Who are your competitors and where are they? These are two questions you should ask yourself when identifying your competition. Unlike an athletics carnival, you are not standing alongside your competitors waiting for the starters gun, rather, your competitors could be anywhere; online, worldwide or locally. No matter what your business or where it is based, we all have competitors.
Direct competitors are much easier to identify, however, there are also indirect competitors; the businesses that your customers may spend their money with instead of you.
For instance, there is a certain amount of money that people will spend on entertainment. However, entertainment can be divided into various categories, of which your business may only be one—e.g. movie, dinner, or a live show. What makes a customer spend their hard earned money at your restaurant instead of on a movie with a Choc Top?
Why identify your competitors
Knowing who your competitors are and what differentiates your business from their will assist you in understanding your target market and the latest trends.
A prospective client may ask you, “Why should I choose you over XYZ?” An informed answer is better than “Because we are better”. If your client contact needs authority from a Board or other Senior Managers, providing them with some quantitative research about your business in relation to your competitors will be quite persuasive.
How to identify your competitors
Take the time to know what your business objectives are, and then research other businesses based on the following criteria:
- Have the same offering
- Same industry
- Target market
- Target market spend patterns
For example, one of our clients was looking at building a health club on their new premises, and they engaged us to undertake a competitor audit to assist them in their plans. The first step was to look at health clubs within a 10km radius of their venue. We then further categorised health clubs as:
- Women only
- Sports centre (including a pool)
- Body building
- Fitness centre for men and women
The audit then contained the following:
- Programs and classes
- Membership based
- Opening times
- Cost; initial set up and then ongoing fees
- Payment plans
- Access to transport
- Demographic of members
- Stand alone health club or a recognised multi-site brand
In addition to creating a competitor audit document, we also visited each health club twice; once as an initial enquiry and then a casual visit. This provided our client a document that was ‘like for like’ when it came to service, image and facilities.
With additional information that we provided they were able to establish the style of health club that would attract the target market and that had various points of difference to what was already being offered.
In-depth look at your competitors
Don’t just make a list of your competitors, analyse them in a measurable manner. Having a measurable ‘like for like’ resource provides a clear view of where your business stands alongside competitors, and can be used to plan changes in your business, such as:
- New product line
- Opening another office/store.