One of the most important factors that can affect your business – for good or ill – is the competition. Strong competition – especially a new competitor with an advantage – can starve you of customers and revenue, whereas a sudden weakness or misstep from one of the competition can offer you a huge advantage, if you’re ready to seize it.
The most important thing for you is to know what your competitors are doing, and even more important what they’re likely to do. When you can make an educated guess about what they’re planning, you can adjust your own plans to suit.
Identifying the Competition
The first thing you can do is work out just who your competitors are. The scope of this exercise varies from business to business. A local, bricks and mortar service industry like a hairdressers or tattoo parlour is mostly looking at local competition – the other salon across town, rather than Amazon. You probably already know who your competitors are and might even have a social relationship with them!
Similarly, specialist retail has a relatively easy job identifying their competitors, though they may be far more widespread geographically: in a relatively small pool it’s easy to spot the other fish, whether you’re an antiquarian book merchant or a kitchen tile supplier.
The businesses with the biggest scope of competition to worry about are more general retailers and digital service providers. It’s a rare retailer indeed who isn’t threatened by Amazon and other online giants, while a digital marketing computer, for example, is open to worldwide competition. The key here is not to exhaustively list every company in your industry, but to identify who you’re most directly competing with – the most common names that come up when potential customers go elsewhere.
A good competitive intelligence consultancy is invaluable here. They can not only help you with that process of identification and prioritisation but also analyse the market to help give you an inside view on what their plans might be. If you know when your closest competitors are likely to be launching their new product or a big sale, you can make sure your own efforts are scheduled around them to give them a chance to breathe.
Competitor wargaming is an exercise that helps you understand how your competition may react in given circumstances: for example, you might look at how your competitors are likely to react to the oncoming cost of living crisis. If you can make an educated guess about how they’re going to recalibrate their products and marketing to retarget customers who are likely to spend with them, you can once again find a space where your own efforts can stand out rather than fighting for recognition.