7 Steps To Assess Your Competition — Market Viability
For years, I have provided business planning services to companies like First Republic Bank, Goldman Sachs, and the Nelson Mandela Foundation. Frequently, I see them try to assess a potential new market. Here’s the step-by-step guide I use to help them determine the financial viability of their ideas.
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All organizations face competitors. To ensure viability in a new market, your organization will want to conduct a full assessment of competitors to uncover either (a) market gaps you can exploit to create a valuable niche or (b) opportunities to innovate or defend your advantage to outperform contenders. Here is a 7-step guide of how to find, assess, and take action with regards to your competition:
1. Discover Who Is Competing For Your Customer.
Determine which organizations are offering the same product or an alternate spending opportunity to your customers. Start simple by building a matrix of these organizations where you can add key details over time such as price point, size, website, etc.
Same-Industry Competitors — Similar businesses who may be local or even abroad. Do not limit your search to those who already exist, constantly watch for new competition. E.g. Apple’s iPhone and Samsung’s Galaxy have been competing for years in the high-end smartphone market.
Non-Industry Competitors — Your competition may be whomever your customers decide to spend their money with, instead of using your product. E.g. Even if you are the only restaurant in town, you may be competing with movie theatres, bars, convenience stores, or food trucks.
2. Find Other Competing Factors.
Competition is not only another organization, but also other factors that may render your product obsolete. To combat these changes, confirm you can adapt quickly enough to sustain viability in the market (though different for every organization, ideal time to adapt is under 6 months).
Technology and Market Trends — Innovation and market changes that alter the way your customers do business. E.g. A brick-and-mortar handbag retailer may need to consider adding online selling, given new consumer preferences for e-commerce.
Regulation — Laws and mandates that limit your organization’s ability deliver its full offering. E.g. Many coal mining companies saw revenue losses due to the “Stream Protection Rule” government regulation that disallowed their standard practice of discarding waste.
Stigmas and Lack of Awareness — Hurdles your organization may face due to preconceptions or lack of knowledge within your industry or by potential customers. To remedy, consider using statistical data or case studies to educate parties. E.g. A diversity recruiter may receive industry push back about the benefits of inclusive workspaces- — thus, they could mention that the top quartile of diverse companies are 21% more likely to beat industry financial returns (McKinsey, 2017).
3. Find Your Competition’s Strengths.
Determine why customers would choose the competition’s product over yours. The answer will help point you to potential gaps in the market you can capitalize on, holes in your offering that need fixing, or highlight unserved customers whom you can capture.
Competitor’s Value Offering — This is the niche value your competitor is providing to customers to make customers buy. (Note: Your competitor’s value proposition may be similar to or the same as yours). E.g. Do they have exceptional customer service, easier to use features or superior product quality, a new distribution channel such as digital delivery, recognizable branding that appeals to masses, or perhaps a more flexible pay-as-you-go pricing model, that wins them business?
Competitor’s Advantage — A strong competitive advantage means your contenders can defend their market share from you, or attract and maintain your customers over the long term. E.g. Do they have a proprietary technology or important patent, an information advantage about your industry, exclusive contracts that block you from customers, superior customer service, or a cultural connectivity to the customer that keeps them one step ahead of you?
Competitor’s Sales & Operations — This is your competitor’s sales funnel and how they operate. E.g. Does the competitor have a robust marketing strategy that reaches customers who choose the competitor over you? How was the problem solved before you came along? If it wasn’t done before, then your competition may be other competing factors or non-industry competitors.
4. Do Research For Basic Information.
Collect details about the competition. Use this information to determine your competitor’s value or advantage that will affect your offering.
Materials — Look at your competitor’s website, social media, blog, newsletter, recent news, and their own marketing materials.
Trials — Especially if the competitor is an online business, request a trial of their service. Follow their sales funnel from start to finish if possible.
Reports — Gather research reports or industry marketing literature from consultancies or universities, press reports, or publications (typically a Google searches is sufficient to locate these items).
5. Interview For In-Depth Information.
Make it on an ongoing practice to use daily or weekly conversations as a tool to stay current on rising or fading competition. If you see competition approaching, confirm you have sufficient time to adjust (though different for every organization, ideal time to adapt is under 6 months).
Talk to Customers — They are your best source for current and future customer needs, and their intel allows you to adapt around the competition quickly.
Network — Talk to thought leaders, go to conferences, social occasions, or industry events — they can be useful sources of market trend and competitive knowledge.
Perform Recon — Contact old employees of your competitors or their suppliers. Some useful info of individuals’ competitor experiences may be on LinkedIn and other social platforms.
Survey — Ask questions across your own networks, including to non-customers, to help find your shortcomings.
Learn From The Industry — Talk directly to competitors or others in their cohort. (Note: Be nice but proceed with caution — competitors may be doing their own research, for example if they talk about price).
6. Use Public Databases To Supplement.
Databases can augment competitive insights by aggregating industry-wide detail. Enlist these public records or paid services to hone in on a large subset of competitor data quickly. Be mindful that as with many other aspects of competition assessment, database information was not originally collected by you, and thus may have inaccuracies for example if it’s outdated.
Use Existing Databases — Industry-wide detail collected by a third party. E.g. Patent or IP searches, annual reports for public companies, local chamber of commerce, city mandates, or analytics tools. (Note: Analytics tools are typically paid services best used for assessing the online marketing strategy of your competitor).
7. Take Action.
Now that your organization has assessed who’s the competition, their strengths, and their in-depth details, create a game plan to adapt. In many cases, taking action will involve reviewing your own value, especially if the outcomes customers receive with the competitor are different or better than with you. Though different for every organization, allow yourself ideally 3–6 months and proper resourcing to execute on the below:
If Your Competitor Is Better Than You or The Same As You — Innovate, do not imitate. Consider pausing to give yourself time to build a differentiating niche value. Especially if you are a new player in the market, avoid trying to compete for the same customer — instead, create more value than your competitor, for a niche group of customers.
If Your Competitor Is Worse Than You — Find gaps where you can capitalize. E.g. If you are in a highly competitive space, consider boosting your customer service as a potential quick way to exploit the gap. Next, look to additional distribution channels like digital that could be readily implemented, and potentially increase your market share and revenue over the competition.
Before your organization leaps into a new market, spend time collecting information about the competition. While some competition is obvious, take a deeper look to determine what action you’ll need to take in response — be prepared to fill a market gap, address your own blind spots, or combat upcoming innovations to stay current and viable in the new market.
In part 6 of this series we will review how to determine market size.
Kaego Ogbechie Rust is CEO at Foresight Advisors — working with foundations, investment firms, non-profits, and for-profit ventures — offering comprehensive support across vision & strategy, investing & financing, and operational planning during critical periods of your growth.
If you’re looking for help, contact kaego@foresightadvisors.com or visit www.foresightadvisors.com.
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