Competitive market research is a very important part of any good marketing plan. This term could elicit some negative images however competitive market research has nothing to do with spying. This type of research has everything to do with paying attention to your competition as well as what they are doing.
Many individuals will lose out on business to competitors which they have never even heard of simply as they’ve never taken the time perform competitive market research. Understanding what your competition is doing will assist you to position yourself, and your product or service, within the market.
What Is A Competitive Market Research?
Every market has more than one company which is pitching similar products or services to the same group of buyers. Competitive market research helps to identify the main market players, determine what strategies they utilise to succeed and identify resources your company could utilise to overshadow the market.
In economics, there are two main theories around businesses getting a competitive advantage:
- The Market-Based View (MBV) strategic framework makes the statement that a business’ performance is determined solely by the structure as well as competitive dynamics of the industry.
- Emanating out of that is the Porter’s five forces model, which demonstrates five main forces which add competitive pressure to your industry. Analysing these forces will give you an improved understanding of the target markets and prepare for launch.
Why Are Your Competitors?
The first step is that you’ll need to figure out who you’re really competing with so that you are able to compare the data accurately. What works in a business that is similar to yours might not work for your brand:
Divide your “competitors” into two categories: direct as well as indirect:
- Direct competitors are companies which offer a product or service that could pass as a similar substitute for yours and which operate in your same geographical area.
- Conversely, an indirect competitor is one which offers products that are not the same however could satisfy the same customer requirement or solve the same problem.
It seems straightforward enough on paper, however these two terms are often misused.
When comparing your brand, you should only concentrate on your direct competitors. This is something which many brands get wrong. Now, this doesn’t mean you should throw your indirect competitors out the window entirely. Keep these brands on your radar as they could shift positions at any time and then cross over into the direct competitor zone.
The market can and will move at any time. This means that if you’re not constantly scoping it out, you won’t be aware of these changes until it’s too late. Also, this is one of the motives why you’ll want to routinely run a competitor analysis.