A big part of being on the cutting edge of your industry has and always will be competitive analysis. By studying the major players in your field, you can learn about trends in your industry and keep tabs on others’ progress – or at least what they’d like you to perceive as their progress.
Where this strategy fails miserably is when analysis leads to imitation.
Let’s say you’ve built a successful business around the greatest, highest quality cola product. In order to take your company to the next level, you realize that you must upgrade your marketing and branding. You decide to look at Coca-Cola since they’ve been doing it well for over 100 years.
You study what you perceive to be the innate strengths in their marketing and branding. You then systematically reconstruct your brand and marketing using the Coke model: your website, packaging, advertising, social media, everything. Then you retail your 12-pack of cola at a competitive price – 2/3 the price of a 12-pack of Coke.
You’ve essentially made a conscious decision to do two insanely stupid things:
Copying iconic or even just well-known brands in your industry neither differentiates your brand from the dozens of other imitators nor helps you draw in new customers. In fact, you’ve diminished the overall value of your product. As many marketing experts will tell you, once a company is forced to compete on price alone, they’ve lost the battle.
If a customer already likes Coke, then what about your imitation brand is going to make them switch, other than price? Plenty of blind tests have been run that show that people can’t tell the difference between brand names and cheaper knock-offs, and yet, if given the choice, many people still opt for the brand name because they believe it symbolizes status and quality.
So that should tell you one thing: Your customers are paying attention to your reputation and the overall impression they get from your brand.
If you aren’t making Coca-Cola money, then a company that size isn’t your real competition. They’re a real pain in the ass because they affect your sales every month, but you aren’t in a position to compete with them. Instead, study companies whose annual revenue, marketing budget, product line, and company size are likely to be about the same as yours.
With all the atrocious behavior exhibited by large corporations in the past few years, many are shying away from working with and purchasing from large companies, favoring instead the attention and personal service they believe they’ll get from a small or mid-sized business. People’s values are changing and business leaders that recognize these trends are primed for success going into the future.
It’s essential that your brand tell your story in a directly personal way. Many brands have adopted this – mainstays like Ben & Jerry’s and Samuel Adams, and younger sustainable brands like TOMS Shoes.
It’s the reason Steve Jobs sold millions of iPods by skipping the technical specifications and simply stating that one thousand songs could now fit in your pocket. It’s the reason trial lawyers appeal to a jury’s humanity as much as the letter of the law. It’s the reason political candidates fight to define each other’s narrative. When human beings need to persuade people about ideas, we tell stories.
—”Want Your Message to Stick? Tell a Story,” 99u.com
If we return to our cola example, let’s say you had instead decided to look into the inherent weaknesses of the Coke model. You could interview retailers, consumers, and distributors to see how their customer service experience had been and how they enjoyed the product. You could ask specific questions about why they continue to buy Coke: is it habit, nostalgia, packaging/branding, price, access, or something else?
You can make truly reliable decisions about your own branding if you consider the weaknesses of your competitors rather than what you perceive they’re doing better.
What’s probably most valuable in competitive analysis is what your competitors are not showing or telling you. Perhaps there is just one element of their business that really sets them apart but that can’t be found on their website or in their literature. It’s critical to directly understand why the customers you’re trying to attract have been so loyal to that competitor. It’s not likely to be something you can pinpoint on the surface or from a distance.
For instance, if you’re visiting a competitor’s website and like the way they’re presenting a lead-gathering form, rather than saying, “We should do that,” instead identify what you find to be most effective about it and ask yourself how you could do it better: “I like that form, but I think we could take a similar concept a step further…”
Without first-hand knowledge, you can’t know how effective something is for your competitors, so rather than making decisions from assumptions and simply copying what they’re already doing, use your creativity to push the idea a step further. Do it better.
Or consider the fact that successful businesses nowadays offer an entire buying/consumer experience. From start to finish, they take care of each customer, treat them as special and unique, solve their problems and answer their questions, and then sit back as that same customer spreads the word. That formula works no matter what your brand or marketing look like, no matter what your budget and size, no matter what industry you’re in.
It’s crucial that you leave a lasting impression on your potential customers and that you stand apart from your competitors, not alongside them. If you’re incorporating competitive analysis into your business strategy, focus on: