Think you know what a competitor is? You may know your Twinings tea from your PG Tips, but there are some competitors that are operating under your radar, so let's see how well you know your competitors...
Competitors might seem to be a bad thing, undermining your company and unhelpfully offering your customers an alternative to your product or service. However, in reality, healthy competition is a force for good. It pushes you to keep improving to get that competitive advantage and provides a point of comparison - demonstrating just what your consumers want.
Broadly speaking, a competitor is any person or business rivalling another. So what makes a competitor? More specifically, a competitor can be defined as:
Any company in the same or similar industry offering the same or comparable products or services.
This definition touches just one of the four different competitors you're facing in the marketplace.
Here's our introduction to those competitors:
More likely than not, this is what you think of when you consider competition. These are companies selling a product or service which is essentially the same as yours.
Say you're the owner of 'Franklin Consultancy', a family consultancy firm. Another consultancy, 'Churchill Consultancy', in the same geographical area, would be your direct competitor.
These competitors offer a different product or service to yours that still solves the same problem for your consumer.
You're still the owner of 'Franklin Consultancy'. Your service is business consultancy and, essentially, it's the solution to a customer or client's need. An indirect competitor would be another consultancy, for example 'Consultancy Plus'. They might be offering a slightly broader, less individually tailored solution to your family firm, but it offers a solution to the same need nonetheless.
Replacement or perceived competitors supply an inexact substitute for your product or service. To identify your replacement/perceived competitors, put yourself into your consumer's shoes and understand what motivates them to buy into your product or service - what need does your business fulfil? Once you can answer this question, you'll understand why your consumer might decide to fulfil their needs with what, cosmetically, appears to be a completely different product.
Thanks to search engines, businesses must now consider companies with the same, or similar, name to be competitors regardless of the product/service they are offering. When a customer searches for 'Franklin', they might have been looking for your consultancy, but instead they click through to 'Franklin & Myer Property Law' and get distracted from their initial search.
Due to the nature of search engines, your click has been misdirected and your enquiry/sale lost.
You need to know and understand your market, from direct competitors to wildcards you might never have considered. It's all dependent on perspective. It is vital that you view your market place through your customer's eyes and understand what motivates them to buy from you or to choose someone else. Understanding this motivation will help you identify any gaps in your marketing strategy.
Enjoyed our back to basics guide? Why not have a look at some of our other marketing posts:
Need an expert to analyse your market? Then get in contact with Mackman's team of specialists. Call us on 01787 388038 or send us an email on customerserv[email protected]