In today’s fast-paced business environment, staying ahead of the competition is critical for achieving sustainable success. While many understand that the 3C’s model – customers, competitors, and company – is key to success in every market, this article will focus specifically on the strategic importance of competitor profiling.
Profiling one’s competitors aims to gather insights to inform a company’s strategic decisions. As an input to the strategy development process, this analysis complements market research efforts, allowing companies to:
- Measure themselves against industry standards;
- Identify areas of improvement; and
- Stay abreast of market trends.
Ultimately, organisations can forge formidable competitive advantages through effective competitor profiling by leveraging insights from competitor profiles.
At Step Advisory, we craft comprehensive competitor profiles to address client problems across various industries. This includes, but is not limited to:
- Strategy facilitation projects, where we leverage competitor and market research insights to broaden and stretch leadership perspectives. By analysing the competitor landscape, we empower our clients to make informed decisions and anticipate potential market shifts and their competitors’ potential next moves. Through this, our clients can navigate the business environment more precisely and make informed business decisions.
- Strategy development projects, where we compare our clients’ processes and performance metrics with competitors through a benchmarking exercise. This approach helps our clients understand their strategic positioning in the market relative to industry best practices and their direct and indirect competitors.
- Commercial due diligence projects, where we assist clients in exploring entry and expansion into new markets through acquisition. By assessing the competitive landscape, we gain valuable insights, such as identifying the market leaders, understanding the different routes to market, and evaluating market prices. This allows for informed decision-making and effective market entry strategies.
“In a world where a competitive advantage often evaporates in less than a year, companies can’t afford to spend months at a time crafting a single long-term strategy. To stay ahead, they need to constantly start new strategic initiatives, building and exploiting many transient competitive advantages at once.”
– Rita Gunther McGrath, Professor at Columbia Business School
Understanding our competitors is essential for gaining a competitive edge in today’s dynamic market. This guide explores six critical elements for effective competitor profiling, helping us to identify threats, uncover growth opportunities, and refine our strategic positioning. We can develop a comprehensive understanding of our rivals by delving into the competitive landscape, market positioning, product offerings, pricing strategies, distribution channels, and competitor capabilities and weaknesses. This knowledge informs our decision-making and empowers us to innovate, enhance our market presence, and stay ahead in the industry.
Enhancing our competitor knowledge: Six key elements for profiling competitors
1. Competitive Landscape
Identify your direct and indirect competitors and understand their roles within the market. This analysis helps identify threats and reveals opportunities for growth and differentiation.
2. Market Positioning
Understand how competitors position themselves within the market. Explore their target customer segments, value propositions, brand identities, and marketing strategies. While also determining their market share and size. We can also identify key metrics that can assist us with continuously monitoring and analysing our competitors, such as revenue growth rates, product performance or employee count.
3. Products and Services Offered
Assess the range of products offered by competitors. Identify the main points of differentiation from your offerings. Competitors introducing new/ additional products and services can provide insights into emerging market trends and evolving customer preferences.
4. Pricing Strategy
Analyse competitors’ pricing structures and strategies and understand whether they have positioned themselves as premium, mid-range, or budget option. We can assess a competitor’s pricing strategy by tracking how their prices vary across different products or services relative to a client’s pricing. Customer surveys can also gauge how price-sensitive customers are and how competitors’ prices influence their purchasing decisions.
5. Distribution Channels
Explore routes to market used by competitors. This encompasses considering their geographic reach, access to key markets, distribution networks, online presence, and strategic partnerships. These insights help businesses optimise their distribution channels, identify untapped markets, and establish strategic alliances to enhance market penetration and competitiveness.
6. Capabilities and Weaknesses
Assess competitors’ capabilities and weaknesses. This is crucial and serves as a strategic guide for business decisions. It involves evaluating financial stability, brand reputation, customer loyalty, and innovation capabilities. By identifying areas for improvement and leveraging competitor weaknesses, your organisation can outperform the competition.
By fostering a deep understanding of one’s competitors, we empower ourselves to adapt, innovate, and seize opportunities that propel us ahead in the market. We need to continuously monitor and analyse our competitors’ moves, industry trends, and market shifts to stay agile and responsive. Consider when your organisation last conducted a competitor or market analysis and whether it needs to be refreshed.