Think your company is safe from the competition? Think again. No matter how unique the product or service offered by your business, there’s always another company looking to steal your customers, trump your company’s offerings, and chip away at your market share.
There are ways to reduce the threat of competition, though. The best strategy is to understand how your company differs from its competitors—and where you’ve got the advantage. “The typical customer can buy from you or from another company that offers a similar product,” says Brad Swanson, a master certified business counselor at the Maine Small Business Development Centers. “So you need to figure out how to meet your customers’ needs better than they can.”
Understanding the competition can help you protect your market share, land new business and keep operations running smoothly at your own shop. For example, if a competitor is paying employees a buck or two more per hour than what your company pays, your employees may be tempted to take their skills and experience to the higher-paying job. “Don’t forget that your employees are a big part of your success,” says Swanson.
Use your company’s competitive advantages to gain a more favorable position as you bid for government contracts or negotiate with prospective clients.
Research is the key to understanding your competition. But before you start digging into what other companies are doing, make sure you know what you’re looking for. Swanson recommends narrowing your research down to just a few areas. For example, if you own a retail store, you may want to focus your research on a competitor’s pricing, advertising strategies and location. “Think about what really constitutes competition,” says Swanson.
Once you’ve determined what you want to learn about your competitors, it’s time to start gathering data. Here are some strategies.
Check online. A company’s website can yield a lot of information, from product pricing to shipping guarantees. The site also can be a yardstick by which to measure your own online presence: If the competition has a more user-friendly website, consider revamping your own to make it easier for customers to order products or find useful information.
Track advertising. A competitor’s advertising can alert you to everything from which items are on sale to what new products are being rolled out. Even the largest companies keep tabs on their competition’s prices: Mega-retailers Amazon.com and Wal-Mart recently engaged in a high-profile price war over popular new books, with each company slashing prices to offer the best deal.
Take a field trip. Swanson says a friend who owns a gourmet food company was concerned about a new high-end grocery opening up in his town. “He was concerned about the competition, so he walked through the store and paid attention to what was being offered and how it was being offered,” he says. “If it was something they were doing well, he had to figure out how his company could compete.”
Talk to vendors. Depending on what industry you’re in—say, manufacturing—simply walking into a competitor’s business may be difficult (or impossible). In that case, find out what you can from companies that work with that competitor. “They won’t tell you trade secrets, but they might tell you if that company bought a new machine or started carrying a new line of products,” says Swanson.
It can be exciting to dig up information about other companies, but don’t let the corporate competition take your eye off the main prize—whether that’s catering to high-end consumers or government bureaucrats: “It’s all about focusing on the customer,” says Swanson. “Remember, you’re not competing against somebody, you’re competing for somebody.”