4 MIN. READ
Your company provides an array of quality goods to manufacturers, yet your sales are slipping. Your company prides itself on the services you offer to manufacturers, yet sales remain stagnant. Why? Competitors.
You know that you have competitors. Successfully running your company is at the forefront of your mind, but somewhere in the back, you know that competitors exist. You may even think that you have a pretty good idea of which companies comprise your main competitors.
It’s time to bring those thoughts to the forefront and perform a competitor analysis.
You have three main types of competitors – direct, indirect and replacement.
A direct competitor is one that provides the same product or service to manufacturers as your company does. For example, your company may provide client relationship management (CRM) software and services that enable manufacturers to better track and attract clients. You are not alone in this market space. Other companies offer the same product and service.
An indirect competitor is one that provides a similar product or service. In the case of providing CRM software and services, an indirect competitor may provide consulting services for manufacturers using freeware CRMs. A manufacturing company may have enough technology experience to download a free software program, select the components that are most useful and upload their client database. However, the staff may not have enough experience to modify one of the modules, so the manufacturer hires a consultant who specializes in their particular freeware program.
A replacement competitor provides a product or service that is somewhat similar to your offerings but different enough that it is a viable alternative. Again, using the CRM software and services example, a replacement competitor may offer cloud services or complete CRM management. In this case, a manufacturing company would only need to request reports or send information for dissemination to its clients to the replacement competitor on an as-needed basis.
Start with a simple internet search for your own company to see the names of some of your competitors. Try searching keywords to garner more competition too.
Now that you know your company has more competitors than were originally on your list, your next step is to find out as much information about your competition as you can so you can regain the upper hand.
A thorough analysis provides you with insights into trends that you may have missed, such as the ability to offer your CRM both as an on-site program and as a cloud service. The information also points out weaknesses in your competition, such as a lack of vigilant cybersecurity measures that would make their product or service less desirable in the eyes of your customers.
So how do you conduct a thorough and effective competitor analysis? Here are 10 components that you should include in your competitor analysis:
1. Identify your competitors: As mentioned, the first step is to identify who your competitors are. But how? You can use various sources to find them, such as industry directories, trade associations, online platforms, social media, customer feedback, etc. You should also categorize your competitors into direct, indirect, and replacement.
2. Analyze their products or services: The next step is to analyze what your competitors offer to their customers. You should compare their features, benefits, quality, pricing, availability, delivery, warranty, etc. You should also look for any gaps or weaknesses in their offerings that you can exploit or avoid.
3. Analyze their customers: The third step is to analyze who your competitors' customers are. You should understand their demographics, psychographics, needs, preferences, pain points, motivations, etc. You should also identify their customer segments and personas and how they differ from yours.
4. Analyze their marketing strategies: Next, you will want to analyze how your competitors market themselves to their customers. You should examine their marketing mix (product, price, place, promotion), their value proposition, their unique selling proposition (USP), their branding, their messaging, their channels, their content, their campaigns, etc.
5. Analyze their sales strategies: The fifth step is to look at how your competitors sell to their customers. You should evaluate their sales process (lead generation, qualification, nurturing, closing), their sales team (size, structure, skills), their sales tools (CRM, software), their sales metrics (conversion rates, revenue, etc.), etc.
6. Analyze their strengths and weaknesses: Next, you’ll want to analyze what your competitors do well and what they do poorly. You should identify their core competencies and competitive advantages as well as their limitations and vulnerabilities. You should also assess how they perform on various criteria such as quality, innovation, customer satisfaction, market share, profitability, etc.
7. Analyze their opportunities and threats: The seventh step is to analyze what external factors can affect your competitors positively or negatively. You should consider the political, economic, social, technological, environmental and legal (PESTEL) factors that can create opportunities or threats for them in the market.
8. Analyze their future plans and goals: What do your competitors plan to do in the future and what goals they have set for themselves? This is what you’ll want to examine in step #8. You should look for any clues or signals that indicate their intentions or directions such as new product launches, mergers and acquisitions, partnerships and alliances, expansions and contractions, etc.
9. Benchmark yourself against them: How does your company stand up against the competition? This key step involves benchmarking yourself against your competitors on various aspects such as products or services, customers, marketing strategies, sales strategies, strengths and weaknesses, opportunities and threats, future plans and goals, etc. You should use quantitative and qualitative data to measure and compare your performance and position in the market.
10. Draw insights and action plans: The tenth and final step is to draw insights and action plans from your competitor analysis. You should use the information you have gathered to identify your own strengths and weaknesses, opportunities and threats, and gaps or areas for improvement. You should also use the information to formulate or refine your own marketing strategy, sales strategy, value proposition and branding.
Once you have completed your analysis, compare your marketing strategy with your competitors'. Start with a comparison of websites (since the majority of purchases begin with a customer's online search). Focus on the landing pages, the organization and the features of each site, including your own. While doing so, keep in mind the customer preferences that you learned through your competitor analysis. How do all of the websites align with these customer preferences? What simple improvements could you implement to make your front page more appealing to the customers that you want to attract?
Next, move to social media outlets. If you haven’t already established a social media presence, do so. See how your competition is – or isn't – using social media effectively. Always remember the “social” part of social media. Simply tweeting about your product isn’t going to increase your sales. You need to engage customers and leads in a dialog about the industry, your product, similar products, trends, and their wish list of what the ideal product or service would be. The more often others mention your company’s name, especially in a favorable light compared to your competition, the more customers you will draw.
So bring your competitors to the forefront of your business plan, prepare an honest competitor analysis and use your new-found knowledge to regain your competitive market edge.
Understanding your competitors is a vital step to building your business -- and so is having access to top quality data! Whether you’re selling packaging services, marketing for a machinery company, helping manufacturers with their staffing needs or simply looking to expand into new markets, IndustrySelect is the most effective way to reach decision makers in the manufacturing world. Click here to try out your free demo!
Note: This article was originally published in January 2021. It has been updated to include addiaional information on competitor anaylsis.