How To Know Your Competitors: Step by Step Guide — Mobiteam

In the famous book “Theory of Blue Ocean Strategy” by W. Chan Kim and Renée Mauborgne, there are described two types of environments: The red ocean and the blue ocean. The red ocean is for companies with competitors, and the blue ocean is for companies that don’t have a competitor. Of course, for a business is good if it goes to a blue ocean, especially if the products of this business have a high market request. However, most of the companies and businesses live in a red ocean. Moreover, if the business still gets in a blue ocean, after a while that blue ocean will become a red ocean.

Nowadays, the existence of business automatically assumes that competitors are already on the market. The small understanding of competition means businesses that provide the same products and services as your business does. In a wider understanding, competition is about finding solutions to already existing problems. In the last type of understanding, the competition exists even outside of your branch.

Below you can find a simplified model about how you and your competitors stand on the market.

To explain this model, you have to answer one question: Who has a competitive advantage when it comes to potential customers?

Based on the answer, you can set up different scenarios and expect four levels of income: High, Acceptable, Minimal, No Income. Try to report this triangle to as many as possible competitors, and in this way, you will be able to identify your position with higher precision.

Questions that sometimes don’t have answers

There are a series of questions, that depending on the moment you are asking — cannot be answered. At the first sight, these questions look simple, but the challenge to find answers is potentially high, depending on your business type, competitors, business model, and market.

• What are your competitive advantages, or what makes you stand out from the competition?
• Why do you consider these are your competitive advantages?
• How your competitive advantage impact your client’s decision?

When answering the first question, business owners usually recall several factors, such as high-quality, professionalism, experience, and even pricing. On the other hand, the rest of the questions remain unanswered.

When a business is in a red ocean, and it doesn’t know its competitors and how does the competition work on the market, it may mean lacking the business of future perspectives.

This is why there are other questions that may help a business to find the answer to the rest of the questions that usually remain unanswered.

How do competitive advantages work?

First of all — the client’s commitment. If a product has returning customers that are ready to recommend it further to their friends and family — the business owning the product has made a huge step to success.

Another indicator is revenue and profit. If the business generates a positive balance and increases revenue, it has a healthy competitive advantage.

So, in a logical order — returning clients not only support your business revenue but also the notoriety which again increases the business revenue. Implementing good marketing strategies at the right time can again increase revenue and notoriety.

How to understand what makes your business stand out from competitors?

To find the answer to this question there are two ways. First of all — asking customers. At least once in life, you’ve seen commercial surveys that even give bonuses to make the process more appealing. Sometimes the survey takes longer, other times is about 30 seconds. The number and type of questions can help you identify in what position the company is, and what it’s looking for.

Simple questions like Why do you use our product?; What do you like about it?; How often do you use it? Can help the business understand what are its week spots and strong spots.

The second way to understand your business’ uniqueness is to perform an analysis on your own. Questions can be customized for each business and depending on its position and market as well as other factors. However, there are some standard questions that the business owner needs to answer in this analysis

• What makes competitors so different and special?
• Is there a significant pricing difference between you and your competitors, as well as between competitors?
• When describing your product or service, what do you focus on? Why?

Of course, after identifying the answers to these questions, more will automatically follow by deduction. Writing down each of these answers will help you understand what makes your business unique, and what are the next steps to improve your business performance.

Conclusion

• Business is about clients and competitors at the same time
• Your competitors are defined not by you, but by your clients
• In the long run, the only competitors are not business and products, but the exact solutions and the way they work for clients.

Originally published at https://mobiteam.de on November 10, 2020.