As a business owner, it’s essential to know who your competitors are. Because every brand, no matter how niche, competes within its market.
So it pays to know who you’re up against. Some of the things you want to know are:
Who your competitors’ customers are.
What products and services they’re offering.
What internet marketing strategies they’re using.
Which new products they’re introducing in your sector.
Smart WSI Marketing is an Edmonton-based internet marketing company that can help you identify and monitor the competition and develop an
online marketing strategy that puts you in front of the pack. We’re the area’s digital marketing agency with the tools you need to build a
stronger marketing approach based on competitor data. Call us today to learn more.
Why You Need to Know Your Business’s Competition
Whether you’re just starting a business or want to grow the one you have, it’s just as important to understand your competitors as it is to
know your customers. By monitoring similar companies, you can not only learn about their strengths and weaknesses, but you can also identify
gaps in the marketplace and, when necessary, pivot or adapt your offerings instead.
You can also:
Avoid costly mistakes. It’s good financial sense to know what your competitors are doing before making
large-scale business decisions. For instance, you might be considering a product launch but in your due diligence discover a competitor
recently tried something similar that wasn’t successful.
Minimize risk. Successfully running a business requires identifying and mitigating risks. There’s little sense in
entering a market where you likely can’t compete because a larger competitor with an identical product or service and ample marketing
resources has already established itself. That doesn’t mean you should abandon the market, but you might want to make some
adjustments before launching.
Recognize your market advantages. Your business benefits greatly when you get a sense of the resources your
competitors have at their disposal and the scope of their market share. You immediately understand what differentiates your
product or service’s features, quality, prices, etc., from theirs.
The Three Types of Competitors in Business
When researching the competition, you have three types of competitors to look out for.
1. Direct competitors
Direct competitors are the brands you first think of when listing your competition. They tend to:
Be in your neighborhood or sector.
Offer similar or identical products or services.
Vie for the same customer base.
For instance, if your business is a garden center, your direct competition is other garden centers in the local area. Examples of big-name
competitors include Android vs. Apple, Netflix vs. Hulu, and Pepsi v. Coca-Cola.
2. Indirect competitors
Indirect competitors are a bit trickier to spot. They include businesses whose customers need similar solutions, but they don’t offer the
same products and services you do. For instance, two fast-food restaurants are in the same type of business, but one can offer burgers and
fries while the other’s menu is devoted to Mexican food.
Your target audience overlaps with theirs, but it isn’t an exact match. To continue with the garden center example, your core business might
be indoor and outdoor plants and gardening supplies, but a supermarket chain competes with you by selling cheap houseplants. Indirect
competitors can be challenging to go up against, but a good digital marketing agency can help you design campaigns that highlight why your
business is the better choice.
3. Replacement or substitute competitors
Substitute or replacement competitors don’t sell the same products or services as you, but they do compete for consumer spending. For
example, restaurants, bars, delis, and cafes can all compete for the local lunchtime crowd. Replacement competitors for your garden center
might include discount chains and landscapers who also provide and install plants. Put another way, if customers could have purchased your
offerings but chose to spend their money with another business, that’s replacement competition.
Five Ways to Identify the Competition
As you can see, it's to your advantage to know as much as you can about your competitors. From studying their ads and internet marketing
strategies to driving past their location, you can learn what they’re doing well and where you might be able to fill a need they are not.
Here are some ways to identify the competition so you can compete more effectively against them.
1. Google Them
A quick Google search like “garden centers Edmonton” will likely return dozens of results, but you want to concentrate on the first page and
the competitors listed directly above and below your business. Those are your direct competitors.
2. Research Targeted Keywords
To find your indirect competitors, check the keywords you’re currently targeting to find other businesses doing the same. For example, the
keyword "houseplants" may reveal a grocery store and a landscaper as the top two results.
3. Monitor Social Media Conversations
Aside from direct feedback, there’s no easier way to find out what your customers are talking about than on social media. For instance, a
homeowner may post a question on Facebook asking for suggestions on where to buy native plants. Pay attention to which companies the replies
refer people to. Other community forums like Quora and Reddit and review sites like Yelp can also help you gain customer insight.
4. Conduct Market Research
Market research can be done in several ways, including:
Browsing through trade journals
Talking with your sales team to see what other companies’ customers mention when they’re talking to them.
5. Ask Your Customers!
Who better to learn from than the people you want to attract and retain as loyal customers? You have many options for soliciting customer
feedback online and off. You can strike up conversations at the cash register or send email surveys. No matter which approaches you choose,
regularly check your customers’ feedback for any trends that start to appear.
What’s Included in a Competitor Analysis
The more you know about the competition, the better. You can use a competitive analysis template or design one of your own. No matter which
you choose, it should include:
A “feature matrix” that identifies all the features each of your direct competitor's products or services have.
The market share percentage each of your main competitors has. You should include 80% of your direct competitors and
20% of your larger competitors, as the big guys often have much to teach about how to succeed in your sector.
Pinpointing your competitors’ pricing and where they fall on the quantity vs. quality spectrum.
The types of marketing strategies your competitors are using. Look at their websites, social media accounts, their SEO strategies, and
current online marketing campaigns.
The differentiators that help the competition stand out and how they market themselves based on them.
Identifying your competitors’ strengths. What are they doing well? What do their customer reviews reveal about why
people love their products and services? Do they have high brand awareness?
Identifying your competitors’ weaknesses. Is their social media strategy weak or non-existent? Do they have an
eCommerce store? Is their website outdated?
Looking at where the competition is located. Are they strictly a brick-and-mortar store, or do they offer online
shopping as well?
Evaluating the competition’s culture, including their main objectives and employee satisfaction or dissatisfaction.
Analyzing customer reviews to determine strengths and weaknesses. With sites that provide star systems, pay
careful attention to the 5, 3, and 1-star reviews and keep in mind that three-star reviews are often the most honest.
What If There’s No Competition?
That would be nice, but every business has competition in one form or another. Think about it. When Henry Ford started turning out
mass-produced cars, he might have had zero other automakers to compete with, but he did need to compete with horse-and-buggy manufacturers,
railroads, and even bicycles.
Even if all your competitors are indirect like Ford’s, they still can be powerful enough to disrupt your marketing and growth plans!
How Does Your Business Stack Up?
As your business grows and evolves, so too will your competition. Direct competitors can go out of business and indirect ones may pivot to
become direct competitors. That makes it crucial to regularly do competitor analyses to keep an eye on who’s above, below, and next to you.
You also want to avoid making your competitive strategy a reactive game. A proactive approach that includes strong marketing campaigns helps
prevent your competitors from pursuing your target market and keeps you at the forefront of your customers’ minds.
Lastly, knowing the competition doesn’t mean copying what they do. You can best achieve your business goals by focusing on meeting your
customers’ needs better than anyone else does. Consistent innovation to ensure your products and service always compare favorably to the
competition is the road to success.
Smart WSI Marketing is an Edmonton digital marketing agency that can help you identify your direct, indirect, and replacement competitors
and then use the latest online marketing strategies to help your business stand out from the crowd. To learn more about how we do it, contact
Lynne Motkoski, Digital Marketing Strategist
Specialty: Digital Marketing
Strategies Education: MA Communications
& Technology, BComm [U Alberta]
Lynne is known for her strategic approach to marketing communications, technologies, and lead generation. She has a passion for education,
keeping up with current marketing trends and practices, and helping clients keep ahead of their competition.
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