Tracking Down the Competition
Competitive analysis is essential to a solid business plan. You need to know who and how you will be competing for revenue and market share with. To assume that the consumer has no alternatives to the company’s products is silly. What products are they using now in place your company’s services? How do you determine who your competitors are?
For example, Etsy has the lion share of the online handmade market. But is a new ecom website for handmade goods really competing with it? Or is competing with the myriad of other startups that are competing for the rest of the online handmade market?
Amazon is in the middle of debuting a new handmade market on their website. Is Amazon too heavy handed to work with independent crafters? Are their traditional customers looking for inexpensive toilet paper and not cutesy toilet paper holders? Time will tell; I’ve been a vendor on both platforms and Amazon is a bit too sterile to deal with crafters, who are noisy, don’t want to learn a system, and expect a flexible platform.
Get out the white board, it’s time to do some thinking.
Who are the competitors in your industry? Chances are that you can immediately name a few. Who are the rest?
When I had my tax practice, it was easy to name H & R Block, Deloitte, and other large local firms. Who were the sole practictioners that I was also competing against? Established CPAs do not have websites, are not listed in the phone book, and worked out of their homes. Finding nearby competitors was a bit like tracking down people in the witness protection program. (I solved that problem by tracking them through the WBOA CPA list, networking, and by asking around. The IRS now lists names of local CPAs in the PTIN database.)
Social Media? Youtube, Facebook, Linkedin and Twitter will yield both established brands and scrappy startups.
Trade Shows. Even if you don’t attend; you can check out who is advertising, bought a booth, or is presenting. Perhaps they are also live streaming discussion panels. Go back to YouTube and see if anything has been posted.
Networking. Networking goes beyond going to Chamber of Commerce meetings. Try looking on Meetup.com to see if there are any interest groups that speak to your customers. Consider sponsoring a meetup group to advertise. It’s my understanding that the meetup groups are now being charged a small annual fee. Linked in groups are a way to meet others; however, they can also be large echo chambers. The members are listed once you are joined. Consider reading their profile and contacting them.
Where Do Potential Customers Shop Now?
FaceBook, Etsy, or Pinterest? Brick and Mortor? Sears? Walmart? Where do people shop now? Local? Online?
The globalization of our economy has lead to anything that can being packed into a box and shipped; is being sold online. Even the big box stores like Target and Walmart are competing online.
Is your product/service shipable? Is that a barrier to being sold online?
Perhaps not. Angie’s List operates a defacto online market for construction services. So much so, that Amazon is now advertising a local service market. I checked it out. It is invitation only at the moment. Where are they finding the peeps to list on it? Probably Angie’s List.
If you are planning a local brick and mortor, you need to research your local competition. Who are they? Are they a chain? Another restaurant? How do they stack up against you?
Do you consider Yelp reviews to be helpful? There is a thriving market on positive reviews on Fiver, Elance, and UpWork. Are the reviews vague? Do the reviewers sound local?
Yelp has been removing reviews if they sound spammy or insincere. Many have complained that actual real reviews have been removed until Yelp advertising has been purchased. I don’t know the truth of that. I do know that they offered to advertise my tax service for about $200 a month. More than newspaper advertising in my local community paper, which charges $200.00 a year.
My suggestion? Read the reviews, make a list of your local competitors, but don’t be swayed by the reviews. Do your own research.
Google and Bing Search
This probably sounds funny and dumb, but just google your business idea and keywords. There is very little new under the sun, and that includes business ideas. The difference is execution and customer happiness. If business ideas were unique, there would be only one place to buy cars.
Google and Bing are forever changing their algos to enhance customer experience. I’ve noticed a few trends over the years. National brands are becoming more prominent and are drowning out local mainstays. Brands are more likely to be visited and used. Therefore, the search engines seem to be favoring them.
Some websites compete by having many hundreds of domains and landing pages. For instance, they might have a page titled Seattle_donuts when they do not in fact have any donuts sold in Seattle. Now, should you do this on your own website? I’m not a SEO expert, nor do I claim to be one. Check out their site map to see all the pages, not just the ones listed on the main menu.
My main point is that for a complete competitor list, you need to search more than just the first page of results. Page 20? Page 50? You decide.
Hire a trademark attorney to do a search for you. It can be expensive, but worth it in the long run. It’s much more fun than a cease and desist letter from your opponent.
Create a customer survey that asks people who they currently use. Survey Monkey does a great job of creating fun surveys that people will actually complete.
I’ve found that Facebook surveys get goofy answers, Linkedin surveys have pretty much disappeared, and that Intuit wants my opinion on just about everything.
Make your questions non-biased, it’s easy to manipulate the results by asking biased questions.
Top Ten Lists
Many business publications publish annual best of lists. Let them do the legwork for you. The lists will also feature size, locations, products and employee counts. It can be a great information source.
Phone Book or Online Phone Book
Are you a local attorney, CPA, or service professional? Perhaps riffling through a phone book will help you find your competition. Established service firms rarely need to advertise; their customers and contacts give them new referrals on a regular basis. They do not need to advertise. They might be listed in online directories, phone books and industry lists.
Industry publications will often interview or profile experts about subjects that are interesting to their members. The Wall Street Journal has long been a source of competitive information for Fortune 500 companies. What is the Wall Street Journal of your industry?
Techcrunch has a startup database. Go look through there. You might find some interesting info on people who are also looking for funding, recently funded, and so on. They specialize in the birth, success and death of startups. It’s fascinating reading if you want to know who had funded your idea, failed, or is living in a Malibu Mansion.
Edgar Online and 10K Reports
SEC Reports by publically traded companies sound extremely boring, don’t they? What if I told you that many have competitive and market analysis tucked inside? Perhaps your largest competitor has their financials posted there. Maybe even by region. Take a look at your list and see which one is a publically traded company. It might be a division of a multinational conglomerate.
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