Finding your Competition, and Beating Them at their own Game
Competitor analysis is vital for every business. Who could compete with you for your customer base? It’s an excellent idea to do a thorough analysis of possible competitors before you go further in your venture. Search the web, online forums, phone books, your chamber of commerce, and ask everyone you know (and some you don’t). Find out who’s out there, what their strategy is, and why your business will succeed alongside your competition (or put them out of business). Remember that for some types of businesses, competitors don’t have to be located in the same city, state, or even country to take customers away from you.
I like to break down competitors into 3 different categories:
Level 1 Competitors – These are people doing almost exactly the same thing you’re doing. If you’re running a flower shop on Oak Street, these are the guys 15 blocks down on Maple. You both might have your own specialty arrangements or selection, but if you’re both ‘flower shops’ they are considered your Level 1 competition.
Research their business, see how they’re marketing, who supplies them, whether business is good or bad, and make a list of what you think they’re doing right and wrong. Implement the things you learn that could help your business, but do it better than they did.
Level 2 Competitors - These are companies in the same line of business, but with something significantly different about your business practices. If you run a flower shop, this is 1-800-Flowers. They sell flowers, same as you, but they do it significantly different. In my line of business (web design, development, and marketing) my Level 2 competitors are places like Yahoo Small Business that use an automated template process to design and develop a customer’s website. They don’t provide SEO or any professional consulting or guidance (which is why they’re not a Level 1), but, bottom line, they sell websites.
Analyze what threats they pose to your business, their strengths, and what you can do to neutralize this advantage. For example, providing free delivery of your own flowers could help compete in this arena.
Level 3 Competitors – Competitors in this level are alternative routes your customers could possibly go instead of using your solution. In the flower business example, this could be local nurseries (clients could grow their own), fields or parks with wildflowers (customers could pick their own), etc.
These competitors don’t require as much consistent attention as the first two levels, but if you can take a huge advantage or plus from this level and implement it into your business, it could mean a payday – this is how home runs are hit. For example, as a flower shop, you could implement a pick-your-own-flowers shop, where you grow the flowers and your customers can cut them for a guaranteed ultra-fresh bunch.
Monitor your competitors’ activity, but in doing so, don’t forget to implement things they’re doing right, or try new things that could turn into that home run you’ve been swinging for.
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Tony Kau is co-founder of Portland web design and Internet marketing company Vanivo. For service inquiries, you can contact him directly at tony -at- vanivo.com.
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