I was introduced to Seena Sharp over a year ago, though we didn’t meet until very recently – and we immediately hit it off. She runs a market intelligence practice helping companies focus and hone in on their customer needs. I asked her to write an article for The Directive this week, and I’m delighted that she accepted.
Do you waste time comparing yourself to competitors? Well, Fuh’Get About ‘Em. Now!
Companies with too much focus on competitors tend to offer more of the same, while fiercely defending the differences that customers either don’t notice or don’t care about. Then they end up with a product or service that’s faster/bigger/cheaper, when what the customer wants may be something else (easier to use, fewer features, return policy, etc). Think of the US car manufacturers that for decades were trying to beat their competition with faster/bigger cars, while Japanese auto manufacturers were responding to shifting market needs and eating their lunch.
Apple is a great example of a company that ignores the competition and focuses on their customers. If they focused on their competition, they would not have created the iPod to compete against Sony; they would not have created the App Store to get into the music business; they would not have entered the phone business; and they would not have created the iPad to start competing against that other digital behemoth Amazon.
There are several reasons not to focus or dwell on competitors:
- The competitor’s focus may not be the same as yours. For example, a major product line for you might be a side offering for your competition.
- You’re indirectly ascribing a certain business or market acumen they may not deserve. Are you sure they know more about the market than you do?
- Competitors can make mistakes. Do you want to follow in their footsteps?
- Following competitors is a weakened position. Your employees and customers will not view your company in a leadership position. This may impact innovation, sales, press coverage etc.
Having said this, there are situations where attention to competitors must be paid:
- A distracted competitor offers a huge opportunity. For instance, if they’re dealing with a possible merger, acquisition, or facing a legal problem, they may not be paying attention to their customers – thus offering an opportunity for you.
- Competitors define the overall market landscape. And therefore are necessary for understanding the shifts in a constantly changing business environment or identifying new offerings within the market.
- Some competitors may have figured out better ways to engage customers. When you have not done your job and competitors have done it for you – by satisfying the market needs.
So how do you uncover those gaps and opportunities that elude your competitors? There are at least two ways – formal competitive intelligence for strategic, insightful, due diligence, and informal observation, as an indicator to monitor or further research.
An example of an informal observation is McDonald’s. The company never set out to compete with Starbucks, but when they noticed that a sizeable number of customers were coming into McD’s carrying cups of Starbucks, they conducted formal market intelligence to determine if offering coffee would be a good move. Now the company offers better quality coffee leading to higher sales and saving their customer base an additional trip to Starbucks.
The clear objective in business is to satisfy customers – and do it over and over and over again. Many companies believe that once they offer customers what they want, the customer will stay with them and be satisfied. There’s just one problem with this thinking. Products and services are constantly being improved. So, what you did yesterday may be no big deal today. And if your competitors copy you, then the differentiating factor no longer exists.
As if that’s not enough, it’s a big investment (and a pain) for companies to constantly make changes to suit their customers, but if they don’t, they should not be surprised or angry when another company comes in and does.
This is where competitive intelligence pays off. It focuses on the entire marketplace, of which customers and competitors are segments – among many - and it seeks to uncover what’s changing and emerging, to give your firm the competitive advantage.
Take a leaf from Steve Jobs’ book. Customers will buy your product if they want it. Even in a recession. Even if it’s expensive. Even if they don’t “need” it.
Sam Walton stated “You guys (manufacturers) are always trying to sell me more Tide. I really don’t care if I sell Tide or Fab. I just want to sell what the consumer wants.” It worked out pretty well for him.
Seena Sharp is a pioneer, founding the first market intelligence firm in the US, Sharp Market Intelligence, following a successful corporate career in New York City. Read her new book, Competitive Intelligence Advantage for pragmatic insights and actions to reduce risk, avoid being blindsided, and make smarter strategic decisions the first time. Seena is a popular speaker globally, and has written dozens of business articles.