Understanding Your Competitive Landscape

If you were a customer, would you choose your product over those offered by your competitors? Not sure how your products stack up against the others? Then you need a competitive landscape. Many companies think they know what their competition is up to, but they only take a close look once per year, or they only do serious research when they get into “feature wars” (what they have vs. what we have).

Understanding your competitors – which means any organization that offers the same, similar, or substitutable products or services in the business area you operate — is a fact of life. Successful companies conduct ongoing competitive research that shows them the big picture – why they win or lose deals, where the strengths and weaknesses are, where the next milestone on the roadmap is.

If you don’t have competitors, it is likely that you are in a radically new market (and competitors are likely to follow) or you are in a market so unattractive that nobody else wants to play.

However, if you are like most companies, you have some generalized awareness of who offers similar products. And that generalized awareness is not enough to leapfrog ahead into sustained growth.

What is a competitive landscape?
A competitive landscape (also known as “competitive intelligence”) provides cohesive, detailed information on what your competitors are doing including

• Who your real competitors are
• What their products are
• How your customers perceive the competition
• What your competitors’ business model is

You and your company need this vital information to plan and market profitable products that beat the competition. According to the Society of Competitive Intelligence Profession, a competitive landscape is a necessary business discipline for effective decision-making. The information enables management to make informed decisions about everything from marketing, R&D, and investing tactics to long-term business strategies. In short, a competitive landscape provides actionable intelligence that will provide a competitive edge.

Why do you need one?
Does a competitive landscape really make a difference? Yes! Studies show that companies that have active competitive intelligence programs generally outperform those that do not in sales, market share, and earnings per share. These studies suggest “there is a positive relationship between emphasis on competitive intelligence and successful financial performance.”

How do you create one?
First, get organized. In gathering competitive intelligence and creating your competitive landscape, you will gather a significant amount of information over time. You’ll need to create a file for each competitor, as being able to stay organized is critical.

Next, you need to know a variety of things about your competitors. At a minimum, you need to know

What makes your competitors the choice of some of your customers?

• Is it their overall perception of value for money?
• Quality?
• Price?
• The way they do business?

What, in the eyes of your customers, differentiates “them” from “you”?

What do their financials look like? How do your competitors make money and profits?

• Do they make their profits from having created better products and services?
• Have they established excellent financial deals with their suppliers?
• How much cash do they have?
• Can they react to impacts that you might make in the marketplace?
• If they are private, how much funding have they raised to date? When was it raised?

What are their future intentions? This is not an easy question to answer, but it should be one of the most important questions that you try to answer.

• In the next three years, which segments will your competitors be targeting?
• Could they be acquired or are they looking to acquire?
• What could they do in order to achieve growth?

Where do you get all this information?
Need information on a private company? Think you can’t get the information? Many think that because a company is privately held there is no information available. That is a myth. The information is out there, sometimes in the most unlikely places. Here are a few ideas for finding information – on both public and private companies – ethically:

1. Analyze competitors’ websites
2. Attend trade shows, exhibits and conferences
3. Talk to receptionists, salespeople and people in human resources in your competitors’ companies.
4. Check out local news outlets
5. Review 10-Ks, 10-Qs, annual reports and credit reports
6. Collect press releases
7. Read general business publications (Forbes, Wall Street Journal, Economist, etc.) and trade magazines
8. Listen and talk to industry analysts
9. Talk to vendors, partners and customers
10. Use on-line information service (e.g. Hoover’s Online, Dialog, and LexisNexis). This includes following blogs, message boards, Twitter, LinkedIn, FaceBook, and other social media.
11. Buy your competitors products
12. Use third party services (e.g. BEK Enterprises)
    

How Much Should You Invest?
Unfortunately, the answer to that question is an unsatisfying, “it depends.” The amount of time and money you need to spend in competitive research depends on your purpose.

If you are entering new markets, targeting new customers, looking to acquire or merge with another company, the time and effort is significantly greater than if you are creating a feature/benefit matrix. I often hear the cry, “it’s costs too much.” But the real question is: “Compared to what?”

If your competitors are consistently beating you, how much revenue have you lost? How expensive is it to send a sales rep to the client, and then lose the deal? How much have easily-avoided strategic and tactical mistakes cost your company over the past 12-24 months? If you could step around those mistakes and shut out your competition, what would that be worth?

Quality information is the basic component to making solid decisions, but it isn’t free. The public library is good, but it doesn’t cover all the bases, and even the best of business libraries have a limited amount of information. You need to plan to invest money and time to flesh out all the details in your landscape.

How long will it take?
Competitive analysis is an ongoing process – a discipline, if you will – rather than a once-a-year or ad hoc occurrence. Some companies have entire teams dedicated to the gathering of competitive intelligence.

However, if you don’t have the resources to dedicate to tracking your competition on a daily basis, don’t worry. Depending on your market, it is possible to successfully monitor your competition and use the information in decision making if you update your competitive information on a less frequent basis. Many companies do thorough updates on a monthly or quarterly basis.

The Bottom line
Acquiring competitive information is not easy, and turning raw data into a meaningful picture of your competition is an ongoing process. However, you can take solace in the fact that your competitors have the same challenges as you. If you have a better view of the competitive landscape, you can beat them at the game and see the difference that it makes on your bottom line!