Gathering Competitive Intelligence
Get the low-down on the competition with this handy guide.
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It's official. You're going to start your own business. You know what you plan to sell and who your customers or clients will be. But how will you decide what your marketing materials should look like or even what you'll charge for your products or services? You need to become an amateur sleuth and gather competitive intelligence to create an on-target marketing program and tailor your services or products to position against the competition.
It's important to complete a competitive analysis during the start-up phase of your new business, about the time you're putting together your marketing plan. In fact, if you get underway without performing a competitive analysis, you run the risk of creating marketing tools and product or service offerings that are way off the mark. This can cost you valuable time and money during the critical early months. You should also plan to gather competitive intelligence as your business grows, in order to stay competitive.
Who's Your Competition?
One of the biggest mistakes new entrepreneurs make is failing to recognize the range of competitors for their businesses. Your new company will have two types of competition-real and perceived. For example, imagine you're a former college athlete who's decided to start a personal fitness training business. Your competitors will fall into two categories: other personal trainers, and gyms and health clubs that offer trainers or advisors on staff. Although you'd directly compete only with the other personal trainers, your prospects-people who want to shape up-would perceive the gyms that offer these services as a viable alternative to hiring you. So to complete your competitive analysis, you need to evaluate the marketing materials and services both types of competitors offer.
Get the Facts
The first step in your competitive analysis is to collect all the marketing materials used by your competitors-both perceived and real. Begin by clipping your competitors' ads. Then request copies of their brochures and other marketing materials-not so you can copy their ideas, but so you can check out marketing strategies and formats, competitive pricing, special offers, the key benefits (or promises made), and clues to marketing niches that may be underserved. If possible, you may even want to "mystery shop" your competitors-go out and actually buy their products or services so you can experience the purchasing process with their store personnel or salespeople. If your competitors are large enough, you can gather information about them on the Net. Use major search engines to look for recent press releases and articles about them. There are even free sites on the Web that allow you to customize your own daily news page, such as NewsPage by NewsEdge Corp. ( www.newspage.com). And don't forget to check out your competitors' Web sites. How do your direct and perceived competitors use the Net to attract customers and sell products? This will give you important clues about information a Web site of your own should contain.
Put It All Together
Now you're ready to draw some conclusions about the types of competitive offers and pricing your new business should use. Best of all, you'll have clear guidelines for developing your marketing tools. Complete your analysis by answering these questions:
- What size are their materials? Do most of your competitors use standard mailing envelopes, or are they using large folders with inserts?
- Do your competitors use photography or illustrations in their materials?
- Do they have Web sites, and how deep are they? Do they sell products online or just offer information?
- How are your competitors' products or services similar to yours? How are they different?
- What key benefits do their marketing materials communicate? Can you offer additional benefits that are valuable to prospects?
- What special product, service or pricing offers do your competitors use to stimulate responses to brochures and ads?
Once you find answers to these questions, you'll be in the perfect position to create marketing tools that work as hard as you do.