How should I evaluate the competitive landscape in my industry?

To some it’s ‘corporate snooping’, to others it’s simply research, but competitive intelligence – the process of gathering information about your competitors and using that information to gain a business advantage – is essential for any company.

There’s no excuse in today’s technology-driven world for not being able to gather information about your competitors, even if you are on a limited budget.

15 years ago when I started my business I didn’t have the cool tools that are now readily available. These days information gathering is much easier. I believed smart entrepreneurs recognised information is power, so I bravely embraced competitive assessment. I learnt the tricky part is figuring out how to find, sort and exploit the best information to the benefit of the business,” says Lawi Muriuki, managing director of Kenya-based furniture maker, Housemark Company Limited.

So, do you need to study all your competitors?

It is easy to collect and maintain information on every competitor in a concentrated market where only a few competitors exist. Not so much if you are in a fragmented market, but you can still have valuable analysis by using the 80/20 rule. The rule assumes 80% of the total market revenues are derived from 20% of the competition. Focus your examination on the 20%,” explains Dr J.C de Villiers, faculty member at the University of Stellenbosch Business School.

Creating a framework

Assuming that you will conduct the research in-house rather than outsourcing to expensive consultants, begin by setting a framework for your competitive assessment – an information repository which can be as simple as a shared file on Google Docs.

Dr De Villiers suggests the best way is to list a set of metrics outlining: names of your competitors, description and mission of the companies, products/services offered and pricing, strengths, weaknesses, and key brand differentiators. He recommends familiarising yourself with well-known frameworks such as Porter’s five forces analysis and the SWOT analysis.

The key thing to remember is that your competitive research is never finished, and that this information provides competitive advantage only when acted upon. Over time, patterns and trends will start to emerge. Analyse the data to identify your competition’s strengths and weaknesses, to determine market share, product information and marketing strategies,” says Dr De Villiers.

Competitive research tools

Research gathering tools and resources are plenty and vary in terms of cost, from free web tools such as Google Alerts and social media feeds to expensive market research reports (e.g. Nielsen and Euromonitor). Consider bringing all your intelligence gathering onto a single dashboard such as Netvibes or Flipboard.

Check out your competitor’s website to keep abreast with reported activities, but don’t take the information at face value. Dig deeper, perhaps looking at the leadership team and its experience, or analyse website traffic using free versions of traffic analysis tools such as SEMrush,” says Muriuki.

To get a more accurate picture of how your competitors are shaping up, below are some further suggestions:

    • Attend trade shows and conferences. These are excellent places to examine competitors’ products and services.

    • Study the annual reports of your competitors. Most public companies are required to produce annual reports, which are usually available for download from their websites. Study these reports thoroughly to gain better insight into their businesses.

    • Talk to former employees. If a competitor has a high employee turnover or is laying off staff, and you can make contact with them, you can learn a lot. Keep in mind they may have an axe to grind and will be only too willing to provide information that will benefit you.

    • Scan the jobs advertisements. Jobs on offer and their descriptions are often good indicators of changes in your competitors’ strategies or organisational structures.