Assessing the Competition
Market Research
February / March 2009
Volume 7 Number 1
Accurately assessing your competition is important at all stages of your company and in different economic periods. This is especially true if you are an entrepreneur starting out with limited resources.
The first question you need to ask is just who your competition is. There are several generic categories to look at: companies with similar technology, companies that use different technology and indirect competition (solving problems another way). The key denominator is that each category has a method of solving the same customer problem that your product addresses, but it doesn't have to be the same technology.
Your customer doing nothing is also a valid form of competition. Many times, you'll find that companies are happy with the status quo, especially when budgets are tight. Or perhaps they are unionized in areas where your products will fit in. Whatever the case, make sure you look at all categories.
How do you find the names of your competitors? You may be able to find industry directories, either online or in a library, that show different types of companies. Industry associations often have member listings available online. Articles and advertisements in trade journals can also yield names of competitors. Talking with others in your industry or your customers is another good source.
After you have identified the names of your competitors, you need to investigate each one. Some of the attributes you should look for are to help differentiate your company and its products are:
Product features: How similar are other products, as compared with yours? Are there some features and benefits that they have that are better? Worse? What about your strengths here?
Competitor Size: Who's big, and how does that impact their place in the market? If they are big companies, are they focused solely on your industry, or are they in other industries as well? Who's small? What is the mix of large vs. small companies, and why? How can you position your company against these sizes?
Market Share and Perceptions: Who has what market shares and why? Are these companies considered leaders and innovators, or followers? Do customers perceive their products and services to be good or adequate? Again, how can you stand out against these perceptions?
Financials: This is important for your marketing strategy. Are the dominant players achieving healthy margins in your industry, and why or why not? What has their growth in your industry been like for the last several years? Are they involved in any expensive litigation, and why? These issues provide clues about how they may be able to withstand and react to new competition.
Research & Development: What kind of R&D budgets do your competitors have? How many patents do they have, and do any cover any technologies related to your products? Do you need to watch out for more innovations and thus need to try to stay ahead of the game? Or, it there someone you can partner with to get to market faster?
Sales and Distribution: How do your competitors sell and distribute their products? If they sell through distributors or other channels, the particular distributors could possibly have a restriction on how many of competing products they sell, which could impact your own product distribution. So, you'll need to note as many of the names as possible so that you can contact them.
There are many resources to look at when researching your competitors. While some of these may be free to you online, not all of them will be; you may need to seek out a public or specialized library for some sources. Start off with some of these resources:
10-K reports: These reports, found at www.sec.gov or on any public company's web site, give very good information on the company, from financials to market risks to pending litigation. You may even get lucky and find market shares and future plans.
Blogs: This is where you may find information on how your competitors are perceived in the marketplace. Sometimes you will read about product successes and failures, from a customer's viewpoint, as well as what current issues might be.
Trade Journals: This is where you may have to seek out a library; free online access to trade journals is diminishing. While you may have to read between the lines, you can find references to your competitors' products, industry standing, and growth.
Databases Databases, such as Hoovers or D&B Million Dollar Database, can tell you estimated revenues for private companies, in addition to public companies. You can determine their actual industry government codes (SIC or NAICS) and find listings of the executive team's names and titles. Once you have the names, you can do further Google searches on the individuals.
Trade associations If you can access the member list, you may also be able to access the companies involved in various working groups. This may give you an idea of your competitors' leadership in different technical areas of your industry.
Government agencies Sometimes the various government agencies, such as the Department of Energy, will have information on collaborations between government and industry on technical matters in your industry. By finding out who is involved in these areas, you may be able to figure out what kinds of products your competitors are working on.
United States Patent and Trademark Office Patent searches can be done at www.uspto.gov. You should search for patents filed by your competitors, but you should also try to do searches on similar technologies and their assignees. This may help uncover new and emerging competitors.
Technical specifications Any product literature you can find with technical specifications should give you information to compare with your own products.
Investment reports Analysts often provide customers with company reports.
These can be quite detailed and can provide information on the industry, competition, and, of course, your competitor's financials.
Press releases These are usually plentiful online and may contain details of new products, partnerships, and strategies from your competitors.
Once you have some concrete information on your competitors, you should analyze the information. One tool is a SWOT (strengths, weaknesses, opportunities, threats). Another might be a simple product or positioning matrix that you can use to rank certain attributes. Whatever tool you choose to use, make sure that note any areas in which you stand out, and areas in which you might need to improve. This will help in developing strategies to meet and beat your competition.
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