Business Plan - Know your competition

Introduction

In this fourth publication in the business planning series of 10 articles, I want to talk about your competition and why you need to know about your competition and not just from your own perspective.

It’s one thing knowing who your competion is and what they do, you also need to understand how they are perceived by their customers. From the moment the customers sees your competitions advert, marketing materials or have any sort of contact with your competition, what is the customer experience?

Analysising Your Competition

OK, do you do your weekly food shopping predominantly at one supermarket? Stop and think why. Is it purely price, convenience or is it the whole shopping experience that takes you back there week after week. Obviously I don’t know, however, your prospective customers “shop” for your product or service in a similar way. So, what is it that will make them come to you? Ask the question “what’s in it for them?”

Example of a customer’s choice – “I buy most of my fresh meat from a local butcher. Yes he is more expensive than the local supermarkets, yes I do have to make the effort and, yes I do have to pay car park fees every time I go there. For me, I am prepared to suffer these incidentals to know I will get exactly the cut of meat I require, the advice on preparing and cooking it and the knowledge that I am getting a “good deal”. This is their value for money deal.

So, why not use a supermarket. Some of them have a butchery department, in the main the meat is of good quality, fresh and well displayed. However, for this customer, they like that little extra they get from their local butcher.

So, how do your customers view your competition, what is your competition good at and what are they not so good at. What do they offer that you don’t, what do you offer that they don’t. What are their prices like compared to yours………….. the list goes on.

So, what do you need to find out? For this we use a tool called SWOT analysis (Strengths, Weaknesses, Opportunities, Threats).

(To learn more about SWOT analysis click on the SWOT analysis button at the end of this article)

Traditionaly SWOT analysis is used as an internal analysis of your business. However, I have found that this tool to be a usefull framework for this and other applications. As you will see from our brief explanation and free template (avialable to you if you click on the button below), the Results template requires for commitment to action. As previously mentioned, action planning is an important emlement in planning for your business.

Strengths: what are they good at?

What is their profile (advertising, marketing, web site etc.)?
What are they good at doing/providing?
What is their market coverage in your chosen areas?
What do they do that you do not or cannot?
Pricing and what packages do they offer?

Weaknesses: what are they not so good at?

What don’t they do that you do?
What are they not so good at?
What is their reputation like?
Are their prices too high compared with yours (and what the market rate is generally)?
Where do they not cover in terms of area, clients etc.

Opportunities: are there any opportunities for your business arising from their weaknesses?

For each of your competitions strengths or weaknesses, what could your business do to take advantage of these and become even more competitive?

Threats: what could your completion do to take advantage of your weaknesses?

For each of your businesses strengths determine if your competition could outperform you in any way
For each of your weaknesses consider if your competition could take advantage of these and what you could do to improve your current offering
What developments could your competition consider to improve their market position?

Once you have data and clear evidence of all of the above, the next step is to put in place an action plan for your business to improve your probability of winning business.

Like any competitive analysis, this is only as accurate as the effort that you put into gathering the information. Remember, the analysis is only a snap-shot in time, you need to have an action to revisit this on a regular basis. Remember, your competition will be looking to improving their position also.

Graham Cripps

Results Consortium Ltd