Market Monitoring - The How & Why of ID'ing Your Competition
Deep down, every entrepreneur fears competition. Although it’s daunting, the reality is that every in-demand business is bound to have competition.
In fact, lacking competition in business tends to cause more problems than it solves – stay tuned for more on this in next month's blog.
Competition is healthy and it's proof that we’re on the right track. It keeps us sharp! Staying ahead of the competition is often one of the largest motivators pushing us to work smarter and work faster. However, not all competition is made equal.
Direct, Indirect, and Replacement Competition
Competitors can be separated into three main groupings: direct competitors, indirect competitors, and replacement competitors. These groups impact your business and your market in different ways, and understanding those nuances helps you to make strategic decisions as a business owner.
Direct competitors are those businesses that offer the same product or service as you, and they’ll typically attract the same target audience, too.
Indirect competitors (aka secondary competitors) include businesses that help customers ultimately reach the same goal, but they’ll take a different approach to get there.
Replacement competitors are one step further removed, providing a product or service that offers customers an alternative to what they’ll get with your business. You both solve the same pain points, but the means vary.
Let’s take a look at an example. It’s Friday evening, you’re tired from a long week, and your stomach is grumbling. You crave feel-good food, but the fridge is empty.
You think about picking up a pizza. Now it’s time to decide: should you order from Pizza Pizza, or Domino’s?
These are direct competitors – they offer the same product at a similar price point.
A trip through the McDonald’s drive-thru sounds pretty good, too. You love a Big Mac, after all!
This is an indirect competitor – although it’s not pizza, you’ll still get a quick, tasty meal on a budget.
Although, maybe tonight’s the night you decide to give Hello Fresh a try.
This is a replacement competitor – you don’t have to go grocery shopping or find a recipe, but it provides a different solution to solve your hunger.
The Brand Brew’s Brand Development Experience begins with a brand clarity session during which we dig deep to uncover these various types of competition in relation to your business. This helps us to brew up an effective brand that highlights everything that makes you stand out!
How to Identify Your Competition
Here are five tips to help you identify the various competitors your business is up against.
1. Get on Google
As with many things in life, start with a Google search!
Put yourself in the shoes of a customer looking for the product or service you provide and search Google for the relevant keywords (for example, [service] in [your city]).
Pay extra attention to the first page of results and those that appear directly above and below your own business – these are likely some of your most direct competitors.
You can continue this process for various keywords related to your business. Don’t neglect to make note of the Google Ads results, too!
Tip: Use Incognito Mode when conducting these searches so that Google doesn’t alter your results based on your previous searches.
2. Keep Up with Keywords
Researching your keywords is a very effective approach to discovering your competition.
Not sure what keywords are best for your business? The Brand Brew can help with our Keyword Strategy and Report.
Keywords are especially helpful in finding your indirect competitors. Take our previous Friday Night example. If you were to search for “fast food near me,” the results might include Burger King, Freshii, and the local sandwich shop, all back-to-back.
3. Search Through Socials
Social media is overflowing with opinions, which is great when you’re a business looking to find out what your customers have to say.
Discover relevant social media conversations by searching for your business and looking through Reddit threads, Quora questions, and Twitter polls. Scouring through the other businesses mentioned will give you a solid list of your competitors as determined by your customer base! You might even gain insights into why a customer would choose you over your competition, or vice versa.
4. Monitor the Market
Market research provides powerful insights into your competition. Peruse the market for companies offering products or services similar to yours and make special note of the businesses with closely competing offers.
You can conduct market research in various ways, from Google searches to flipping through trade books. Consider consulting with your sales team to discuss which other businesses are commonly mentioned by prospective customers.
5. Consult Your Customers
Researching businesses and weighing options is a key factor in the customer journey. So, who better to give you insights into your competition than your customers themselves?
You can spark up a casual conversation at the end of a sale or ask directly via a follow-up email survey. Make note of your most mentioned competitors and what sets you apart in the eyes of your customers.
Understanding your competition is crucial to staying relevant in your industry. The landscape is ever-changing – with businesses morphing and shutting down and with new businesses popping up – so it’s best to make a habit of checking up on your competition. The Brand Brew’s Brand Development Experience helps you determine your direct, indirect, and replacement competitors, and build a brand that sets you apart.