Most companies analyzing their competition focus only on the competitor they sell directly against; usually the archrival who brings the same product to the same customer as you, leading to the death spiral of price competition. Yet there are five other competitor types you might never see in the customers office, but their effects are felt every day. Advance knowledge of who these other competitors are prevents your company from being blind sided by the same events that can demolish other companies in your business. Go ahead. Try to put a name to each of the types. The pain should start about the third one. First theres the Look-alike competitor. They do exactly what you do for the same set of customers. These are the top of mind companies your sales people watch on a minute-by-minute basis. These are also the companies sales forces are most concerned about because the customer always uses them as a point of comparison. As a result of product management pressure from one side and sales force demand from the other, marketers spend most of their time responding to the actions of the look-alike set. Write down the names of your look alike competitors. The Extensive competitor could do what your company does, if only it chose to. Extensives have the resources and expertise to move into your market but instead are listening to Sun Tzu and avoiding direct confrontation with a rival. No, the Extesnsive competitor serves a different market for the same type product. Cadillac doesnt make tiny econo-box cars, but they have all they need to so anytime. They meet their financial goals but essentially without provoking a response from companies that do make econo-cars. It might take some head scratching but you can probably come up with one or two companies to fit this profile. The Innovative competitor spells real trouble. These are the companies that completely change the rules of your market overnight. Barnes and Noble discounted Amazon.com because they saw them as just another look-alike. Since both buy books from the same printers Barnes and Noble knew that the online upstart wouldnt get a much of a better price, if at all. But Amazon was really competing on innovation in logistics- book shopping in bunny slippers. Barnes missed this one completely and took more than a year to their online store up and running. In the late 70sXerox dominated the copier market. Xerox main selling point was its huge field service force and distributed parts warehouses that guaranteed no copier would be down for more than four hours. Sharp entered the market with copiers that made four times as many impressions before needing service at all, using innovation to take away Xeroxs prime advantage. In order to monitor the innovative competitor, look to sources within the scientific community, or university research projects (and the companies funding them.) As a mental exercise, imagine waking up tomorrow and your product is obsolete. What has replaced it? Better think about who is developing it, because if it isnt you it is someone else. There are three other types of competitor often missed by both startups and market leaders. Even though they dont sell products to the your customer base their actions enhance or impede the success of your company. Resource competitors use the same materials and talent as you do, but offer different products to a different market. They have nothing to do with your business other than demanding the same supplies. But the stock Java programmers, oil, genetic material, frozen peas and lumber are limited, therefore consumers of these resources are de facto competitors. A few years ago IBM Global services, Accenture and a few other large systems integration firms announced their hiring plans for new computer science graduates. The total was 10,000 more than every graduating computer science major in the entire country. A product manager at a small company planning on two new grads for a major project would have a hard time meeting the salary and benefit demand of the scarce resource of computer science grads. Purchasing and HR departments have their fingers on the pulse of supplies and resources. Too bad they are rarely invited to strategic planning meetings. The Regulatory competitor has the force of law to make or break your next strategy. These can be approval agencies, the Food and Drug Administration for example, or a watchdog like the Environmental Protection Agency and its state equivalents. Participation in an industry trade association that maintains a lobbying presence is the best way to anticipate regulatory changes, or, better yet, encourage them in favor of your strategy rather than someone elses. Finally, theres the Political competitor. This entity doesnt have the force of law most times, but can have public opinion on its side. Labor unions, technical standards organizations and environmental activists fit this category. The motto here is if you cant control em, join em. Theres no law against working for a big oil company and joining Greenpeace to keep tabs on what the club is up to. Simple awareness of the spectrum of competitors beyond the simple look alike, already extends your companys radar over the horizon. Its not too far a leap to figure what you can do anticipate, or even influence, their impact and their effect on your business. |
