I’ll be honest with you, in all my work with creative clients, I would say competitor research is deemed the least important, or urgent, area of setting up and running a small business. And that’s understandable – once you know your product, your customer, your market and you are beginning to think about where to stock it (or already have stockists)… well, that’s enough, isn’t it?
Yes and no. I think just getting your offer out there and getting the money in is vital to launching and keeping your business afloat. But I think it is hugely important to keep tabs on what your competitors are doing, and to learn from their successes and failures. Ultimately, a competitor is someone who YOUR customer (now or in the future) is spending their money with instead of you. And we all want our customers or clients to spend money with us, and to keep on spending it even in tough economic times.
But what if you are just developing your business and you are taking your first steps to finding stockists or tweaking your offer or service? Then the steps below are ideal for you. In marketing, we have long referenced the 4 or 5 Ps – product, price, place, promotion and, latterly, people – as any brand or individual’s ‘marketing mix’. This is how you should develop your product range or service, how you price and position it against competitors, where you promote it, and how and where you retail it. So you can see that competitor research is beneficial to, literally or metaphorically, setting out your stall.
But… I don’t think I have competitors…?
Yes, this is something I hear a lot. Everyone believes passionately in their product or their business, why it is genuinely brilliant, and will do, or is doing, well for them, and that others aren’t quite in their league. And this may be true, but, if we’re honest, there are also a lot of other really fantastic, innovative, astounding creative businesses out there. Take a look any major high-street in the UK (or world) – it’s saturated with established, often global, names in fashion or design or retail. All the stores are designed by incredible, visionary designers and architects, kitted out with exceptional, beautiful merchandise.
I can say with certainty that ALL these brands invest heavily (from mighty budgets) in promotions to attract, engage, and maintain customer loyalty, and research into what their customers want and where else they buy. They also keep a close eye on what the others in the high-street (and online) are doing – both long-standing and newcomers like you – using this to inform their own marketing mix, and how they interact with their customers. And these are very well-known brands, with years, decades, of success behind them and with very loyal customers. These brands don’t just want to compete; they have to stay several steps ahead. And, as a small creative business still building your brand and customer base, so do you…
Who are my competitors?
You may be promoting and selling your products or offer: online through your own website, through an online host platform, through a larger retailer (online or offline), in your own shop or studio, in pop-ups, sales events, fairs or markets. Or perhaps you work to commission, or a mixture of both or several.
In all cases there are four basic variables that remain the same:
Brands or individuals who sell the same product (or service) as you. This may be broadly speaking e.g. interior products or menswear, or more specific e.g. porcelain bowls or bow ties. The price range may be similar, or may be cheaper or more expensive. However, the closer the price point, the closer the competitor. If you are a bespoke milliner, Topshop or Debenhams can still be a competitor. It’s not just brands similar in scale to you.
This is where you sell or promote your product or offer. If you sell online e.g. Notonthehighstreet.com or John Lewis, then customers will search and shop by category, brand or price. So you can also research other brands (your competitors) by similar category or price. If you have a physical retail presence, be it in a departments store or market stall, you can check out their offer easily by just having a nose around.
This is why customers buy your product. So, you might (through your carefully conducted customer research – see my earlier blog post, Creative Planning Basis 3) know that weddings are a prime motivation for the customer to buy, or gifts for other people, or interior products for first-time buyers or students. The motivations are endless, and possibly varied. But if you know one of the main reasons your customers buy, then you have an idea of who else might offer this, and therefore who your competitor might be.
As you have already done your customer research (of course), you will know who your customer is. You will know approximate age, gender, spending power, motivations (above), shopping frequency, lifestyle/occupation, what blogs/magazines they read, what other shops they visit and even the brands they buy. So, if your customer is a middle-aged, affluent, media bod with a penchant for quirky cufflinks, then that will help you pinpoint where this type of person may be likely to also shop. Hence your competitors…
So what should I look out for?
Okay, it’s unpleasant, but wouldn’t we – just occasionally – love our competitors to slightly less well, because then there are more customers for us? Mean-spiritedness doesn’t get us terribly far (or keep us very positive), but we can look for indicators of their successes and challenges. Some of you may be familiar with the term S.W.O.T. – this is where we would review their strengths, their weaknesses, the opportunities they take, and the threats they face.
How do I do it?
So, if I was an interior designer who worked with hotel commissions, I could nose around other hotel chains and find out who the interior designer behind the refit/new decor was. From the designer’s website, I could discover more about their business, their client list, their previous projects, their forthcoming projects. I could then explore this further online by searching for publicity about them, and other mentions of them online. If I was a childrenswear designer, I could explore online by searching under ‘boutique childrenswear’, for example, identifying other brands or bespoke makers, and follow the same process.
Your research will show you:
- what the competitor’s offer is and how much they charge for it (or you can make a guess from knowledge of cost prices and the type of place they sell/clients they have)
- where they promote themselves
- what appears to be working well for them and what they are good at
- what opportunities or trends they are more skilful in exploiting
- if there are physical products, what is marked down in price (and presumably not selling)
- what areas of their business they are NOT taking advantage of that you could do in yours
- what threats or negative trends are facing your industry/sector and so this competitor also faces, and is better – or less well – equipped to deal with
I probably should also mention here that you don’t just want to focus on one competitor. Sorry! Thorough competitor research – that you might need for a business plan, or just to take the temperature if you are an early stage or pre-start up, or established – will require at least three. And, to run a viable and sustainable business, you should really know who your three main competitors are.
To make this process easier, with some clients, I structure this around WHO, WHAT, WHERE, WHEN, WHY AND HOW – in terms of identifying the competitor and their promotional and selling activity. But be sure to also look for their opportunities and weaknesses…
So now you have done this research, you will have at least come away inspired, with more ideas of what you can do to develop your own offer, what pitfalls to look out for, and realise where you can’t compete – you have other strengths instead. Which is just fine, by the way.
Ultimately, you will be better placed to use your own creativity more efficiently and grasp chances when they come your way, and effectively build your brand to reach and maintain more customers who keep spending their money with you.
If you have any questions after reading this, then feel free to email me on firstname.lastname@example.org, or drop a comment on the blog.