For anyone trying to grow a business, one of the first tasks is to map the competitive landscape. With a good understanding of the competition facing your company, you'll be able to spot and exploit opportunities as they develop. These dozen points should help you draw and refine your map, beginning with your earliest efforts to plan your new venture and continuing for as long as you stay in business.
Be a customer. Bring a notepad and pencil to competing establishments and ask a lot of questions. Testing a firm's ability to serve you will reveal much about their business. And don't just pretend to shop from competitors. Buy something. It's the only way to gain first-hand experience with the company's products and services.
2) Find out as much as you can about the people who run competing businesses. Where did they go to school? Where have they worked? How long have they been in the business? What are their strengths and weaknesses? This information can help you anticipate your competition's moves. For example, a local, life-long farmer will run an Indiana seed company very differently than will a young MBA.
3) Buy stock in your competitors. If you're competing against a publicly traded firm, consider buying a few shares of its stock. That way you'll receive regular updates on the firm's financial results and business strategies.
4) Talk to your competitors' customers. Why do they buy from your competitors? Is it because of the quality of the product or service, the price, the location, or the customer support? What do they dislike about the company? What do they wish that company would provide? Why don't they buy from you?
5) Use the Internet. Online services such as Dow Jones Interactive allow you to search through thousands of publications for information about your competitors, especially if they include large companies. Searches are free, but you'll have to pay a fee for articles on Dow Jones or for a monthly subscription. You also can learn a great deal about competing businesses simply by going to their Web sites.
6) Check public filings. As an entrepreneur, you already know that companies must disclose information to government agencies. Such disclosures are required to undertake public offerings, receive building permits, register for patents or trademarks and so on. Many of those filings are public record and contain information about the company's goals, strategies, and technologies.
7) Get to know local librarians. Many are virtuoso researchers and can save you a great deal of time and effort. Your library also will have local publications that may have information on competitors in your area.
8) Attend industry conferences and trade shows. Your competitors' representatives will be pounding their chests about their firms' products or services. Take advantage of the opportunity to familiarize yourself with their product offerings and strategies, and how they sell themselves.
9) Assess the competition's goals. A competitor trying to increase its market share might lower prices; a firm attempting to increase profits may cut costs; and a business that wants to accelerate sales growth might kick off a marketing campaign. If you know your competitors' goals, you'll be better able to anticipate their strategies.
10) Be aware of the potential for new competition. These days, the competitive landscape can change faster than Net-stock valuations. A national chain may not have entered your region yet — but what if it does? Likewise, companies that don't currently compete with yours might shift their focus and pit themselves against your firm.
11) Don't delegate the job of keeping up with competitors. You might appoint someone to work with you on the task, doing research and the like. But as the entrepreneur, you're in the best position to appreciate and act upon information about your competitors.
12) Define the competitive landscape broadly. Your competition includes anything that could draw customers away from your business. For example, movie theaters compete not only with other cinemas, but also with restaurants, live music venues, theater —l even cable TV, video rentals, and video games.
Source: All Business - A D&B Company