Competitive Analysis - no company exists in a vacuum online.

Knowing who your competitors are, as well as their strengths and weaknesses is an essential part of assessing the market for your product for your product or service. Most businesses have direct and indirect competitors.

1. What is competitive analysis?

A competitive analysis is a formal evaluation in which you review the businesses of one or more companies that compete, directly or indirectly, with your own.

Online, competitors have access to each other's company information and marketing materials that they might not be able to gather as easily in the offline world. This allows for even greater opportunities to benefit from competitive analysis data.

But how can companies improve by analyzing their competitors? And what is the best way to implement a thorough competitive analysis?

For a business to succeed, you need to know almost as much about your competitors as you do about your own company and customers. Unfortunately most business owners make the mistake of waiting until a competitor opens up shop across the street and is cutting into profits to find out who and what they are up against.

A Competitive analysis allows you to identify your competitors and evaluate their respective strengths and weaknesses. By knowing the actions of your competitors, you will have a better understanding of what products and services you should offer; how you can market them effectively; and how you can position your business.

Competitive analysis is an ongoing process. You should always be gathering information about your competitors. Look at their Web sites. Read their product literature and brochures. Get your hands on their products. See how they present themselves at trade shows. Read about them in your industry’s trade publications. Talk to your customers to see hoe they feel about competitive products or services.

2. What are the benefits of conducting a competitive analysis?

The benefits of conducting a competitive analysis include:

1. You will identify WHO you are competing against. You will be able to assess the threat levels presented by other companies in your market.
2. You will identify your own weaknesses. Companies who do not pay attention to their competitors may not understand just what they are doing wrong because they have no frame of reference. Studying your competitors offers you a perfect opportunity to find out how you can better serve your customers.
3. Once you've identified those weaknesses, you'll be able to improve your business in a number of ways. The order in which those improvements should be implemented will often be dictated by the analyses of your competitors. For example, if all of the other companies sharing your target market have a certain feature considered essential to that market, this will be one of the first things you will want to remedy.
4. You will also identify your strengths. By comparing your own online presence to those of your direct competitors, you will discover what sets your business apart from theirs. These qualities can then be emphasized in your marketing efforts.
5. Additionally, you will be able to identify or confirm your Unique Value Proposition (UVP). Your UVP is the single most important element of your business that sets you apart from your competitors. Do you have the largest catalog of products? The lowest prices? The (quantifiably) best customer service? Competitive analysis will help you develop your UVP and test the validity of the claims you make about your business.
6. You will be able to determine what factors drive success in your market space. These may vary greatly from market to market, and may not be what you originally expected.

You will identify what specific actions you need to take in order to improve your competitive position

Identify your competition

Every business has competitors; you need to find out who your customers can approach to get a product or service that fills the same need as yours does. Even if your product or service is truly innovative, you need to look at what else your customers would purchase.

Begin looking at your primary competitors. These are the market leaders, the companies who currently dominate your market.

Next, look at your secondary and indirect competitors. These are the businesses who may not go head-to-head with you, but who are targeting the same general market.

Finally, look at potential competitors. These are companies who might be moving into your market and who need to prepare to compete against.

Analyze strengths and weaknesses

After you have figured out who your competitors are, determine their strengths and find out what their vulnerabilities are. Why do customers buy from them? Is it price? Value? Service? Convenience? Reputation? Focus on as many “perceived” strengths and weaknesses as you do on actual ones.

Tabulate the strengths and weaknesses in a table format (template attached). This will allow you to see, at a glance, where each competitor stands.

Look at opportunities and threats

Strengths and weaknesses are often factors that are under a company’s control. But when you’re looking at your competition, you also need to examine how well prepared they are to deal with factors outside their control. These are called opportunities and threats.

Opportunities and threats fall into a wide range of categories, such as technology, regulatory and economic.

You should consider the following guidelines when conducting competitive analyses.

1. Utilize a multitude of resources to identify your competitors. Who else is bidding on your PPC terms? What sites come up as natural search results for your terms? Check trade association memberships and business registries. Use your referrer data to identify what sites your visitors are coming from. Don't overlook word-of-mouth information from your customers and investors.

These sources should yield a number of direct and indirect competitors. Narrow the scope of your analysis if necessary, but the most effective competitive analysis will compare at least three to five leading companies in your market.

2. Identify key success factors (KSFs) for your industry and rate yourself and others on each of them. One useful tool is the "strategic group map", which is part of a supporting Word document available for download:

http://www.meclabs.com/CompetitiveAnalysisSupplement.doc

3. Identify the competitive strengths of each company in the analysis, including your own. What makes each company unique? Do they own patents or copyrights that give them a competitive edge? Is there a dominant company with market share at or near "critical mass" level?
4. Identify the revenue models of your competitors. How do your competitors make money? Are you overlooking potential sources of revenue?
5. Do your competitors utilize partnerships, outsourcing, or other strategic relationships? Could your own company benefit from such relationships?
6. KEY POINT: In the course of your analyses, make note of unique or creative elements or approaches your competitors may use. Often, the greatest insights will come from where your competitors depart from convention.
7. Utilize search engines to discover the sources of your competitors' incoming links. These sites may be potential link partners for you as well. For more on linking strategies, see our research brief on that topic:

http://meclabs.com/cgi-bin/pl/pl.cgi?mls

8. If practical, make purchases from your competitors. How is their customer service? Are they utilizing drop-shipping or other forms of outsourcing? What can you learn from watching how they do business?
9. Monitor your competitors over time. Sign up for their email lists and analyze their marketing messages. How strong are your competitors' brands?
10. Analyze your competitors' Google, Overture, and other PPC ads. Knowing the best keywords for your market, it shouldn't be hard to locate your competitors' ads. These may give you ideas about how to modify your own campaigns.
11. Analyze your competitors' ratings and rankings on a number of platforms, including Google PageRank, Alexa, BizRate, comparison engines, and incoming links from other websites. The following spreadsheet may be useful in helping you track this analysis:

http://www.meclabs.com/CompetitiveAnalysis.xls

Once you have compiled this data, you should be able to use it to gauge the effectiveness of your competitors' marketing efforts compared to your own.

12. Depending on entry and exit barriers for your industry, your competitive environment will change over time. Competitors will enter and leave and the most resilient among them will learn and evolve. Continue to analyze your competitors as time progresses. Consider performing a competitive analysis update on an annual or semi-annual basis.

No company exists in a vacuum online. If you ignore your competition, you will lose the opportunity to discover your own strengths and weaknesses. Effective competitive analysis gives you the information you need to "remove the blinders" and see your company as your customers and investors do, and to tune your marketing and business strategies for success.

Douglas Mackie - Consultant and Business Planner

http://www.fundamentallybusiness.com

A new Era for Search Marketing

Search Marketing involves finding the right search engine keywords to generate sales and leads. By tracking, monitoring and measuring their effectiveness you will most definitely enhance your chances of success and profitability.

Adjusting your strategies based on results is paramount to maintaining your presence and competitiveness. Each day you don’t follow these guidelines your qualified leads will be fewer, your return on investment will be lower and your competitors will gain at your expense.

One area you need to focus on is the difference between organic search and sponsored search and how high visibility is attained

A recent report by the Marketing Leadership Council (http://www.marketingleadershipcouncil.com) highlights the following statistics.

1. Well over half of Web site traffic comes from search engines.
2. The majority of business-to-business customers visit search engines for product or service.
3. 90% of users rarely look beyond the first three pages of search results.
4. Approximately 70% of buyers click on organic searches as opposed to sponsored or paid listings.
5. 81% of searches are made using Google (47%), Yahoo (21%) and MSN (13%).
6. Online advertising expenditures are expected to rise considerably over the next few years.

With these facts in mind it is obvious that your immediate goal is to strive to be in the top 30 search result listings. Anything less means the majority of your customers can’t even consider what you are selling.

Although Organic and Sponsored search results look similar, they are, in fact, very different. Research shows that both consumers and business buyers trust Organic search results more because they believe search engine computer driven algorithms verify the relevancy of the topic subject matter and are not driven by economics.

Quite simply, organic search results are calculated by algorithms which determine the relevant list of sites that closely match the keywords and phrases typed into the search box. Because algorithms are always moving and are different for each search engine you must monitor the activity and be prepared to adjust at any given time.

The actual keywords are definitely important but they are only one of many factors determining your ranking. The order, combination, position and place in which they appear also bear weight on rank. Next is the frequency in which they appear throughout the site is also relevant.

Other factors include:

1. The web site’s structure must be search engine friendly.
2. A well constructed site navigation for ease of indexing.
3. Use of static images as opposed to flash.
4. Proper title tags, meta description and meta keyword tags.
5. A linking strategy.

When all these factors are properly optimized the site ranking is well positioned for Organic search results. Of course, if they are not the reverse is inevitable.

Just remember, the rules are constantly changing and you must act accordingly to remain strong, competitive and profitable.

Douglas Mackie http://www.fundamentallybusiness.com

ANALYZING YOUR BUSINESS & MARKET

Before you can develop an effective marketing plan for your business, you must know the answers to the following key questions and then proceed to preparing a feasibility study.

• What business are you really in?

• What are the relative strengths and weaknesses of your company?

• What are the strengths and weaknesses of your products/services?

• What are your company’s goals?

Identifying Strengths and Weaknesses

• Company image

• Products and services (including price)

• Benefits to customers

• The cost of producing these products or services

• Management skills

• Human resources

• Business location

• Facilities and equipment

• Financial situation, including financing, cash flow and net profits

Setting Company Goals

• Unrealistic vs. Realistic
• Inconsistent vs. Consistent
• Not Specific vs. Specific
• Not measurable vs. Measurable

To be successful make sure your goals are Realistic, Consistent, Specific and Measurable. It sounds easy but, it requires careful thought and honesty.

Analyzing the Market

In order to analyze the potential for your business, you need to answer some questions/requests to determine the data and methods you use to achieve your business goals.

1. What do you estimate the total market--in terms of numbers of prospective buyers and dollars--to be for your product or service?

2. If your business can be broken down into different categories, list the total market for each of these categories.

3. Has the market continued to grow over the last 5 to 10 years

4. State the growth as a percentage or total dollar volume. How does it relate to your business?

5. Are there any demographic trends to support your business concept?Have there been any shifts in the economy that will likely make your

6. Business prosper.

7. How will you attract and keep your customers?

8. How are you going to price your product or service, to make a fair profit, and at the same time, be competitive?

9. Will someone pay your price

10. How can you expand your market?

11. Who are your targeted customers?

12. Within these targeted customers, who is typically the buying decision maker?

13. What kinds of needs do your customers have and how will you meet them?

14. Will you offer credit to your customers (accounts receivable)? If so, is this really necessary? Can you afford to extend credit? Can you afford bad debts?

These are just some of the questions that need answers

Now you have to assess and examine your place in the market and the growth opportunities. There are two key components to understanding the market: knowing your customers and knowing your competition. Research information on both customers and competition is essential to creating an effective marketing plan.

Simply put, a market is a group of people with wants, needs, values, expectations, money to spend and the willingness to spend it. They will exchange their money for products and services for one of three reasons:

· To satisfy basic needs

· To solve problems

· To make themselves (or someone else) feel good.

It is most important to know your customers and potential customers and then give them what they want.

When selling to another business, you need to know:

• The type of business and location
• Its products, services and annual sales volume
• The specific needs of those who will use their product or service
• How purchasing decisions are made and who makes them

It is important not to identify your market as everyone and anyone. It’s difficult, and expensive, to let everyone know about your product or service. It is better, by far, to find the people most likely to buy your product or service.

Search around there are lots of other companies vying for your customer’s attention. Your goal is to create value, a reflection of worth rather than cost. This is where you have to differentiate yourself. If there is no difference between you and the next guy, it all comes down to price.

As mentioned, it is also important to understand what the competition is.

In addition to the competition, it is useful to understand the bigger industry you are playing in as well as the environmental and regulatory climate.

Once you have chosen your target market and understand the landscape, how do you fit in? The easiest way to find out is to take a snapshot--- a SWOT analysis (strengths, weaknesses, opportunities and threats). Included in this should be:

• A cost analysis—what does it cost you to deliver the product or service?
• What are the financial resources and constraints of the company?
• What are your distinctive assets and liabilities?
• What strategic questions do you have?

There are other issues you must address including asking “What does the company stand for”? Clearly it is there to make money, but money is the byproduct of a well-run organization. A company that understands and operates from an ethical core will produce a sustainable business with satisfied customers, fulfilled employees, industry respect and the potential to do great things.

You can read more about Business Planning and download our Free Start-up Business Guide on our Web Site at http://www.fundamentallybusiness.com