How to Conduct Competitive Research
Who are your closest rivals—and how do they talk about themselves, as well as your company? It's time to find out.
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Understanding the competition is a crucial business activity for any entrepreneur or business executive. Some companies hire professionals to track competitors and assess the competitive landscape on a regular basis. But it doesn't always have to be a complicated, time-consuming, and expensive process -- particularly given the new wealth of data that can be assembled using the Internet. By investing even a small amount of time, businesses of any size can develop a framework for making competitive assessments, gather intelligence on business rivals, and understand how to position their own brand, products, and company in the marketplace. Not only can you learn best practices from competitors, but you can also learn to avoid the mistakes they make.
"Keeping track of who your competitors are, what people are saying about them, and what they are saying themselves can help you differentiate your business and stay ahead of trends that could impact your business," says Michele Levy, an independent brand strategy consultant. "Staying smart on the competitive landscape helps you make very practical decisions around product development, pricing, promotions, messaging, as well as where you fit in the brand landscape."
This guide will help you understand how your business can benefit from competitive research, how to conduct competitive research, and which sources you will find most productive.
Dig Deeper: The Changing Face of the Competition
Conducting Competitive Research: Understanding the Benefits
Conducting a competitive assessment should be an ongoing process, one in which you continue to deepen your understanding of the strengths and weaknesses of your competitors. Every business should gather information about the competition and most already do -- even if they don't formalize it into a competitive research process. "Everyone really needs to do competitive research. The difference is scale," Levy says. "You really need to keep your eyes open regardless of how large you are or what you are selling."
There are a series of business benefits you can gain by having insight into the competitive landscape, particularly if you track products, prices, staffing, research and development, and other aspects of the competition on an ongoing basis. "This is so a business can understand the external and internal environments they're operating in," says Ken Garrison, chief executive officer of the Society of Competitive Intelligence Professionals (SCIP).
The following are potential business benefits from conducting competitive research:
- Understanding the market.
- Better targeting customers.
- Forecasting the potential for the market.
- Figuring out how the economic climate impacts the market.
- Understanding what competitors are offering.
- Keeping tabs on competitors' prices.
- Determining offerings in ancillary markets.
- Finding new customers.
The promise is that by gathering competitive research over time and in a systematic way you will be able to track trends and/or scenarios and be about to act on the research. "You want to take this research and do it in an organized and systematic way so that you can create an actionable strategy or actionable intelligence from it," Garrison says. "Most every company gathers competitive intelligence, even though they may not define it as such. We're all aware of the business environment we're selling into, how our operations are functioning, where we can sell in the future, our profitable areas."
Dig Deeper: How to Profit from Market Research
Conducting Competitive Research: Getting Started
The first decision you need to make about competitive research is whether to gather it in-house or go outside and hire a professional firm or consultant.
The benefits of hiring a consultant include that they may have more expertise in intelligence gathering that you do. "They will do things that wouldn't occur to you," Garrison says. "They have probably done hundreds if not thousands of these analyses. They know how to do them in a systematic way. And they're probably also pretty good at getting senior management to tell them what it is they want to know and what is the scope." Conversely, the challenge of hiring an outside consultant is that sometimes it's difficult getting senior managers to clearly enunciate what they want to know and then listen to the results of the research.
The benefits of conducting the research in-house include that you would understand the business and what competitive factors you want to track, Garrison says. You would also have a constant stream of data in the firm, and managers may listen more to an insider than an outsider. The challenge is that gathering competitive intelligence is a skill and you would either have to develop the talent on your own staff or hire it from somewhere else, he says.
A compromise might be to hire a professional to provide an initial competitive analysis and update it every six or 12 months, while you keep track of competitors on a day-to-day basis in-house, Levy says. "As a business owner your best bet is to do it yourself on an on-going basis by seeing what your competitors are doing, looking at their website, and getting in the habit of keeping those folks on your radar screen," Levy says. "Ideally, this will become an organized thing where you're on their mailing list, you're following them on Twitter, and you mystery shop them every six to 12 months."
Conducting Competitive Research: Creating a Framework
In general, the way to start gathering competitive research is to first set a framework for your competitive assessment. Levy suggests the best way to begin if you're doing this on your own is to start by opening up a new Excel worksheet and creating the following columns outlining your competitors:
- Name (and location if relevant)
- URL
- Elevator pitch (Brief answer to the question "Who is this company?")
- Mission (If it exists.)
- Products/services offered (with pricing)
- Strengths (What is the competitor good at?)
- Weaknesses (Where does the competitor fall short?)
- Key brand differentiators (What are the messaging, product/service offerings, etc., that set the competitor apart from their competition?)
As you work through the competitive assessment, Levy says, you may find other aspects of your competition useful to track, but this is a good starting point. Garrison suggests that you may want to review the economic environment at a macro level. You may also want to look at the economy on a micro level, particularly if your firm competes in a certain geographic area that has a unique set of factors.
Conducting Competitive Research: Selecting Targets
It's helpful to think of your competition in terms of options that your customers have -- where else they can go to purchase the products and services you hope to sell them, Levy says. That can include direct competitors (those who sell the same thing you do) and indirect competitors (those who sell other products and services that meet the same need). "For example, Starbucks and Dunkin' Donuts are direct competitors, while the prepared foods section of the local supermarket could be an indirect competitor to them both -- especially if its coffee is good," Levy says.
Often entrepreneurs claim that they have no competition, but everyone has competition. If your list of competitors seems long (and the prospect of tracking all of your competitors daunting), consider prioritizing your list into a couple of different categories. Levy recommends, for instance, "key competitors to watch closely" versus "emerging competitors to keep an eye on."
Conducting Competitive Research: Secret Shopping
