Here we complete the analysis of the sector or industry, so we discuss the analysis of competitors in this sector. We have previously discussed the analysis of external factors, the study of industry attractiveness, market segmentation, segment attractiveness, Porter’s analysis, identifying the key factors for success,
One of the essential steps in strategic planning is the analysis of key competitors. Likewise, in the case of a feasibility study, we are interested in identifying the capabilities and objectives of competitors, because this affects the calculations of the feasibility study. Our project may be wonderful and we base our calculations on the size of a request, believing that no one will compete with us, while there is a competitor who has capabilities and goals that make him able to compete with us, and therefore the volume of demand will be Distributed between us and that competitor.
What do we want to know about the competitor?
First: Its strategy: Does the competitor aim to provide high quality or low price? Is it intended to expan?
Second: Its objectives: Does it aim to achieve quick profitability or to achieve great profitability in the long term? Is it for-profit, or is the competitor a state-owned company that aims primarily to increase production and sales? Is it a family business that aims to use time at work and does not care much about achieving high profits? Does it aim to achieve technological advancement over all competitors?
Third: His perception of the sector (his assumptions or beliefs about the sector): Perhaps the competitor believes that information technology cannot be used in this sector? It may be thought that a certain quality of products can not be profitable? Could the competitor think the market is in decline?
Fourth: His Resources and Capabilities:
What are the limits of his financial resources?
What are its human resources (number – competence – educational level – experience – age – loyalty – training)?
What are its physical resources (equipment – tools – shops – site – stores)?
Does he own a big brand name? How loyal are people to his products or services?
What are his manufacturing capabilities? Is it successful in reducing the cost? Does he have flexibility in changing product specifications?
Does he have the ability to develop? Does he have research capabilities?
What are its capabilities in distribution and sale? How fast is he in responding to customers? What is his level of customer service?
What are his marketing capabilities? What are his reactions to market changes?
What are his managerial capabilities? How flexible is his organization?
Who is the competitor?
A competitor is any organization or person that competes or may compete with you. Of course, it is difficult – sometimes – to study all competitors, and therefore the focus is on the most important of them in terms of competing on the same segment or the same geographical area, and therefore we study a number of main competitors. There are some potential competitors, such as a company that operates in other countries and has a desire to expand. It may decide to invest in your country. The main potential competitors must be studied.
What is the source of the information?
There are many sources of information, including: general and specialized newspapers and magazines, the international network, the competitor’s website on the international network, customer impressions, the declared budget, your personal experience such as using your product or service, its commercial advertisements, the trade fairs in which it participates, its catalog (sales booklet), economic analyzes Announced government reports, seminars and conferences in which he participates, his pricing policies, the tenders he presents in newspapers or on his website, his policies of expansion and purchase of other establishments, his job advertisements, television or press interviews with company managers.
We may know more about a competitor than another, and we may not be able to know everything we wish, but this does not prevent us from making efforts to analyze the information we have in order to reach the best perception of competitors.
Example: You want to open a small restaurant in an area with a lot of residents and pedestrians. What do you want to know about competitors and what do you gain from it?
It is important to know the level of service they have, the level of prices, the quality of customers, the quality of foods, do they have the ability and desire to expand and if so, can they expand in the same place or in other areas, is this restaurant owned by a person or a group, what is the ambition of the owner or The manager, is this restaurant owned by a family and lives from its revenue in the narrowest limits, or is it owned by the state, or is it owned by an investor who cares about profit? What are the resources of this restaurant, its relations with food suppliers, and its market share…….
How do we benefit from this information?
Level of service and prices: We may find that there are ten restaurants, for example, but all or most of them provide excellent and expensive service, or we find that most of them provide modest service at a low cost. This helps us know our opportunities to invest in new projects so that we can operate at a level where most restaurants do not operate. This of course depends on the presence of customers of this level of restaurants in that area. The second thing is to work out who are our real competitors and who provide the same level of service and prices.
Quality of food: We may find that there is some type of food that is not served in existing restaurants, or is not served in most of them, or is not well presented. This opens up an area for us to specialize in this type of food or to serve it well with other foods. This is assuming this type of food is acceptable to customers. Also, by knowing the quality of food served in each restaurant, we can know our competitors who provide the same quality of food. Of course, there is competition between restaurants that offer different quality of food, but it is more influential among those who offer the same quality.
Do they have the ability and ambition to expand?: This helps us to know our opportunities in competition. If they have a strong desire to expand in the same place and their service is close to ours, then their expansion means that they accommodate a larger number of customers and perhaps a more spacious place to sit, and this affects us.
The nature of the owner: If the owner is a humble person who lives from this restaurant and spends his time in it, then his competition by reducing prices will be fatal, as he will continue to compete until he dies because he wantsHe lost the least profit and it is enough for him to find something to occupy his time in this restaurant. However, he may not have the administrative ability to provide distinguished and renewed service, and he may also not have the ability to expand.
Resources: The greater the competitor’s financial and physical resources, the greater his ability to compete, and this makes us think of the difference in the quality of service to avoid direct competition.
Relationship with food suppliers: We may find that there is a very strong relationship between existing competitors and food suppliers to the point where we are unable to obtain food supplies as required. We may find that they did not invest much in building a relationship with suppliers, so we find an opportunity to build a strong relationship with suppliers and obtain a method of supply that achieves savings and advantages that competitors did not get.
Market share: The larger the competitor’s share, the higher it will have the upper hand in determining prices and influencing the market. Therefore, it is necessary for us to analyze this competitor more accurately.
The benefit of competitor analysis becomes more evident when it is linked to the rest of the steps of the feasibility study or strategic planning, such as the basic success factors for each segment, the analysis of our capabilities and resources, and the study of each segment separately.