Can you say that you know who your competition are, where their strengths and weaknesses lie, why consumers might choose them over you? If you can’t then how can you compete with confidence?
I work with owners of micro businesses (typically employing 1-9 people) planning how they are going to get from where they are now to where they want to be.
I help them realise their potential and in doing so help them get the businesses they want.
The initial analysis revolves around three areas;
- The current situation with their own business (products, strengths, weaknesses etc.)
- The external environment (including their competition)
- The customer and/or consumer (the segment they should aim their products or services)
Understanding what is happening in the external environment (what is going on in the wider world outside of your organisation) can be compared to taking in what’s happening outside your car when driving. Imagine the consequences of not looking out for what other drivers are doing or the behaviour of pedestrians or cyclists when you’re driving through a town or city.
Your competition are an intrinsic part of the external environment – indeed they are probably scanning the environment (and you) in order to determine their strategies for moving their businesses to where they want them to be.
Knowing the competition and what they can offer is imperative if you are going to compete effectively. You need to be able to compare and contrast your own strengths and weaknesses with those of your competitors
Do this for each competitor for each of the products and services you offer. Ideally this will include systems, strategies, strengths and weaknesses. In doing this you will be in a better position to make decisions on how you need to position yourself.
Firstly, list each of the strengths of each competitor for each of the products or services you offer. Be as specific as you can be, concentrating on those that you do not possess. Once this is done list the weaknesses of each competitor, concentrating this time on those areas where you do not have such a weakness.
Secondly, rate each of the strengths and weaknesses to reflect the importance to the client base or to each segment of the client base (if you don’t know this then use you own experience and knowledge of the market).
At this point you will hold some valuable information as to which segments of the market are likely to want to buy from you, based on your own strengths, rather than your competitors (based on theirs).
This has taken care of the position in relation to your current competition, however what of the future?
If you have examined the external environment using a tool such as PESTEL analysis, you may have concluded that there are some big opportunities on the horizon that you want to take advantage of.
You are not likely to be the only organisation to have drawn this conclusion and so you need to think about your potential as well as your existing competition.
Are there businesses trading in other sectors that could transfer their skills, knowledge or technology into your own? How many competitors are their currently compared with the number of customers (or even suppliers if you make a product)? How easy would it be for a new entrant to gain a foothold in the market potentially eroding your market share?
Scanning the external environment should be an ongoing process. It should be something you re-visit, review and continually keep on the radar.
By staying on top of what’s happening in the external environment you will be able to compete with confidence. If you need help, please get in touch with E Business Coaching.