Looking Outwards At Your Market (Competition)
Outward looking in management deals with the “operations in a competition context”. On the other hand the outward focus might be key to operating in a competition world where the company must equal the current best – but feasibly the outward focus will only be able to identify problems and targets, rather than solutions.
When taking an outward looks at the market, we are invariably saying “looking at what our competitors are doing best, which we can as well inculcate into our own business too, so as to make our company more sensitive to follow the market. Manager of an entity take a perspective in the industry the company belongs to. And, in doing this, he must carry out marketing research which help him in understanding the market.
An outward looking management, would perceive every unit in their organization against the background of the outside world. They will ensure closer relationship with customers and they will focus on understanding their individual requirements. Also, the company supplier would be seen as an important part of the company operation and they will also work with them to ensure a high level of mutual understanding and trust. Issues like inventory, quality and cost would be understood in relations to how those factors affect the connections with customer, and comparisons would be made with other companies to assess relative competitiveness.
Competition analysis was also defined as a strategy where you identify major competitors and research their products, sales and marketing strategies. By so doing, you can create a solid business strategies that will improve your own company over its competitors.
The statement “Looking Outwards at your market” implies that, an entity must understand where they fit in the market; which companies can they refer to as their competitors; how much can the entity’s activities and decisions influence their competitors and finally, how tough is the competition between and their competitors. This articles will take cognizance look how a company can carryout the aforementioned activities.
Looking Outward At Your Market
Scrutinizing ideas from your competitors is a respected technique for innovation, but it needs to be carried out with a serious respect for intellectual property. A competition analysis can be one of the fastest ways to enhance in on a workable design paradigm for your product. If you are designing a portal, take a look at Yahoo! If you’re planning a shopping site, look at Amazon. If you’re building an auction system, look at eBay, one caveat, Yahoo, Amazon, and eBay are all multimillion-dollar systems. in Nigeria perspective, if you’re planning of going into banking business and building your own site, look at GTB, Zenith bank, First bank etc. so you may find some excellent features on their sites that are not possible within your budget and this likely make you to improve your budget. Therefore, we can’t talk about “looking outward” without mentioning competition Analysis.
A competition analysis, sometimes also called comparative analysis, is the process of analyzing products that are similar to or compete with the product being designed in order to generate ideas and assess features and functions and to understand how the products rank or measure up against each other.
Furthermore, Competition analysis is a way of establishing starting point in the design of a particular entity, but much credit won’t be given to the competitors. Competition analysis deals with comparing your entity’s way of doing things with that of their competitors and identifying their weakness in which your own entity can leverage and use in having competition advantage over them.
Therefore, a competition analysis is most suitable in the following circumstances:
- When designing a product from scratch
- When someone has little experience in the target field and need a source of good ideas.
- When an entity or individual is developing a transactional system that is differ from what the company/individual is doing before.
- When a competitor is threatening to take market share from a particular company and the company need to understand their competitor better.
A competition analysis is important when you are planning your content because it will help you discover what types of content your competitors produce, as well as their levels of engagement with their audiences. On a high-level, it gives you the lay of the land as well as the market context.
Breaking down How the Activities of Competitors Are Been Looked Into
Competition analysis commence with the research reports that was produced in the Data collection Phase. The report of data collected will be enumerated and the advantages that the competitor’s product gives their users and the hindrances it places in their way will be identified.
Additionally, looking at the results more closely, what do they say about the company and its development process? Where does it provide consistently strong experiences? What are the characteristics of those experiences? How does it regularly falter? Business analysts call the collection of a company’s strengths their portfolio of core competencies.
Traditional competition analysis can, of course, also be revealing. It shouldn’t be the only kind of analysis, but it can deliver a useful information. If, for example, users clearly value a certain set of features, then it may be appropriate to create a feature comparison matrix with those features. Such side-by-side comparisons, however, need to be between actually comparable items. Thus, a site map somewhere on a site should probably not be compared with one that has a map front and center on the home page.
Then the next activity after analyzing the report derived from data collection phase is Benchmarking, In the interest of creating a shorthand by which to evaluate competition, some competition analysis techniques introduce numerical or letter grade competition ratings. Each feature in a feature matrix a score, let’s say 0 – 4, where 4 means the product does something well, and 0 means it doesn’t do it at all. After then, adding up all the scores gives you a total for the competitiveness of the products. This allows the company carrying out the competition analysis to quickly see which ones are most competitive because relative to the others they are the most successful at what they do. Benchmarking is a technique useful when new competitors are constantly entering the field and your company need to evaluate them quickly and this exercise will be useful in figuring out which strengths are serious threats and which weaknesses are important opportunities.
One way of carrying out a competition analysis is by following this stages:-
- Determine who your competitors are.
- Determine what products your competitors offer.
- Research your competitor’s sales tactics and results.
- Analyze how your competitors market their products.
- Take note of your competition’s content strategy.
- Analyze the level of engagement on your competitor’s content.
- Observe how they promote marketing content.
- Look at their social media presence, strategies, and go-to platforms
- Perform a SWOT Analysis to learn their strengths, weaknesses, opportunities, and threats.
- Determine who your competitors are.
Firstly, you’ll need to figure out who you’re really competing with so you can compare the data accurately. What works in a business similar to yours may not work for your own brand. Therefore, competitors will be divided into “direct and indirect competitors.
Direct competitors are businesses that offer a product or service that could be pass as a similar substitute for yours and that operate in your same geographic area while Indirect Competitors is the one that provides products that are not the same but could satisfy the same customer need or solve the same problem with yours.
For example, let’s say my company is producing and selling body cream (called Haby-vera), therefore, the another company producing Venus body Cream is one of my Direct Competitor because the main purpose of my product and Venus body cream is the same; while company producing Goya Oil is my Indirect Competitor because the main purpose of producing Goya Oil is not to serve as body cream but can as well be used by some people to cream their body.
- Determining what produces your competitors offer
At the heart of any business is its product or service, which is what makes this a good place to start. You’ll want to analyze your competitor’s complete product line and the quality of the products or services they’re offering. You should also take note of their pricing and any discounts they’re offering customers. This will help you in determining the competition price and quality you want place on your products. Venus body Cream might sell their own product for N2,500 while I might decides to sell mine for N2300 just to have a price bit lower than Venus body cream price.
- Research your competitor’s sales tactics and results
When running a sales analysis of your competitors, you may encounter so many trickish stuff. But answering this following questions will be help in doing that.
- What does the sales process look like?
- What channels are they selling through?
- Do they have multiple locations and how does this give them an advantage?
- Are they expanding? Scaling down?
- Do they have partner reselling programs?
- What are their customers reasons for not buying? For ending their relationship with the company?
- What are their revenues each year? What about total sales volume?
- Do they regularly discount their products or services?
- How involved is a salesperson in the process?
All this will be looked into so as to know how to sell my produce (Haby-Vera), more than Venus body cream sold their own cream.
- Analyze how your competitors market in their products
Analyzing your competitor’s website is the fastest way to gauge their marketing efforts. Take note of any of the following items and copy down the specific URL for future reference:
- Do they have a blog?
- Are they creating whitepapers or e-books?
- Do they post videos or webinars?
- Do they have a podcast?
- Are they using static visual content such as infographics and cartoons?
- What about slide decks?
- Do they have a FAQs section?
- Are there featured articles?
- Do you see press releases?
- Do they have a media kit?
- What about case studies?
- Do they publish buying guides and data sheets?
- What online and offline advertising campaigns are they running?
- Take Note of your competition’s Content Strategy
Then, take a look at the quantity of these items. Do they have several hundred blog posts or a small handful? Are there five white papers and just one ebook?
Next, determine the frequency of these content assets. Are they publishing something new each week or once a month? How often does a new ebook or case study come out? Chances are, if you come across a robust archive of content, your competitor has been publishing regularly.
Depending on the topics they’re discussing, this content may help you improve on their lead generating strategies. From there, you should move on to evaluating the quality of their content. After all, if the quality is lacking, it won’t matter how often they post since their target audience won’t find much value there.
Moreover, when analyzing your company’s competitors content, the following questions must be consider:-
- How accurate is their content?
- Are spelling or grammar errors present?
- How in-depth does their content go? (Is it introductory level that just scratches the surface or more advanced topics with high-level ideas?)
- What tone do they use?
- Is the content structured for readability? (Are they using bullet points, bold headings, and numbered lists?)
- Is their content free and available to anyone or do their readers need to opt-in?
- Who is writing their content? (In-house team? One person? Multiple contributors?)
- Is there a visible byline or bio attached to their articles?
- Analyze the Level of engagement on your competitor’s Content
There is a need to see how your target audience responds to what they are posting and this will help in gauging how engaging your competitor’s contents is to their readers.
- Observe how they promote their marketing content
From engagement, you’ll move right along to your competitor’s content promotion strategy.
- Keyword density in the copy itself
- Image ALT text tags
- Use of internal linking
The following questions can also help you prioritize and focus on what to pay attention to:
- Which keywords are your competitors focusing on that you still haven’t tapped into?
- What content of theirs is highly shared and linked to? How does your content compare?
- Which social media platforms is your target audience using and the most active on?
- What other sites are linking back to your competitor’s site, but not yours?
- Who else is sharing what your competitors are publishing?
- Who is referring traffic to your competitor’s site?
- For the keywords you want to focus on, what is the diffculty level? There are several free (and paid) tools that will give you a comprehensive evaluation of your competitor’s search engine optimization.
8 Looking at their Social media presence, strategies, and go-to platforms
The social media presence of your competitors must also be look into, so as to know how they engage people on their social media. In case, your competitors use social media you’re not using before, you can also try and start using it. Social media handle like: Facebook, Twitter, Instagram, Snapchat, Youtube, Pinterest and Linkedlin etc. And you will as well, take note of the following quantitative items from each platform:- Content virality, Content engagement, Number of fans/followers and Posting frequency and consistency. Therefore, this will help you in coparing the rest of your competitors using a similar grading scale.
9. Perform a SWOT Analysis to learn their strength, weakness, opportunities and threats
By carrying out SWOT Analysis of your competitors, you will be able to position your company well in the industry, because SWOT analysis will help you uncovering areas for improvement within your own brand.
Looking outward at your market, can also be linked to focusing more on cost, buying trends, and advertising in the market a company belong to. The goals of both types of competition analysis are to learn from the competitors and to rip a strategic advantage.
Therefore, for a company to identify their competitors:-
- They must speak with their production team and sales or marketing department
- Conduct a web search
- Read trade magazines
- And conduct user surveys, interviews or focus groups.
After a company has identified their competitors, then they should establish their:
- Functionality and unique features
- Customer base (loyalty, size of customer base etc)
- Requirements etc.
If a company is able to appraise the competitor product themselves, they should as well identify a set of core tasks with which to compare their product and with that of their competitors
Moreover, when relating this subject matter to entrepreneurs, Competition is a crucial businesses activity for any entrepreneur or business executive. Some companies employ professionals to trail competitors and assess the competition background on a regular basis. But it doesn’t always have to be a problematical, time-consuming, and expensive process; particularly given the new wealth of data that can be assembled using the Internet. By investing even a small amount of time, businesses of any size can develop a framework for making competition assessments, gather intelligence on business rivals, and understand how to position their own brand, products, and company in the marketplace. Not only can you learn best practices from competitors, but you can also learn to avoid the mistakes they make.
Understanding the Benefits from Conducting Competition Analysis
There are so many business benefits an entity can gain by having insights into the competition background, especially, if they track products, prices, staffing, research and development and every other aspects of the competition on an unending basis. It should be ongoing process, that is, the one the company must continue to deepen their understanding of the strengths and weaknesses of their competitors.
Moreover, it is advisable to every business to gather information about the competition and most already do, even if they don’t formalize it into a competition research process. This implies that, every company needs to do competition research.
Companies need to keep their eyes open irrespective of how enormous they are or
what they are selling. By doing this, we can say they are
“LOOKING OUTWARD AT THEIR MARKET”
The following are potential business benefits from conducting competition Analysis:
- Better targeting customers
- Understanding the market
- Understanding what competitors are offering
- Forecasting the prospective for the market
- Keeping tabs on competitor’s prices
- Finding new customers
- Figuring out how the economic climate impacts the market.
- Determining offerings in secondary markets
You must as well, note that, hiring a consultant to conduct a competition analysis for you has its own benefits, because they will apply expertise intelligence in gathering information for which will benefiting to your company. Reason been that:-
- They will do things that wouldn’t occur to you
- They have probably done hundreds if not thousands of these analysis
- They know how to do the competition analysis in a systematic way and finally,
- They might as well, get senior management to tell them what it is they want to know and what is the scope.
Although, there is only challenge in hiring an outside consultant to conduct a competition analysis for your company and this challenge is the difficulty in getting senior managers to clearly enunciate what they want to know and then listen to the results of the research.
Basically, in conducting a competition analysis, the first thing is to set a framework for your competition assessment. Microsoft excel is best use in doing this. Inside the worksheet, columns for the below stated items will be created to outline the company’s competitors
- Name (and location if relevant)
- Brief answer to the question – Who is this company
- Products/services and prices offered
- Strengths of the competitors (What they are good at)
- Weaknesses of the competitors (What does the competitor fall short)
- What are the messaging, product/service offerings that set the competitor apart from their competition?
After creating all this inside your excel sheets, the next thing is to Select your Targets. Selecting the company targets can include direct competitors and indirect competitors, that is, those who sell the same thing the company do and those who sell other products and services that meet the same needs with that of the company. After you might have select your target companies, then the next thing you should do is Secret Shopping, this involves buying from your competitors directly or online, just make sure you visit your competition, view their products and pricing, so as to have the same experience as that of their real customer. You can as well, ask your own customers, if they have idea of what your targets companies do, using formal or informal interviewing strategy
Meanwhile, there are variety of competition analysis tools available, and company’s chooses the one to use based on whether the competitors are public-traded companies or privately held.
Sample Competitive Analysis Report of Haby-Vera Cosmetic Products
Description of the Business’s target market
The Business target market of Haby-Vera Company is Cosmetic Industry. Cosmetic industry is made up companies that produce foundations, powders, lip sticks, eye pencils and shadows, mascaras as well as make-up tools including brushes, waist pouches and make-up bags and so on. Cosmetic industry has been one of the large business industry in Nigeria.
There are so many cosmetic companies in Nigeria but three out of the companies will be focus on in this Analysis report. The three firms are House of Tara, Zaron and BM Pro.
House of Tara, first Established in 1998 and founded by Tara Fela-Durotoye – a premier in the makeup beauty business in Nigeria, HOUSE OF TARA is an international beauty brand geared towards empowering, helping them achieve self-awareness and boosting self-esteem.
Gradually becoming a beauty empire, it features a wide range of cosmetic products and accessories, from foundations and powders to lip sticks, eye pencils and shadows, mascaras as well as make-up tools including brushes, waist pouches and make-up bags all promoting Nigeria’s ethnicity and cultural heritage. Their first beauty line launched for women of colour – Tara Orekelewa, remains extremely popular.
The second cosmetic company is Zaron. This company is one of the most popular beauty brands in Nigeria and very well preferred by Nigerian women, Zaron is a fast-rising premium beauty brand in the country, launched for to meet the hair and makeup needs of many women all over the world.
With its products which compete with foreign bands even though it is specially designed for the black skin tone and tropical climatic conditions, it has engraved its name in the consciousness and hearts of many makeup lovers around Nigeria and Africa at large. They were the first Nigerian beauty companies with products certified oil free and containing (SPF) Sun Protection Formula. Oh, and their make-up products are fabulous as they are always richly pigmented makeup products.
The last Cosmetic Firm is BM Pro. This company was Founded by Banke Meshida-Lawal, a highly recognized makeup artist in Nigeria, The BMPRO (Banke Meshida Professional Makeup) makeup line started with 14 products in the line in 2006 but is currently boasts of over 65 products in the Nigerian market as well as distributors all over Nigeria, Ghana, UK, USA, and Canada; and has received many awards and accolades. This brand also has a complete line of high pigment, hypoallergenic makeup products and brushes, and has undoubtedly achieved iconic status among the women of Nigeria.
Details about the features of Haby-vera product compared to the company’s competitors Products
Haby-Vera Products features quality materials used in producing our beauty products e.g. oils, fats, wax esters, and ester oils, and surface-active agents. Most of our materials are imported from abroad before we mix them together to achieve the quality we are aiming it. We ensure that the raw materials of our beauty products are imported from America where it was believed to be country with most reliable cosmetic raw materials can be gotten.
Our competitors don’t lay much emphasis on importing quality raw materials from abroad; they believe they can achieve the quality they want by getting their own locally in Nigeria. And when mixing our surface-active agents, we ensure that the agents are mixed based on the standard specified by SON (Standard organization of Nigeria) and WHO (World Health Organisation).
Moreover, our foundation last longer on our customers face than other company’s foundation; we are able to confirm this by asking our customers who was once a customer to other companies. They told us that, our foundation stay longer and don’t easily wipe away on their face.
A breakdown of current and projected market share, sales and revenues
Currently, Haby-vera Cosmetic products has not really gain a strong position in the industry. Our market share in the industry has been projected to be at average level. Recently, our turnover used to be like N4, 500,000 per annum. But, while doing background check on our competitors’ annual turnover, they made up to N7, 500,000. Haby-vera Company is aiming at making more than this annually. And we will ensure that, all necessary steps will be taken to increase our market share as well as our Annual sales.
Comparisons of pricing models
The pricing models used by House of Tara cosmetic company is Cost-plus pricing model and pricing model used by Zaron and BM Pro is Competitive Pricing model.
Cost plus pricing model involves adding a markup to the cost of goods and services to arrive at a selling price. Under this approach, you add together the direct material cost, direct labor cost, and overhead costs for a product, and add to it a markup percentage in order to derive the price of the product and Competitive pricing model is a pricing strategy in which the competitors’ prices are taken into consideration when setting the price of the same or similar products. The focus is on competition-driven prices rather than production costs and overheads.
Based on this discovery, Haby-Vera company decided to make use Value-based pricing model, this type of pricing strategy (also called value optimized pricing) is a pricing strategy which sets prices primarily, but not exclusively, according to the perceived or estimated value of a product or service to the customer rather than according to the cost of the product or historical prices. We believed by making use of this type of model, our potential consumers will know that, we are coming into the industry with a quality product not just anyhow type of products.
An analysis of marketing strategy and social media strategy
We observed that our competitors make use of various marketing strategy like advertising on billboards on major highways in the city, making use of Televisions stations and radio stations.
Likewise, Social media strategy make use by our competitors are Facebook, Instagram, Twitter, YouTube and so on. Our competitors create an account on this media and showcase their product to their various followers. Various designs are used to portray how their products can be make use of.
Therefore, Haby-vera Company is going to do same and even discover another social media that has not been used by our competitors but if make use of, will boost the popularity of their products in the industry.
For instance, on Facebook, a Facebook fan page will be created and people will be invite to like our page, as well as carry out so many activities on the page that will draw the attention of our potential customers and through this manner make more sales. Etc.
Description of customer ratings of the features of each competitor
Though House of Tara cosmetic products has been rated high by Nigeria cosmetic users, they believe their products are popular and due to the fact that her husband has helped her in making her beauty products make name for itself in the industry. Meanwhile, BM Pro has been rated to be internationally acceptable, that is, the company’s product is competing with American best cosmetic producers.
However, Haby-Vera company is not moved with all this ratings, because we believed that, by the time we work on our SWOT analysis, we will able to compete well in the industry and carve a good niche for our products.
When thinking of competition, what we think of is other businesses that are into the same thing we are into. This businesses may as well offer bargain, prices, and as well introduce new features or launch marketing campaigns which we might be interested in, but we must know that there is more to competition, that just that. Competition can as well be caused by so many other factors such as Customers preferences, threat from new entrants, supplier’s power etc.
Competition Analysis helps companies in identifying the form of marketing strategies to carry out in order to have a competitive advantage over their competitors. It will also help them in knowing their competitors strengths and weaknesses and as well knowing when to make use of opportunities available and tackle any form of threat that might hinder their progress/profitability.
A competition analysis is important when you are planning your content/products because it will help you discover what types of content/products your competitors produce, as well as their levels of engagement with their audiences. On a high-level, it gives you the lay of the land as well as the market context.
Finally, if a company is able to appraise the competitor’s product themselves, they should as well identify a set of core tasks with which to compare their product and with that of their competitors. Meanwhile, Companies need to keep their eyes open irrespective of how enormous they are or what they are selling. By doing this, we can say they are “LOOKING OUTWARD AT THEIR MARKET”
About the Writer
Olusipe Abiodun Yinka is an Audit Associate in Bulls Capital Limited. He has a National Diploma in Accounting from Abraham Adesanya Polytechnic, Ijebu-Igbo, Ogun State; as well as a Degree in Accounting from Alex Ekwueme Federal University, Ebonyi State. He is a creative copywriter and a Trendsetter. Apart from writing, Olusipe is also an entertainer.
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