in Small Business
Issue No. 6 - July/September 2002
Keeping an Eye on Your Competitors
by Warren Hobbs
Very few businesses have a monopoly, as almost any product that is worth buying or selling will generate competition. But you need to have a detailed understanding of the products and services offered by your competitors, given that strong competitors could poach some and perhaps all of your business.
A business usually strives to offer a product or service that is unique. That is the best defense against competition. Where products are not unique, they should have features that are at least distinctive or more attractive in some way.
You need to decide what basis you are competing on. Is your competitors’ packaging more attractive? Are their products better distributed and easier for consumers to obtain? Does their product do the same job at less cost? Does it come with extras? Will customers be attracted by higher service standards?
You can only assess your competitors’ products if you understand who your customers are and what they want.
For example, are you selling to people on limited incomes who will make choices based on price? Or are you selling to people with lots of spare cash and an eye for quality? Many small business owners have a gut feeling for whom their customers are, but research can come up with some surprising results.
You can survey your customers, analyze data you collect through sales, or study publicly available statistics that will give information such as the average age and income levels of people in your neighborhood.
Having identified who your customers are, you then need to identify your direct competitors. Direct competitors are businesses that sell a very similar product to the same customer base.
For example, restaurants located in the same neighborhood are likely to be in direct competition with each other. Smart restaurant owners will have a detailed knowledge of what their competitors are offering and how they could improve to attract customers.
Are their competitors offe...
