Why Companies Conduct Competitor Research
Competitor research is a fundamental aspect of strategic management. Competitive analysis in strategic management and marketing is an analysis of both the strengths and weaknesses of potential and existing competitors. This analysis provides a powerful strategic context to recognize threats and opportunities, which in turn provides opportunities for expansion. Competitive intelligence provides information necessary for planning, forecasting, and acting. Competitive intelligence support can help businesses become more profitable by better understanding their competitors and acting quickly when those competitors are identified.
There are multiple ways to analyze competitors and obtain important competitive intelligence results. Some of these methods include conducting surveys with the goal of identifying individual company characteristics that set particular companies apart from others, studying competitor business models, analyzing company-to-company competition, analyzing industry alliances, and analyzing target markets. Competitor research can also be performed internally by using a variety of analytical tools or outsourcing to a third party. Outsourcing is the most common way to perform competitive analysis, especially in start-ups where personnel resources are limited. Analyzing competitors internally can provide insights not immediately available through external sources.
Competitor research is a strategic process that involves examining, gathering, and interpreting competitor and industry-related data. The primary focus of Competitor Research is understanding and assessing the competitive landscape. There are several approaches to perform this. One approach is to collect and compare competitor pricing, services, technology, and infrastructure. Another approach is to search for patterns of behavior using internal and external resources.
Competitor research is usually conducted during the start of a company’s competitive strategy development. Many companies view competitor analysis as a tedious and time-consuming process that should be avoided at all costs. While some companies view competitor analysis as an important part of strategic management, most view it as an after-thought and a resource that should be carefully managed. Competitor profiling provides an opportunity to develop the best competitive positioning and then use that information to develop the most effective competitive strategy. Competitor profiling provides insight into weaknesses in current business models and strategic alliances that serve as opportunities to improve the company’s position in its field.
Competitor profiling can be performed by traditional market research firms, including those that specialize in Business Process Outsourcing (BPO) and social media. Companies in a BPO environment acquire market intelligence reports from multiple sources, conduct in-depth interviews, and conduct focus groups to gain an understanding of competitors and their offerings. They then use this information to develop strategic plans and tactics. In the case of social media, a company needs to identify customers, understand their behaviors, and then target them specifically through a variety of social media channels. This process requires extensive market research to identify various potential target markets.
Competitor profiling is based on the accumulation and analysis of competitor analysis. Some of this may already be in your organization. For example, you may be collecting competitor data on customer loyalty, products and services, and employee engagement. However, other insights may not be in your current collection or knowledge base. Therefore, competitor analysis is applied to obtain additional customer insight, competitor behavior, and competitor analysis that will allow you to develop new approaches, better manage risks, and increase productivity.
Competitor profiling provides the means for businesses to understand their competition, discover their weaknesses, and develop successful strategies to overcome those weaknesses. A well-done competitive analysis will identify key opportunities as well as threats and provide the means by which competitors can be defeated. The objective of conducting competitor research is to enable organizations to develop the ability to see clearly where their weaknesses lie and to develop a robust strategy to exploit those shortcomings. Competitor profiling provides a way for organizations to identify their weaknesses and to rise above that to become the dominant player in their field.
Competitor profiling is often used in international companies where a company must compete with businesses from overseas. For these types of companies, being able to understand their global competitors and how they are perceived by the marketplace is critical to the success of a business. Competitor profiling allows businesses to use information from the top competitors to create a strategy to win over the international market. These reports also provide companies with important intelligence about the behavior of top competitors and the ways they relate to customers. Through these reports, businesses are better able to understand their strategic direction and develop effective plans to capitalize on their competitive edge.