Would you ever run for an elected office without knowing who the other candidates were? Knowledge of your competitors’ background, habits, products, personnel, strengths and weaknesses, goals, and future plans gives you power, as well as helps you develop your product and marketing plan, and may even be the deciding factor in whether or not you go into business. Investors also want to know what their up against. They want assurance that you have an intimate knowledge of your competition–not just a list of names. Here are some questions that can help you describe your competitors:
- Who are your biggest competitors?
- How do you stand next to your competitors in terms of market share, price, profits, quality, research and development, reputation, sales, distribution, production capabilities, and service?
- Why do people buy your competitors’ products–large, well-known, respected corporation, major distribution and service network, quality?
- Do your competitors or their products have any weaknesses or problems?
- How would you rate their products–good, bad, ugly, beautiful, mediocre?
- Do your competitors’ products meet all the requirements and specifications demanded by your market?
- Do you interface well with significant, non-competitive equipment whose manufacturers may be reluctant to support your product due to warranty, liability, or image considerations? For instance, do you produce a software program compatible with IBM computers?
- Why have companies dropped out of the industry in recent years?
- Will your sales be at the expense of your competitors’, or will your market expand?
- How will your competitors’ influence your start-up?
- Is your product easily copied?
- How much head-start do you have over your competitors?
- Whom of your competitors are more opportunistic and likely to take risks? On the other hand, which companies are more stable and long-term?
- Do your competitors have enough resources to see them through a product failure or a recession?
- How does your company compare when it comes to aggressive selling tactics? For example, would you describe yourself as cut-throat, hold-your-own, price-cutting, or a follower?
- What pricing policies do your competitors have, and how do these compare to yours?
- Is your product competitively priced on a feature-by-feature basis with other products on the market?
- If your product is cheaper than your competitors’, explain why and how you are still able to make a profit.
- How will you justify price increases over and above your competitors’–newness, quality, warranty, service, delivery time?
Your Competitors’ Key People
- Who are your competitors’ key personnel?
- How do these key personnel fit into their organization?
- Do they have a history of success or failure?
- Do the marketing and sales executives stand firm on their pricing policies, or have they resorted to price cutting?
- Does the CEO have a tendency to ship products of questionable quality at month-end to boost monthly sales?
- Does the manufacturing manager have a history of shipping high- or low-quality products? What is his on-time record? Does the product work when the customer receives it or is it dead on arrival?
- Does the engineering manager have a reputation for solid designs, poor designs, or expensive products?
- Does the financial officer pay the company’s bills on time, or are they typically late?