A competitor is not only someone who sells the exact same products, but also someone who markets products or services that satisfy the same needs and that can be equivalent or a substitute to yours. It is very important to know which competitors can take over your business. This exercise requires a lot of creativity, to identify both direct and indirect competitors as well as potential new ones.
The process of collecting data includes:
- Identifying generic competitor groups (pharmaceutical companies, software companies, pharmacies, supermarkets, etc…)
- Creating a list of specific competitors for each group identified in the previous step (with their real names such as Abbott, Roche, Aventis, etc…)
- Preparing a database with information about each competitor
Here are few tips you should keep in mind:
- Avoid the syndrome of “there’s nothing like it in the market”. There are always competitors, so be realistic and work hard on identifying them and you’ll see that many people will have thought of something similar to your product and that offering something truly different is more difficult than it seems. Be creative!
- Use sources to find information about the competitors such as the Internet, the Yellow Pages, specialized magazines, directories and lists, virtual communities and forums, trade fairs, etc… Keep the data you collect organized in a database such as Excel or Access, so that you can get back to it in the future for your marketing activities.
- Collect information such as their products and services, prices and discount policies, clients, marketing strategies, strong attributes, technical specifications, distribution channels, etc… Learn how others have done it before you and learn from their mistakes. There is a lot of information that can be found if you put a little effort into it.
Some very effective ways to get information about competitors are:
- To visit competitors’ clients and ask them about the strengths and weaknesses of the competitors’ products
- To perform purchases or pseudo-purchases, pretending to be the competitor’s potential customer
- To study the competitor’s product and test for functional, technical, etc. differences or weaknesses
- To study technical and legal weaknesses of the competitor’s patents
- To check the competitor’s website
- To collect advertisements, catalogs, promotional materials, annual reports and even users’ manuals distributed by competitors
- To attend major specialized trade fairs
- To subscribe to your competitors’ newsletters
How to do a pseudo-purchase? It is basically like ghost-shopping. It’s probably the most effective technique to gather relevant information about competitors, although it’s also the most difficult. It consists in faking that you’re a competitor’s potential client, in order to become familiar with their sales pitches and to collect more information about their products and services. In order to do this, it is fundamental that you play a role and that you play it well.
Before the meeting, you should prepare by drafting a “pseudo-sale script”, studying your part well enough to be coherent and preparing supporting material that will make your presentation look more real (fax letterheads, etc.). In any case, try to be as ethical as possible. Do not fool anyone more than necessary. For example, you can play the role of a major distributor interested in marketing the competitor’s products, of an intermediary consultant, who advises clients interested in buying and looking at offers for products, of a friend of yours, who owns a company, of an Internet portal that is specialized in the industry or even of an employee writing a business plan for the company that is being created, that requires to know how much it could cost to buy the products, etc.
So how many competitors did you identify in your market??