Marketing for Small Businesses
Part 3
Our Competitors
As you recall, in part one of this series,
we began asking questions about our business. We discussed what makes
our product (idea) unique, and who are our customers. Now we come to a
third question.
3. Who
are our
competitors?
Firstly, we need to know who is in direct
competition to our business. We understand this is important information
to the success of our business. We need to target a specific segment of
our customers where we shall have the greatest success.
Many times our
competition comes from places where we least expect it. Let’s use the
trophy business for our example. Everyone knows their competition would
be other trophy shops. But what about the independent vendor making
hand-carved wooden plaques in their garage? Or the retiree down the
street etching brass plates? Competition can surprise us.
To help
determine our choices, we need this kind of information so our programs
be effective and efficient. So let’s think of our competitors as
being in three groups.
The first
group contains the competitors who have the greatest impact on our
business. They have similar products or services and are usually located
close to our site. Typically, competitors In this group vie for the same
customers usually within a 10-mile radius.
The second
group is similar to the first, except they are located farther away
from our location. Plus, while they have similar products or services to
our business, they’re not quite the same.
The third
group of competitors vies for the “same occasion” business. What
this means is if the competition sells only one similar product or
service, they offer other unique product as well.
We must be very
careful to understand that our customers are able to purchase products
from us as well as ‘the other guy.” This brings us to the next piece of
our question.
What are our competitor’s strengths
and weaknesses?
Now that we
know who our direct competitors are and their names, we need to learn
how they run their organization. We accomplish this by studying their
brochures and promotional materials. We drive by their business and
perhaps even go inside and see first-hand how they are run. Speak to
their customers to learn what our competition is doing well (so we can
duplicate it) and what they aren’t doing well (so we can both avoid
doing the same thing and also to take advantage of it.)
It is quite
possible that when we obtained secondary research, we might already have
this information. We need to know at least the following:
-
Competitor’s market share vs.
our own
-
Customer’s opinions about
competitors products and services
-
Competitor’s financial
standing - this directly relates to how much they can afford to spend on
advertising and promotions
-
Competitor’s ability and
timeliness in the creation of new product lines or services
Depending up
our business, there can be much more information required.
Don’t be
discouraged. Every competitor has it’s own weakness and strengths. For
example, larger companies usually cannot adjust to changing markets as
quickly as smaller businesses. But when the larger companies catch up
and begin taking customers away again, it’s time to quickly adjust
again.
Please
remember, we need to decide when the cost of direct competition is
unhealthy for our business. For example, the retiree engraving the brass
plates cannot compete with all the products offered by the trophy shop.
So the retiree needs to be content to focus on his unique product and
sell it in his own market and with his constrained marketing budget.
If our business has been operating for
several years, we still need to take time and reevaluation our business
plan in relation to our competitors. We need to keep in touch with the
comings and goings of all types of businesses to see how they may or may
not affect our operations.
In the next week or two we’ll continue our discussion
with information about how we position our business in the marketplace.
