Learning from your competitors (1/2)

December 2008

It is received wisdom to keep friends close and enemies closer, but precious few companies really know their competitors’ strengths and weaknesses. Many organisations simply don’t bother to find out what they are.

This failing can have negative consequences for your marketing communications. Unless you note how rival companies, brands or products are positioned, you have no framework in which to differentiate your own. And unless you know what segments others are targeting or what messages they are communicating, you are basing your own marketing decisions on a hunch. That’s a big risk to take.

A simple first step

Alongside intelligence on your competitors’ financial strength, partnerships, products, prices, distribution channels, and relationships with customers, intelligence on your competitors’ communications can give you a strong foundation for any communications effort, be it a rebranding, a public relations campaign, customer publishing, advertising or sales collateral.

For companies that do not set aside a budget for marketing research, the good news is that this doesn’t have to be an unwieldy and time-consuming project. A short, focused project that looks at your competitors’ communications is a valuable exercise that can give you knowledge to inform decisions. Competitor analysis should be an ongoing process rather than a one-off: it is best to update your information annually, or more often if you operate in dynamic markets.

Competitor information

If your competitors publish news, you can benchmark their releases to reveal a host of information, including:

News frequency
Key messages
Identity of key customers and partners
Spokespeople and the conferences they attend

The better your competitors are at planning and executing their marketing communications, the easier it should be for you to determine their positioning and direction. For example, is there evidence of market positioning or development that may herald a future product announcement? If a competitor is talking up an industry issue, it may be preparing to enter a new market.

A thorough analysis can help you to use your communication channels more effectively and also predict competitors’ responses to your activities.

Strategic decision making

You can gain a lot from a tactical review of comparative messaging without having to revisit broader strategic issues. However, with the help of a few simple models and frameworks, analysis of trends and patterns can help you to determine a competitor’s strategic direction. Michael Porter’s Five Forces model is the classic framework for placing competitors in their industry context. It considers buyer and supplier power, barriers to entry, threat of substitution by other products and services and issues that affect intensity of rivalry.

Performing a SWOT analysis on your own organisation and your main competitors helps you to identify generic strategies and potential for differentiation. This can be a powerful tool if executed properly. In one project that we carried out, we successfully predicted the demise of one of our client’s key competitors. It became apparent that the competitor had no clear direction: its conflicting messages suggested that it was confused and ‘stuck in the middle’ from a strategy viewpoint. Six months later they ceased trading.

How we do it

If competitor research is something your organisation would like help with, read part two of this article where we outline our own approach.

Read part two

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