, define your market first, for example if you are a dry cleaner in London, you can probably focus largely on the surrounding area without having to review every dry cleaner in the UK.
What is your unique selling point and how do you compete? If you are largely focused on price, this might be one factor you absolutely must learn about your competitors.
Could you learn from a related field? If you are a dry cleaner, could you consider another service business to get some insights and ideas, for example hairdressing, or vehicle valet services?
2. Define what you already know.
Simple enough, start by listing out the companies you already know about. Create a table and list as many of the following details as you can:
Name
Location
Website
Turnover
Age
Product range
Pricing
Key customers
Core strengths and weaknesses
3. Develop the Profile.
Once you have the basics listed, start to think about what other information you could or should gather and from where. For example, have you employed a sales manager that used to work for the competition? Could they provide some real insight into pricing and sales strategies which you may find useful?
You could also consider:
- Try to find their latest set of accounts (try Companies House in the UK) to help you understand their financial position
- Look in the trade press to identify if they have received any grants recently which you may also benefit from, or whether they have received any investor funding – this may give you a clue as to the money they have to spend on developing the product and marketing communications
- Look for any advertising or promotions they are running to identify their unique selling points, for example are they running Payperclick advertising? If so, which keywords are they bidding on?
- Talking to industry commentators and journalists. These are people paid to understand the market place you are competing in and will have an excellent knowledge of what is working and how the market is developing.
- Suppliers – who are they using and can you get a better price by using the same suppliers?
4. Translating information into knowledge
Once you have spent some time gathering this information and it probably won’t be a quick task, you need to translate that information into useable knowledge.
A good example is looking at price points and how this matches to your customer segments. Continuing with the dry cleaning example, a market which is probably fairly price inelastic (small changes in price will have little impact on demand), you might find your competitors are all more expensive than you.
What action could you take?
In this case you could probably consider increasing your prices a little without impacting sales volumes. This would have a direct impact on your bottom line.
Once you have taken this action, you of course need to monitor the impact and take additional corrective action as necessary. If your price increase does reduce sales volumes, you may wish to revise your stretegy.
5. A regular approach.
Competitive intelligence is not a one off activity. Keep a regular check on the core criteria and ensure this is something all of your team, especially customer facing staff, are involved in.
And that’s it. You don’t have to be a James Bond type to get to grips with competitive intelligence, but you do have to get to grips with it!
I’d love to hear what your experiences are of trying to keep tabs on the competition.
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