8 Competitive Analysis
To be effective in marketing, you need to be competitive with your product or service, promotion, distribution, customer service, technology—just about anything you can think of. Even mighty Microsoft is failing with their mobile phone software, which is considered by many to have a boring interface and sluggish response time. In this chapter we offer a series of worksheets that will allow you to compare your company to the competition along many parameters. You are asked to score yourself on a scale of 1 to 10 in each of the worksheets below against your three major competitors.
You will not have “hard data” to make many of these assessments, but the better you know your industry and your competition, the more useful this competitive analysis will be. Some of the data can be obtained through research on your part (see Chapter 17, The Research Plan), and for some, you will just “wing it.” Give it your best shot.
Where you find yourself weak, you need a plan to make yourself stronger. Where you excel, if it is considered a vital factor in the buying decision, these factors should be your basic thrust in your promotions.
You can make photocopies of these worksheets, or print them out from your downloaded Worksheets folder.
Worksheet 8–1 Product/service
Quality is usually considered a vital factor, and is the reason for the success of Marriott Hotels, Coach, and Apple. Differentiation is also critical, otherwise why would customers buy your product or use your service instead of the competition’s, unless you are relying on discounted pricing. Depth of line, which is the number of products or services you offer, is also important for maximum profit, and is a big part of the strategy of Coca-Cola and McDonald’s. If you don’t know your trial rate and your repurchase rate, you should be able to get that information from a benchmark research study or perhaps from other departments in your organization. It’s important information to have, and will come up again in Chapter 13, The Sales Plan: Future Sales.
Worksheet 8–2 asks you to rate yourself on manufacturing.
Although manufacturing is not part of marketing, you need the right resources on which to build a marketing plan for a product. Value added, which is a vertical or horizontal integration strategy such as Cisco’s expansion into other markets, and pushing the experience curve (as Japanese industries are so well known for doing) can lower your cost of goods and leave more for marketing.
Worksheet 8–3 asks you to look at how well you stack up against your competition in terms of promotion.
The previous chapter on your marketing communication budget provides you with charts to help you calculate your budget for advertising, sales promotion, and public relations. You have the reach and frequency calculation spreadsheet for advertising in the chapter on advertising (Chapter 9); the one for trade shows, etc., is in the chapter on sales promotion (Chapter 10). The research chapter (Chapter 17) will tell you how to use a benchmark study to obtain your awareness level, your “would consider” and “intend to buy” levels, among your target audience, as well as how to measure the creativity of your advertisements. Again, a benchmark study will answer these questions for you.
You don’t have to outspend competition to win, just more effective marketing. However, if one or more of your competitors are outspending you and have a powerful creative department, you should stop everything and determine how you are going to fight back. Do you alter the product or service for greater appeal and/or obtain a more effective creative department?
Worksheet 8–4 will help you determine your competitive score in terms of retailing.
If you are into retailing, you should take a trip to see Bloomingdale’s in New York City. That is really a fun place to shop. You should also take a tour of Wal-Mart’s home office or read about them because they understand the whole world of retailing better than any other company. In the past, their only weak spot was employee relations, but now they are providing more benefits to their employees.
Worksheet 8–5 Distribution/customer service
If your competition has more outlets than you do, their marketing costs per outlet will be less than yours and their entire cost structure will probably be more favorable. We have talked about customer service before and will again later, but remember, keeping a customer only costs about a fifth as much as acquiring a new one. The CEO who calls all her customers to ask how she can improve her service to them has an extremely high customer retention rate.
Worksheet 8–6 asks you to score yourself against the competition in terms of your sales force. Remember, these worksheets are very general, meant to help you home in on what your company is doing well—and where it is falling short.
One of your most important marketing objectives should be to have the highest sales closer rate in the market. You can calculate your own internally and with a little investigation obtain competitive rates. You should always have a debriefing session with the prospect after the presentation. This enables you to find the pluses and minuses of your own team as well as hear the attributes of your competitors’ sales talk. Once you know your own closure rate, you want to set a higher objective for the following year and your strategy should be some form of sales training.
Worksheet 8–7 asks you to evaluate your company in terms of research and development. If your company is not investing in its future, it probably won’t have a very good one.
Worksheet 8–7 Research and development
The key factor here is the number of new products/services in the last two years. Research indicates that about 70 percent of markets start to deteriorate within three years. The company with the highest percent of new items is usually the winner.
After you complete these worksheets, you will know what you do well against the competition, and where you need to pick up the pace. You will have the parameters you need for setting up your marketing objectives.