I like to use terms like “opportunity”rival” when describing competitor research. I am going to use them a little bit more, because I want to define a few terms that relate to it. In terms of opportunity, I mean what the other company is offering to its customers, and I would also say that the competition is offering something similar, just that their offerings may not be quite so similar. For example, if two companies are offering similar, but different service plans, the market may be divided into four separate markets, with the same and completely different pricing models.
The next question is, which of these markets is the most competitive? There are many ways to answer this question, but perhaps the best one is to take a look at the demographics of the markets. Of course, this is only one aspect of a market and one that is perhaps overlooked. Nevertheless, it is important to take a look at demographics when evaluating the market, because that can tell you a lot about how the market is shaping up.
For example, if one company offers an alternative product in the marketplace, that can reveal a lot about the competitors. For example, it may mean that the competition is fairly weak, or that the competition is struggling with their product launch. Either of these situations will cause the market to shrink, which could in turn indicate a potential opportunity for the new company.
When comparing the competitors, consider not only the pricing and products, but also the competition, and who they are targeting. If the competitors are targeting the wrong demographic, they may be struggling to develop strong brands in their market. Remember, the target audience is the one that will be most likely to buy the product, and they will decide whether or not they will buy the product based on whether or not they see the brand name.
Consider branding strategy, especially in the realm of a niche market. Companies that create a strong and professional brand identity will find themselves more likely to stay in business, and the competition will want to beat them to the punch, and offer their products and services at a better price.
Once the competitor research is done, the next step is to come up with a strategy that addresses the competition, and the differences between the competitors. In fact, this is so important, that the need for this step is often highlighted, and companies will spend tons of money developing and perfecting the competition research that has been conducted.
One way to do this is by coming up with a list of all the characteristics of the markets that the competitor is in, then coming up with what these characteristics may mean. For example, if the competitor is in a market that is home based businesses, you will want to ask yourself what the similarities and differences are between a commercial business and a home based business. You want to know what the similarities are, and what the differences may be.
As an example, think about the difference between an online business and a brick and mortar business. One way to look at this is by considering which is easier for the customer, and which one offers better support. This information should help to develop a better understanding of the market and which one offers the best product and service at the best price.
Once you have identified your competitive market, the next step is to gather information on the competitors, and how the market is changing over time. You may want to use some of the same methods as those used in creating your competitive market research, but you will also want to use additional sources, because there are many areas of the marketplace that have yet to be fully explored. For example, consider the industry’s evolution over the last 10 years, or when was the last time that it was considered a “garage sale”?
If you really think about it, it is not that difficult to determine what the most important aspects of a market are, or if they have changed in any way over time. What you will do is collect as much information as possible, use the data that you have gathered, and make some bold predictions.
Remember, this kind of competitive market research is not for the purpose of producing sales. It is to inform you, the investor, about whether or not there is a market that may be ripe for the taking.