Analyzing Your Competitors

I'm Veronica Combs, Content Manager of BNET.com. What are your competitors doing, do you know? Analyzing them will help you know where they are in the market place, and where you need to be to keep up with them. One easy way of finding out is the strategic group map technique. This sounds academic, lots of theory, but actually five minutes of analysis will give you an hour at least of discussion about where you are in your market place.

So say I'm a restaurantuer. I have a small lunch shop, and I have a chance to expand, and I want to know: Do I stick with my current strategy, or do I need to try something different? The first step in the analysis is to list my top 5 competitors. I am a sandwich shop so lunchtime is my main business time, and I want to know who else is serving lunch that I need to be worried about. I'm out in a strip mall, so I know my big guys to worry about our McDonalds. Panera is out there as well, new little sandwich shop, latte, salads. Subway of Jared fame, lost all his weight eating at Subway. Wendy's is nearby as well, and finally there is Qdobo, which is a Mexican place.

The next step in the analysis is to identify the two most important competitive factors in my market place. For you, this could be brand image, it could be price, it could be delivery method, it could be a range of offerings. For me, it is speed of delivery. How fast can I get them their food? And my second most important factor is health value. So that means there are my two competitive factors.

The third step in the analysis is to look at my competitors and group them together. You want to think about how they are similar, how they are dissimilar, what products they have in common, what products they have that are only theirs. From looking at my list, I've got the burger guys, McDonalds, and Wendy's, so they're a pretty easy group. They are going to be "A". Then we have the two sandwich guys, you know, somewhat similar offerings, not quite identical, but close. Then we have Qdobo, which is pretty much in a class by itself, at least in this list.

Over here I have my two competitive factors, speed and delivery and health value. I'm going to draw circles on the map that represent their size of the market share. So looking at Group "A" which is McDonalds and Wendy's, they are pretty big. Pretty big market share, really fast delivery, not so healthy. So they are down from this quadrant, Group "A." Group "B" is the two sandwich shops. Little bit healthier, little bit slower than the big guys, big burger guys, so they're pretty much here. Then you have Qdobo which is again in a class all of its own. It's kind of slow, but pretty healthy, skip the sour cream.

So, now that I know who my competitors are, I need to figure out my position. But anything on the drawing board that is low in health value, and slow to produce, I know to kill it right away. Looking at the open spaces on the map, this is where I want to be. If I can come up with a product that's fast to produce and healthy, I've got a great combination. So instead of looking over my shoulder and wondering what my competitors are doing, all I have to do is look at my map to know where I am, and where I need to be.