Hello, my name is Naomi Burgess and in this post I’d like to talk about the importance of knowing your competitors and of what is known as “differentiation strategy”.
Observe Competitor
The first thing you should know is that you have to abolish the “special snowflake” mentality that so many businesses seem to have today. No matter how unique you think your product is, there is a 100{71f0b96d7fb9125465257c4beabfd4b54654a6dcc01d6b761d78baf7e14996ab} chance that you have competitors that have either invented something akin to your product or are selling something that can easily replace it. If you think you have no competitors, you haven’t been paying attention.
Establish Business Relationship
I’ve always believed that it’s vital to know who you’re dealing with, be it your clients, co-workers and yes, competitors. This century’s most valuable tool is information, and there’s plenty of information available on the Internet about almost every company in the UK. Stay aware of the current industry trends and make a note of companies that appear to be operating in the same field, geographical area and/or with the same people as you. Don’t be afraid to follow these companies on Twitter or “Like” them on Facebook – many organisations today publish their most important information for clients on social media.
You should your due diligence properly and look deeper than social media pages, though. Familiarise yourself with your potential competitors’ website and get your researchers (or do it yourself) to carry out information analyses of the most noteworthy competitors to keep an eye on. As a result of these analyses, you should have the answers to the following questions in the four core areas:
SWOT Analysis
- Strengths – what makes them successful? What makes their product better than yours? Do their strategies overlap with yours? If yes, can you, can your business, learn from them in any way?
- Weaknesses – what are their product’s potential pitfalls? Were any of their promotional strategies unsuccessful? Have they been receiving negative reviews recently? How can your company avoid making the same mistakes?
- Opportunities – what kind of industry opportunities have they taken advantage of recently? Are there any prospective opportunities coming up for them? Can your company take advantage of those opportunities or do they come with a level of risk too high?
- Threats – just how much of a threat do these rival companies pose to yours? Is your company in any danger of losing clients to them? What can you do to neutralise any possible threats coming from them? Would that involve deviating from any set plans?
Make a Strategy
All of the above is important information to be aware of, if you want to stay ahead of your competitors. They’re also very important when forming your differentiation strategy. In simple terms, differentiation strategy is just what it sounds like – a strategy to make your product different, as unique as possible. Knowing your competitors would help you know the general state of your target market, and if you know it, you can plan your next moves depending on its state. I mentioned above that you should know your competitors’ potential opportunities; a lot of differentiation involves taking advantage of these opportunities and applying them to your product, thereby making it different. Differentiation would also involve quite a bit of accounting analysis – it is, after all, important to know whether you should spend a certain amount of money on launching a new product or promoting it, or save it until a better opportunity comes along. It’s impossible to list all the benefits and methods of application of differentiation strategy in a single post, but it’s important to understand that it’s not a one-person job so make sure to get your accountants, your marketing managers, your product experts and other team members involved. I’ll just say this – if you want to be the leader in your field, know your competitors and dare to be different in any way you can (as long as you understand the risks, of course).
Be on Top
Staying ahead of your competitors shouldn’t necessarily be your only goal, however. If, for example, the results of your due diligence show that a company smaller than yours has developed a project that can potentially be “the next big thing” but they lack the funds to develop it (whereas you have plenty) you might consider offering them a partnership or any other kind of mutually beneficial relationship – a referral arrangement, for instance.
I’ve written about what you should take into account when getting to know your competitors, However, please don’t treat this post as an invitation to immediately become paranoid and carry out extensive due diligence of every single company that operates in your chosen industry. After all, if you do so, you might actually miss out on the opportunities available exclusively to you and won’t have much time to develop and grow!
