Prelude: Netflix vs. Blockbuster: The Art of Knowing Your Rivals: A Prelude to Competition

In the business realm, the journey of understanding your competitors is much like a seasoned detective piecing together clues to solve a mystery. This investigative process is not just a tactical maneuver; it's a strategic necessity. Consider launching a business without this knowledge as akin to setting sail in a storm without a compass. The seas of commerce are rough, and knowing the currents and undercurrents shaped by your competitors is crucial for navigation.

Tales from the Trenches: The Good, The Bad, and The Ugly of Competitor Analysis

  • Netflix's Strategic Chess Play: The saga of Netflix's rise is a masterclass in competitor analysis. Initially, they were up against giants like Blockbuster. By meticulously studying the rental market's pain points (late fees, limited selection), Netflix rewrote the rules with their mail-order service and eventually their streaming platform, effectively making traditional rental stores relics of the past. Their foresight to evolve with emerging online streaming competitors further cemented their dominance.
  • BlackBerry's Fall from Grace: Once the darling of the mobile world, BlackBerry's downfall is a cautionary tale. They underestimated the iPhone's potential, dismissing touchscreens as a fad. This misjudgment, rooted in a lack of competitive insight, led to their market share plummeting. BlackBerry, focused on their existing strengths, missed the seismic shift towards consumer-friendly smartphones, a shift capitalized on by Apple and Android.

These tales highlight that understanding your competition is not just about identifying threats but also about recognizing and seizing opportunities.

Lesson Overview

In this lesson we talk about:

  • The crucial role of competitor analysis in business strategy
  • Techniques for conducting comprehensive competitor research
  • Using competitor insights to make data-driven decisions

Deciphering the Competitive Landscape: A Step-by-Step Guide

If we want to win, we need to know how to search the market. Use the techniques below to collate a comprehensive list of competitors.

  1. Google Search:
    • Begin with a spectrum of keywords that align with your business.
    • Venture beyond the first page of Google. The best clues aren't always in plain sight.
    • Notice the paid advertisements. These are often your most direct competitors vying for the same spotlight.
  2. Social Media:
    • Traverse through the world of hashtags and keywords on Twitter, LinkedIn, and Instagram.
    • Look for patterns in engagement. Who is drawing the crowd in your arena?
    • Join LinkedIn groups and Facebook communities. These are the watering holes where industry players gather.
  3. ChatGPT and AI Tools:
    • Deploy AI to uncover a list of competitors, both the giants and the hidden disruptors.
    • Ask for insights on market trends that might unveil indirect competitors lurking in the sidelines.
  4. Online Forums:
    • Immerse in forums like Reddit or Quora.
    • Search for {Your Business Idea ‘reddit’} and you will be amazed at what returns.
    • Seek out discussions about products or services in your niche. What are people raving or ranting about?
  5. Product Hunt and Similar Platforms:
    • For tech enthusiasts, Product Hunt is the crystal ball revealing the future contenders.
    • Observe product launches and the community's reaction to gauge the market's pulse.
  6. Industry Reports:
    • Dive into reports from IBISWorld or Statista. These are your encyclopedias for industry knowledge.
    • They not only list key players but also provide a narrative on market trends and shifts.
  7. Conferences and Webinars:
    • Be present at industry events, either as a participant or an observer.
    • Note the companies that are making waves, those sponsoring, speaking, or being talked about.
  8. Competitor Websites and Customer Reviews:
    • Walk through your competitors' digital front doors – their websites.
    • Dissect their strategies and listen to the voice of their customers through reviews. Here lies unvarnished truths about what makes or breaks them.

Thorough competitor research will provide a deep understanding of rivals' strategies, strengths, and vulnerabilities, enabling you to carve out a unique market position.

Competitor Analysis Grid

A powerful tool in your competitive analysis arsenal is the Competitor Analysis Grid. This visual representation allows you to map out the competitive landscape across key dimensions relevant to your business.

See an example below for ‘Liam’s Eco Tours', a made up business, below”

To create your own grid, follow these steps:

Step 1: Select Your Axes

Choose two critical factors that differentiate players in your market. These could be things like price vs. quality, convenience vs. customization, or any other relevant attributes. In our example grid, we used Innovation & Engagement and Sustainability & Affordability.

Step 2: Plot Your Competitors

Research each competitor and assign them a score for each factor based on your findings. Then, plot them on the grid accordingly. Don't forget to include your own company!

Step 3: Analyze the Landscape

Look for patterns and clusters on the grid. Are there certain quadrants that are more crowded than others? Are there any clear outliers or gaps in the market?

In our example, Liam's Eco-Tours stands out in the upper right quadrant, indicating a strong position in both innovation and sustainability. However, the sparse lower left quadrant suggests an opportunity for a budget-friendly, no-frills alternative.

Step 4: Identify Your Battleground

Based on your analysis, determine which quadrant or position aligns best with your strengths and target customer needs. This is your strategic battleground – the space where you'll aim to outmaneuver competitors and capture market share.

Liam, for instance, might double down on his innovative, eco-friendly positioning. He could introduce cutting-edge sustainable technologies or partner with local conservation groups to further differentiate his brand.

Step 5: Anticipate and Adapt

The competitive landscape is always evolving. New players enter, existing ones pivot, and customer preferences shift. Regularly update your grid to stay on top of these changes.

Pay particular attention to competitors inching closer to your chosen position. How can you fortify your defenses and maintain your competitive edge? Continuously innovate and listen to your customers to stay one step ahead.

The Competitor Analysis Grid is a simple yet powerful tool for visualizing the competitive landscape and identifying strategic opportunities. By diligently plotting the battlefield and choosing your position wisely, you'll be well-equipped to outmaneuver rivals and capture the flag of market leadership.

Further Reading

  1. "Mapping Your Competitive Position" by Harvard Business Review - a great article demonstrating a few different methods on defining the threat of competition and uniqueness of your own product (product market fit / UVP): Mapping Your Competitive Position

Assignment

  1. Identify the two most important dimensions for competitive differentiation in your industry.
  2. Plot at least five competitors, including your own company, on a Competitor Analysis Grid using these dimensions.
  3. Analyze the resulting landscape and identify potential opportunities or threats.
  4. Outline a strategy for how you will differentiate and compete effectively in your chosen market position.

Knowledge Check

  • What are some common dimensions used in Competitor Analysis Grids?
  • How can plotting competitors on a grid help identify strategic opportunities?
  • Why is it important to regularly update your Competitive Analysis Grid?