Know Your Competitor
The Internet allows quicker feedback on experiments with specific strategies in a very controllable market segments. With e-business, a very high market transparency exists. Everything happens quicker, with higher quality and bigger transparency.
Market Analysis Questions:
- Who are your competitors?
- What’s their value proposition?
- How fierce is their competition?
- Regions
- Languages
- Multimedia
- Partners
- Customer interaction or self-service
- Cost structure
- What market segment?
- How big are they?
- What’s their marketing budget?
- Strengths/Weaknesses
- How do they differ?
- Approach: “Me Too” or are we going to provide an improved value proposition?
Analysis of the various dimensions of the competition:
- Communication Speed—Check if the competitor is faster, more convenient or more complete
- Costs—direct sales can eliminate the middle man and his commission. If the competitor’s structure is leaner, copy his approach or improve it to make efficiency gains
- Freebies—before you offer anything for free, there should be a good idea of how to generate revenues
- Changing boundaries—if you can join them as allies instead of competing with them to expand the network and contribute to your propositions.
Positioning
- Specific and focused presentation
- Immediate confirmation and sometimes immediate delivery
- Quality offering and flexibility
- Specific added-value services
- Targeted loyalty programs
- Speed, convenience and price
Gaining Market Share by using Internet Tools
- Search engines registrations and techniques
- Mailing lists and offers
- Free Offerings
- Infotainment
Compiling competitive data:
Top-down approach: refer to publicly available information and pragmatically pick the available data that comes closest to your needs.
Bottom-up approach: focus on a small number of direct competitors and estimate their market share.
“Initially, a one- or two-year planning should be sufficient” and try to “get big fast”
Market Position:
Pioneer/Leader vs. Follower
Market Leader—you should anticipate how much it takes a competitor to build up a similar organisation…you either have to have the next improvement to your own offering ready or your margins will be under pressure.
Follower—you can build on the experiences of the first player…avoid some of his mistakes…with a clear focus on expenditures, costs and streamlined back office processes. And you need to be ready for price fights.
Points to consider:
- Languages
- Legal requirements
- Payment habits
- Permanent risk assessment
- Continuous business re-design for higher effectiveness and better convenience
- Be pro-active and drive your innovations based on your strengths
A price fight: streamline your operation…but if you are proactive in making your sales and production more and more effective, you have reserves you can use once a competitor challenges you.
…it doesn’t pay off to fight competition everywhere.
Marketing Mix
- Differentiate yourself from the competition—have few solid selling points
- Decide whether a quality leader or a price leader
- Test your story with some prospects
- Pilot a small test market
- Ask your customers
Maintain Awareness
- Encourage risk identification
- Implement loyalty—“Gold Club Members Only”—allow only your good customers to access some specific added value information
- Perform regular assessment of the competitors
Resource:
Morath, P. (2000). Chapter 5 “Know your competitor” in Success @ e-business: profitable internet business and commerce. London: McGraw-Hill. (pp 79-96)