26. Competition: Keep Your Friends Close and Your Enemies Closer
Competitive research is an important part of your marketing plan. You need to understand the strategies of your most direct competitors, as well as those of your indirect competitors. As you develop this section of your marketing plan, you should become aware of three types of competitors:
1. Direct competitors who sell the same products or services that you do
2. Indirect competitors
These are companies that do not compete head-to-head with your firm, but nonetheless compete against your business because they offer a similar product or service. For example, a mid-size consulting firm that provides a specialized type of consulting may compete with a large multinational firm that provides similar consulting, but derives a larger percentage of their business from global clients in conjunction with other consulting services they provide.
3. Competitors who supply a substitute product or service
These are alternative choices a person considers as a way to meet their needs. The solution provides the customer with the same or similar result, but does so in a different way. If you want to watch a movie, you have many choices. You can record a movie and use TiVo to watch it at your convenience. Or you can order a movie from your cable or satellite system and watch it on demand as you like. Another choice is to go to the movie theater. All of these options are forms of substitute products. If the goal is “entertainment,” then the list of substitute products grows to sporting events, theater, opera, and a myriad of other choices.
A B2B example is using mediation services instead of an attorney for certain types of legal mitigation. A person may choose to use a financial advisory firm instead of a banking representative or an investment strategist for long-term retirement planning. Another example is the choice to work with a CPA on a tax return instead of using a software program, or just doing it with pen and paper.
4. Competitors who compete for the same budget or wallet share
Who is competing for the same budget as you? You may not have thought about this kind of “competition” before, but it’s important to consider. Companies have many projects under consideration at the same time and different departments compete for the same budget. So, your “competitor” may be another project within a company. If you have ever been blindsided by a lost sale just as you thought you were going to win a deal, you know how frustrating it can be. The only way to try to potentially alleviate this up front is by asking and drilling into buying criteria and conditions. A similar form of competition in this area is the decision for companies to make versus buy. Instead of outsourcing a capability, the company may decide to do it internally.
Observe and Learn
Throughout the marketing planning cycle, it is valuable to track a few of the top competitors in your industry. There are many reasons for this. It will help you gain valuable insight about innovative strategies they are deploying across various aspects of their business such as new products and services, growth into new markets, or sales and marketing strategies. You will also learn about their customer base and potentially discover new opportunities to win market share.
Whatever size of business you have, and no matter how new or mature your market is, you will see value in tracking your competitive market. This will come from not only tracking direct competitors, but indirect competitors, companies that provide substitute solutions, and innovative new companies in your industry or adjacent industries. Tracking different types of competitors will help you think more creatively and strategically about marketing and sales strategies and create innovative solutions to business problems.
If you are one of the few people who say, “But I don’t have any competition,” think again. It’s a global marketplace, and someone out there is making and selling something like yours, or at the very least a substitute like yours. During this step in the process, it’s your job to find out who it is. Think broadly about who is fulfilling the customer need today, and how. Refer back to the “Why Is Your Product or Service Hired” exercise you did in Chapter 23, “Market Segmentation for the Twenty-First Century,” which identified alternative ways for a customer to get a job done that is similar to your solutions. If you have the opposite problem and have dozens of competitors, your job is to select the top three or four companies to track during the planning process. If you try to track too many, it becomes a cumbersome process, and you’ll get bogged down in this step.
Marquis Banking Partners had a difficult time finding a competitor who offered a similar full range of services to what they did. In this case, Marquis chose to track a national staffing firm, Bank Temps, which provides interim staffing for positions like tellers, even though Marquis focuses on C-level interim staffing for banks. One of Marquis’ goals is to broaden the reach within their existing customer base, so tracking a firm like this would be advantageous to learn about strategies to target and sell interim staffing to bank directors and other decision makers within a bank.
In Table 26.1, “Competitive Tracking Information,” select three competitors and write their names in the boxes labeled Competitor A, B, and C. The vertical axis lists several topics that you can research for each competitor. Every company is unique, so customize the topic areas most relevant for your business. For example, a small consulting company would not see much value from trying to ascertain market share, but this is a critical data point for large companies. You will use the same three competitors as a point of reference throughout the planning process, and the information you gather now will be particularly valuable as you develop marketing strategies and tactics.
Table 26.1 Competitive Tracking Information
Summarize this information and your observations in the marketing plan template so you can use it when you develop strategies.
It’s a good idea to transfer this table into a spreadsheet or other document that will help you track this information not just once, but on an ongoing basis. In the marketing plan template, there is a place to include the competitive chart as well as a summary of the key findings on each competitor (which I discuss later in this chapter). Another way to include competitive information in your plan is to write a narrative of the competitive environment. Choose whatever style is best for you, or use both methods for a snapshot view and a more thorough briefing.
Real-Time Marketing Tip
To accomplish two goals, (1) keeping competitive information updated on a regular and seamless basis, and (2) fostering a collaborative approach to marketing planning, consider using this process:
Collection: Create folders in a shared workspace so that when information such as articles, earnings release, and press releases are discovered, they can be stored in separate folders within the competitive folder. That way, all the competitive information is stored in one place.
Collaboration: This is one section of the marketing plan where it is easy to spread responsibilities across a team of people. Assign a competitor to different individuals on your planning team. Engage a cross-functional team of people from customer service, sales, operations, and marketing to collect and assimilate information for each competitor. Each person or team can also be responsible for communicating updates in monthly sales meetings and/or quarterly reviews.
By assigning competitors to different individuals, it spreads the workload, it educates more people about the competitive environment, and it is much easier to adjust strategies to respond to changing market conditions. This process also keeps the marketing plan updated in real-time.
Competitive Information Sources
The Competitive Research Guide is a comprehensive list of resources that helps you discover where to look for certain types of competitive information. It can be found in the resources section of www.MarketSmarter.com.