Develop and Use Competitive Intelligence
Do you know what an Ice Resurfacer is? Here in the dog days of summer ice skating may be far from your mind, but maybe you know an Ice Resurfacer by its more common name, a Zamboni.
Like a bunch of other brand names that have become synonymous with their product - Xerox, Kleenex, Google, Photoshop - Frank Zamboni’s invention is so dominant in the industry they can use the tagline “Nothing Else Comes Close” and it’s not just a silly brag line.
But in non-ice rink industries, when formulating business strategy, managers must consider the status and strategies of the firm's competitors. A competition analysis should include the important existing competitors in addition to potential competitions such as those companies that may enter the business, for example, by expanding their present approach or by vertically integrating.
With a set of competitors established, then deep analysis can begin. Casual understanding is typically insufficient. Instead, competitors must be examined systematically, using coordinated competitor intelligence gathering to compile an assortment of info so that well informed approach decisions may be made. This framework relies on the following four important aspects of a competition:
When this information is fully developed, strategies can be developed that consider two primary motivations.
The first is obtaining details about important competitors and using that info to predict their behavior. This provides an understand about how rivals plan to compete, their present strategies, and to the extent possible, their planned actions - either implicitly or conjectured.
The second motivation is to understand how competitors might react to your firm's actions. When strategies are developed to influence competitor behavior to the firm's own advantage.
When these two goals come together the analysis can be very detailed and brings a better prediction of the reaction to different moves. For instance, a competitor that's focused upon reaching short term financial goals may not be willing to spend much money responding to a competitive attack. Rather, such a competition may favor focusing upon the products that hold positions that better might be defended. And on the other hand, a company which has no short term profitability goals may be willing to participate in destructive price competition wherein neither firm earns a profit.