Know your competitors!

Michel Munzing, SAJE Accompagnateur d’entrepreneurs, Montreal, QC, CYBF Community Partner

Competitors are companies that sell products or services that meet the same customer needs as you. There are direct and indirect competitors.

Direct competitors sell the same thing you do. For example, if the consumer’s need is to travel from Montreal to Toronto quickly, frequently and on a flexible schedule, he/she will likely choose to travel by plane. Three Canadian airlines offer frequent flights between Montreal and Toronto: Air Canada, Westjet and Porter.

These companies are direct competitors.

If the consumer’s need is simply to travel from Montreal to Toronto, there are more options available to him or her. The customer can travel by train, by bus or charters, by car share, etc. Businesses offering these services are indirect competitors for airlines. The service is different, but the need continues to be met.

Finally, if the consumer’s need is only to travel from Montréal to Toronto, he/she can travel by personal car, by bicycle, on foot, etc. These represent substitute products/services.

Competitive analysis

The first step is quantitative and aims to:

• Identify competitors – who and where they are
• Count competitors – how many there are
• Quantify the served market – number of clients, amount of sales, market shares

The second step is qualitative and aims to understand your competitor’s offer. The points to analyze:

Competition’s customers

• Who are they?
• What are their needs?
• What are their consumption patterns?
• Purchase decisions?

Information can be gathered from secondary data sources such as Yellow Pages, ICRIQ, professional directories, and more. It can also be collected through primary data sources through:

• Interviews with competitor’s owners/leaders/employees
• Observations as a competitor’s customer
• Requests for service offer
• Telephone conversations
• Discussions with customers

The inspiring competitor

Myth: You should not talk to a competitor and never tell him or her that a new offer is emerging…

Reality: Competitors are a source of valuable and inspiring information. They know the market, the consumers and the rules and like to talk about their businesses, successes and positioning.

Understanding your competitors’ strengths and weaknesses will help you build your own service model and reinforce your competitive advantage.

Remember that competitors can be a source of inspiration!