Researching the competition

You need to understand your competition to compare your strengths and weaknesses to theirs to see how you match up. This will help you select the right strategy to win. Now competitors can be direct, indirect, or what are called substitutes. A direct competitor sells the same things you sell and delivers the same benefit. An indirect competitor sells similar products with a different benefit, and a substitute is any unrelated product or service that a consumer can use in place of your products or services. Now you analyze the competition with a competitive matrix like the one you see here. To create a matrix, list your company and your competitors across the top, then down the side, list the things that you want to compare. Things like size, market share, strengths and weaknesses, and especially the key strategy elements like the value propositions. What resources do they have and how do they use those resources to acquire and retain customers? A competitive matrix will vary depending on the industry, so if you’re in a high-tech industry, you’ll want to compare R&D activities like spending, number of engineers, or perhaps number of new products launched. Now in service industries be sure to compare things like how each company delivers the service, how they train their employees, or how they’re rated for their services. Now be sure to use only information that is publicly available. Never try to get inside information about your competitor that they would consider confidential. Now when you complete the matrix, look for insights that you’ll need later when deciding on your strategy. What conclusions can you draw from the matrix? Now if you spot strengths of theirs to avoid, or weaknesses to take advantage of, you increase your likelihood of success in the marketplace.