Understanding your Market
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In simple terms, your competitors can be identified as those companies that offer similar products or services to the same customers at similar prices. These can be either direct or indirect competitors. As an example, Kodak identifies Fuji as a major or direct competitor for camera products. However, they also face competition from companies that offer different products, but ones that supply the same service or capability, i.e. indirect competitors which are companies like Nokia who offer mobile phones with digital cameras as an integrated feature.
Identifying who your competitors are and understanding the approach they take in the market can help you to develop and sustain a competitive advantage.
The following questions can assist you in identifying and understanding your competitors:
- Can you make a list of your top five or ten direct competitors?
- Can you identify any indirect competitors to your product or service?
- Do you know what your competitors are doing, i.e. what are the benefits of their products and how are they marketed?
- What are your competitors' strengths and weaknesses?
- What do consumers think about your competitors' products?
- How are you going to position yourself in comparison to your competitors? Would it be meeting the competition? beating the competition? countering the competition?
- Are you competing on price, product, quality or another point of difference?
When analysing competitors it is important to identify their mix of objectives and the importance of each. For example, some competitors may be focused purely on profits while others may be focused on customer service. Understanding the relative importance the competitor places on profitability, growth, market share, technology etc can assist you in understanding how your competitors may react in different competitive situations.