It's time to play KYC - Know Your Competitors!
Knowing your competitors inside out is one of the key gateways to success for your business. It will help you create the right marketing campaigns, develop appropriate pricing models, provide value to your customers and generally stand out from the crowd. Here are the most important things you need to know about your competitors:
What kind of a competitor are they?
The first thing to know about any competitor is to assess which of the three categories they fit into— direct, indirect or replacement competitors. This way you will have a much clearer vision and specific strategies of how to pit yourself against each one of them.
- A Direct Competitor is one which offers the same product and services to the same target market as yours.
- An Indirect Competitor is one who does not have the same products and services but they solve the same problem as your business does.
A replacement competitor offers a service that is wholly different from yours but has the potential to supersede your revenue stream by making your customers spend money on their products instead of what you’re offering.
What are your competitors’ strengths and weaknesses?
Evaluating your competitors’ strengths will allow you to instill the same in your own business, develop strategies to better them with your products and in case you cannot emulate them, then find means to sidestep them in the best way possible.
On the other hand, knowing about your competitors’ weaknesses will let you create appropriate marketing and messaging, identify a general problem in the industry and sometimes even reveal an aspect of the business that you hadn't thought of before. It is therefore important to ask these questions to yourself during your competitive analysis:
- What do your competitors do well?
- What do they do poorly?
- Why do customers like doing business with them?
- Why have customers stopped doing business with them?
- What can you learn from them? What can you do better than them?
How are your competitors positioning themselves?
Learning how your competitors are positioning themselves in the market will help you differentiate your own self rather than getting lost in the crowd. See what message they are putting forward and then you can adjudge how best to penetrate the market and create value for your customers. The more you can differentiate yourself from the competitors’ positioning, the more conspicuous you are in the market.
How does your competitors' pricing compare to yours?
Understanding your competitors’ pricing is an important element in your competitive analysis. Many new businesses will make the mistake of thinking that knowing your competitors’ pricing is all about matching the same when you deliver your products and services. However, there’s so much more to it. The most important is to figure out where your own pricing falls vis-a-vis your competitors in the market. If it falls below you certainly have an advantage but your customers might think that you have an inferior product and so you have to develop the right plan to convince them about the quality. If it falls above, then your customers might prefer your competition and so it is your job to create a message that persuades them to pay a higher price for your product.
What innovations in business methods and products are they practicing?
Today the customer is more discerning and more empowered than ever before. This is why it has become mandatory for any business to seize opportunities to innovate not only their products and services but also the way they do business in order to provide convenience and efficiency to highly demanding customers. By knowing how your competitors are innovating themselves, you will be able to get valuable insights into your customer's needs, learn about shifts in the industry, learn to look for opportunities that can help you improve your offerings.