STAGE 1b) ANALYSE TODAY - COMPETITOR
“If we know the enemy and know ourselves, we need not fear the result of a hundred battles.”
Strategy is a competitive sport - it is not about how good we are, it is about whether we are better than competitors.
Our strategy needs to consider our strengths relative to our competitors' strengths, especially from a customer perspective. We might think we have the best range, because we have more SKUs than competitors. However, if competitors are doing a better job at communicating their range to customers, the customers will rate them higher. Customer perception is what matters, not arbitrary benchmarks.
Questions to answer
- Who are our direct competitors? Who are our indirect competitors? Who are potential future competitors?
- Who is our most dangerous future competitor? NB. This is unlikely to be the long term competitor we know well!
- What are their strengths and weaknesses? What are their future strategies?
- What are our asymmetries with our competitors? How can we take advantage of them, strategically and tactically?
Example Framework: Competitive Performance Analysis
When customers want a product, they evaluate which ones meet their needs by judging them on a number of product/service attributes. Customer segments with different needs will place different levels of importance to these attributes, so plot this chart for specific customer segments. This evaluation may be explicit, for example a weighted matrix to select an enterprise software solution, or it may be sub-conscious for an impulsive customer purchase.
Customers will start with a certain consideration set - which brands/companies they will include in this evaluation. Our competition is this competitive set, not who we think is like us! The customer rates each of these competitors against the product/service attributes that are important to them and picks the one that matches them best.
What matters is customer perception of these product/service attributes, NOT the reality! It does not matter that we have a better product, if our competitors have done a better job of owning this attribute in customer’s minds.
We need hard data to plot these perceptions from customer conjoint analysis, customer surveys or interviews - we may need expert third party help, since customers don’t always tell the truth - especially to us! Even if we don’t have this data yet, discussing this chart will be a very valuable exercise for our executive team. To ensure we get an energetic discussion, get each executive to draw it individually, then share, compare and debate the differences!
- Competitive Asymmetries
- Competitive Map
- Market Share and Trends
- Cost Benchmarking