There are many factors that impact the way a business operates, with the competitive landscape being one of the most important. To compete effectively and to maintain a strong market position, it is essential to identify and regularly monitor your competition. This allows you to remain informed about how the landscape is changing over time across external forces such as technological innovation, regulatory changes, political and economic factors, and more. Capturing competitive information via monitoring allows you to plan accordingly and gain an advantage over key and emerging players. Remember, even if the product or service you are offering is niche, there is always another company looking to offer a similar product or service at a lower price.
When thinking about your competition, it is crucial to understand who your competitors are, what products or services they are offering, and what might drive customers to choose their offering over yours. Additionally, competitive monitoring should include key product and company updates, new features and innovations, market expansion, pricing strategies, and any other notable developments that could give your competition a leg up in the market and take away both customers and market share.
Many companies focus exclusively on monitoring their direct competitors, however, there are five key competitor groups you should consider including in your program.
What are the key types of competitors to watch?
To maintain a strategic position in the market and ensure long-term success, every company should identify and monitor the following competitor types:
- Direct competitors: Direct competitors are companies that provide a similar product or service, and/or target the same customer base. A direct competitor often competes in the same market(s) and has similar revenue targets.
- Indirect competitors: Indirect competitors may offer similar products or services, but they target different customers and have different revenue goals and success targets. It is often the case that the similar product/service is not a major focus of their business. Indirect competitors may also be defined as companies that offer a different product or service to the same customer.
- Replacement competitors: Replacement competitors are companies that target the same customers, but with a substitute product or offering. They operate differently but address similar customer needs. This type of competitor seems invisible but poses a significant threat as they may provide a more convenient or innovative way of delivering the same product/offering, potentially disrupting the entire marketplace.
- Potential competitors: Potential competitors are companies that have similar capabilities but are addressing different customer needs or serving an entirely different type of customer and market altogether. This type of competitor should be monitored as there is a risk their competitive threat could increase should they choose to expand their target customer base or enter your market.
- Future competitors: Like potential competitors, future competitors are characterized as companies that have the infrastructure, resources, and capabilities to enter your market at any given time. When they choose to enter your market, they become a direct competitor.
How should competitors be prioritized?
The number of competitors you monitor and track will depend on many different factors, such as your product, market, current position, and available resources. Some companies may choose to place their competitors in different tiers, such as:
- Tier 1: Direct competitors
- Tier 2: Potential and future competitors
- Tier 3: Indirect and replacement
Ranking each competitors’ level of threat and prioritizing accordingly is an important step in the monitoring process. Placing competitors in different tiers allows you to prioritize your research and monitoring efforts accordingly, based on the players that pose the most immediate threat.
How can you effectively track and monitor your competitors?
Mapping your competitive landscape is not a static, one-time initiative, but rather requires continual monitoring and analysis (see this blog post on Analytical Newsletters to learn about HelloInfo’s custom monitoring efforts). There are many factors that can impact your company’s landscape and can cause you to reprioritize and consider the threat level of each key player. For example, a direct competitor may go out of business, or a potential competitor may expand their target reach and begin to steal your customers.
As a result, continuous competitor research and monitoring are vital to your company’s success and should be prioritized as such. According to this Competitive Intelligence Report from Crayon, competitors are becoming increasingly fierce, with 59% of practitioners saying their markets have gotten “much more competitive,” and 98% of stakeholders saying Competitive Intelligence (CI) is crucial to their success. As a result, companies are increasing their investment in CI initiatives.
How can HelloInfo help?
While there are several methods and information sources that can be used to identify and monitor your competition, each HelloInfo client is unique in the questions they want to answer about competitors in their own niche product and/or service area.
HelloInfo supports clients in identifying and monitoring their competitive landscape through a variety of research initiatives, including company deep dives, pricing analyses, win-loss analyses, wargaming, and equipping sales teams with actionable and impactful battlecards.
Schedule a call with us if you are interested in learning more!
