14 Ways to Track Your Competition
There is an entire line of professionals dedicated to tracking the competition for Fortune 500 companies and many organizations have departments dedicated to watching every move of other companies in their industries. But that doesn’t mean monitoring the competition is too expensive or time consuming for small companies. It is an essential part of a solid business plan that will improve your operations, customer service and marketing. And because of all the tools available, there is really no excuse for not monitoring your competition.
- Define your business’s goals and strategies. When you know where you stand in the marketplace and where you would like to go (e.g., we want to be the number one choice among small retailers in Elgin, Illinois for tax preparation services), the difference between you and the other players will become clearer.
- Determine who should be followed. Beyond the traditional, direct competitors, you should think broadly to avoid being surprised by new entrants or disruptive market forces. For example, there might be three other local coffee shops. But what if the supermarket down the street opens a coffee kiosk people can visit for a treat while running in for dinner ingredients after work? What if a new line of espresso makers is offered at discount prices and your $5 lattes seem cost-prohibitive? Anticipate what could change and impact your bottom line.
- Analyze important information. You should determine four things about your competitors: 1) goals (usually in terms of revenue or profits), 2) management assumptions about the market, 3) strategies and tactics in use and 4) capabilities to reach objectives.
- Focus on a reasonable number. It is not productive to watch scores of competitors or you could be distracted from enhancing your own company’s edge.
- Formalize the review. Decide who will monitor the competition, the process, the repository that will be used for information and the frequency of reviews. Quarterly or monthly reviews are advisable but if you only do this annually, you could miss critical developments.
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