Understanding Your Competition Requires You to Step Up Your Game

 

Photo on 5-8-13 at 1.08 PM #3Competitors are the healthy aspect of being in business. Without competitors, we would not be challenged beyond the status quo.  We would  probably exist in a place where one vendor controlled all the inputs and outputs in the market.  There would not be any variety in our products or services.  Quite frankly, the world would be gray.  I envision this dismal state as one where there is absolutely no freedom of choice, or thought.  Pretty boring.

Competitors cause us to be creative and think out of the box

The beauty of competitors is the freedom we have to make our widget different, better, bigger, or smarter than the next guy.  We have a chance to introduce creativity into our designs.  We can target a specific audience or not.  Having competitors should cause us to think differently about our approach to business.  One way we can do this is to spend time analyzing our competitors or competition.

Who are your competitors?

It doesn’t matter if you provide services or products.  Knowing who you compete against is vital to the success of your business.  I recently worked with a company that is in the defense market sector.  Working as a defense contractor is quite interesting because your customer is the federal government.  There are numerous businesses that provide goods and services to the federal government.  However, none of that matters if a company is blind to who also provides similar or like services.

Understanding your competitors means knowing everything about how they go to market”

As business owners we should conduct a profile of our competitors.  That means we need to understand the intricacies of the competitor including how the competitor sets its prices.  There are many ways to validate price setting of your competitor.  One way I do this is to conduct a price analysis.  I research as many related contracts that a company has won and begin to garner a better understanding of how they set prices for labor, other direct costs, indirect costs and fee.  Decomposing this data helps me to have a better understanding of where I should be, from a price perspective, when competing against my peers.  This of course assumes my goods and/or services are sensitive to price.  In most sectors or industries, price is a major factor.

So the question I am asked most frequently is where do I find that type of information.  I just want to assert here, that I always conduct competitive research in an ethical manner.  With that said,  I research publicly available documents such as previous contract awards, in the case of researching defense contractors.  To do this you can access any number of sites to provide a better understanding of what type of work the competitor bid on.

The first step is to procure a copy of the Request for Proposal better known as the RFP the contractor competed against and won.  Consider requesting a copy of the contract using a process called the Freedom of Information Act or better known as FOIA, from the contracting agency.  Sometimes you find a lot of usable data, sometimes you don’t.

Many times, you may find the FOIA’d document redacted.  Don’t despair, because at a minimum you will have a better understanding of what the procurement was for, what the customer expectations are and criteria used to make an award.  All useable data when building a competitor profile.

You may have to kiss a lot of frogs to find the prince, however, don’t get discouraged.  This aspect of researching your competitor is very time consuming, but in the end, provides ideas about how you, the business owner, can successfully compete in a hyper competitive environment.

Sometimes you may determine that you need to refocus your product or service offerings, or refine your product of service to become a more niche type of service.  Any way you approach this, you need to understand your competitors.

Cheers!

 

 

Renee Sanders is a PhD candidate in business at Capella University, where her specialization is strategy and innovation. Renee holds an BBA and MBA from the University of Maryland University College. Renee currently works in for a defense contractor as the Director of Strategic Pricing and Price to Win.

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