Five things you must know about your competition

One of the most important, though sometimes elusive, aspects of running a successful business is knowing everything you can about your competition. This runs the full gamut from knowing their branding and marketing tactics to how they compensate employees and manage their business.

There is a lot more to it than simply developing a competitive analysis that reveals who your competition is and what they're up to. Knowing your competition should be an ongoing, evolving experience, one that can practically put you right next to that proverbial fly on the wall- watching, listening, and absorbing.

But you don't have to sneak around with a hidden tape recorder to gather intelligence on your competition. If you look hard enough, you can find just what you need without breaking the law or crossing any ethical lines. In Part One, we talk about what you need to know about your competition.

Determine who your competition is

Take into account not only those companies that provide the same products and services as yours does, but also those providing services that fulfill the same or similar customer needs.

Let's say you own a gym, but there's a yoga studio right down the street. Both offer the same utility to customers: getting into shape and feeling good. But it's not the same service, so it's easy to assume that you're not competing for the same customers. Taking a big picture view of your competitors can make your job more complicated, but it's essential to understanding your target market.

Assess your competitors' corporate culture

Every business, whether it's big or small, has a corporate culture. Understanding that culture can help you understand how to compete against it. Look first at a competitor's website, which is a good place to learn about the company's senior management, see whether they do any pro bono or charity work, find photos of company employees and events, and pick up any number of corporate characteristics.

You can also attend professional meetings and conferences where you're likely to bump into your competitors. Try to listen more than you talk; you'll learn more that way. Listen especially to the way your competitors talk about their colleagues and employees.

Getting a good read on a company's culture can take time and patience. Once you've got a firm idea of a company's "personality", decide if there's something you can learn and, if appropriate, incorporate into your own business.

Conduct an inventory

It is always important to know what products and services your competitors offer, both now and in the future, but you don't need to steal corporate secrets to do this. You just need to pay attention. Listening carefully to what people are saying at networking events, for example, is a surprisingly good means of gathering intelligence.

Reading about your competition in the media- including social sites like Twitter and various blogs- often yields interesting and useful product trend insights.

It is also critical to differentiate your firm from others by offering products and services that will appeal to people in ways that your competition cannot. These are the corporate characteristics that make your business unique.

Yet, in addition to assessing what separates you from the pack, you should also identify similarities. Your prospects may like certain things about your competition, and if you can offer them the same- or even better- products or services, you might win them over.

Look who's talking

For a small business, reputation is everything. That's why it's just as important to keep tabs on a competitor's reputation as it is to monitor and protect your own.

As you conduct your competitive analysis, keep a file on what you're hearing about the competition. This should include not only what others are saying on the news, in newspapers or online, but also what your competitors are saying to and about each other.

Be careful, though: You never want to be caught bad-mouthing the competition, and you can always learn more by listening than by talking.

Play the customer

One of the best ways to get acquainted with your competition is to become a customer, or pretend to be one. Putting yourself in the shoes of a customer is always a good exercise in market research. Scour your competitors' web pages (not just the home page), and study all their digital and print advertising.

If possible, become a mystery shopper so that you can sample a competitor's wares and services. Pay attention to what you like and what's not working.

Next week's Part 2 will discuss five more tips on how to better know your competition.

By Leslie Levine of AllBusiness

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