31 Jan Marketing Competitor Analysis
Do you have questions about marketing strategy or marketing competitor analysis? I am going to lead an online mastermind session with Lucie Tesar of Consult for Success on Tuesday, February 7th, 2017 at 7:30 pm PST. Join us here.
If you are just starting your business/startup or find you are stuck, and not able to differentiate yourself from your competitors, it is worth taking a look at both your direct and indirect competition. I find that while most entrepreneurs understand the concept of direct competitors, sometimes we tend to underestimate our indirect competitors.
Direct vs. Indirect Competition
A direct competitor is a person or a company providing the same type of service you provide. For example, the direct competitor of Uber is Lyft, the direct competitor of Crate and Barrel is Pottery Barn.
Indirect competitors on the other hand can take many shapes and forms. An indirect competitor is any business, individual, or action that provides your potential customers with an outcome similar to what you provide. In the case of a ride sharing service, for example, these are all indirect competitors: public transit, walking, biking, hitching a ride with a friend, taking a taxi, driving your own car, borrowing a friend’s car, renting a car, and other rental options such as Zipcar. And indirect competitor can also be an alternative, for example, staying home. We are all susceptible to doing what is easier: if your solution or service takes too much work, consider that the option of doing nothing can be very appealing to some of your potential customers.
Indirect competition merits the same attention you give to your direct competition, if not more. When designing a product or service, it cannot simply be different or better than that of your direct competition: it also needs to be better, or more convenient, or more reliable, and different than the alternatives available.
Let’s take wedding photography as an example of an industry whose professionals have lots of indirect competitors: every wedding guest has a cell phones, a friend or family member who is a talented photography hobbyist often volunteers to photograph the wedding for free, photo booths, videographers, non-wedding photographers looking for extra gigs, these and more are all alternative options available to couples.
New wedding photographers often see their colleagues as a threat – but most photographers lose work to uncle Joe who loves to take photos at family gatherings.
Your Own Marketing Competitor Analysis
How can you run a useful marketing competitor analysis to help you position your business? Here are the steps.
1. Define your direct competition
2. Brainstorm – possibly with your team, or other people – all available alternatives to what you provide. Make sure to list all of them, including taking no action.
3. Write the benefits of using every option available to your potential client. Include at least 3 of your top direct competitors and write the benefits of working with each of them.
4. List the benefits of working with you.
5. Take a step back and look at all you compiled. Now ask yourself the following questions: what can I provide that no one else does? What can I provide that is better than what my competition offers? What can I provide that is different? You don’t have to be unique, but you have to be different. If you feel stuck on this, narrow your niche.
6. Then take a good look at the benefits you listed, and start to get a clear idea of the psychology of each competitor’s ideal clients and of yours. If we go back to our wedding photographer example, we can easily see that the couple who hires a professional and pays $5,000 for their wedding pictures values very different things than the couple who is happy to ask family and friends to document the day with their cell phones.
7. At the end of your analysis, you should be clear on who are the potential clients who value the benefits you provide, and who are the people who would never hire you. Once you identify the characteristics of those who would never hire you, don’t try to get their business. They re not your potential clients.
When I had my photography business, for example, I quickly realized that some people either couldn’t tell good photography from bad, or didn’t care for it enough. I stopped trying to sell to them, and focused on selling to those who valued a certain type of aesthetic. Selling became a lot easier, and much less frustrating!
Once you understand what your potential clients value the most, get to work to reach those potential customers, and tell your story, focusing on what you provide and how different you are from the other available options.
A marketing competitor analysis is one of the steps to evaluate your market. Do you have questions about marketing strategy? I am going to lead an online mastermind session with Lucie Tesar of Consult for Success on Tuesday, February 7th, 2017 at 7:30 pm PST. Join us here.