Do You Know Who Your Competitors Are?

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:

• Google searches
• 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:

1. A “feature matrix” that identifies all the features each of your direct competitor's products or services have.
2. 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.
3. Pinpointing your competitors’ pricing and where they fall on the quantity vs. quality spectrum.
4. The types of marketing strategies your competitors are using. Look at their websites, social media accounts, their SEO strategies, and current online marketing campaigns.
5. The differentiators that help the competition stand out and how they market themselves based on them.
6. 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?
7. Identifying your competitors’ weaknesses. Is their social media strategy weak or non-existent? Do they have an eCommerce store? Is their website outdated?
8. Looking at where the competition is located. Are they strictly a brick-and-mortar store, or do they offer online shopping as well?
9. Evaluating the competition’s culture, including their main objectives and employee satisfaction or dissatisfaction.
10. 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 us today.

Lynne Motkoski, Digital Marketing Strategist

Specialty: Digital Marketing Strategies
Education: MA Communications & Technology, BComm [U Alberta]

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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.