If you are one of the 40% of sellers on large marketplaces who also sell on your own website and/or store and wonder how you can compete with the right businesses to stay ahead, we’ve got you covered.
• Understanding the types of competitors is crucial to identify the right competitors
• Direct competitors offer similar products at similar prices and must be monitored closely to stay competitive.
• Indirect competitors offer different products that satisfy a similar need and monitoring them will give valuable insights into your customer base
• Replacement competitors offer entirely different products that your customer might choose to spend on instead of yours and they should be monitored to prepare for market or trend shifts.
• The retail industry is ever-growing and aggressively competitive. It’s not only impractical to keep track of every competitor but is also not cost-effective or time efficient. so, it is crucial that you identify the right competitors to track and compete with.
• To accurately identify your competitors, you not only need to know your business goal, product segment, and audience base, but you also need to understand the different types of competitors, the different factors you must track, and how often you need to track them.
Let’s take a brief look at who they are, how they might affect your business, and how often you should monitor them to stay competitive, relevant, and profitable.
Direct competitors are those who offer products and services that are similar to yours. They are the ones you could quite easily lose your customers to if you don’t continuously monitor their products, prices, and promotion strategy and counter them promptly.
Some examples of direct competitors are Pepsi and Coke in the soft drinks segment, Tanquery and Bombay Saffire in Gin, and Mcdonald's and Burger King in the fast food segment.
Direct competitors are the immediate threats to your business. So, it is crucial that you monitor their price, promotion, and stock status and tweak your business decisions like price and promotion strategy to stay ahead.
Key aspects of direct competitors that you must monitor are,
Product, so you are always aware of your direct competitor’s offerings.
Price, so you can price your products competitively
Promotion, so your existing customers get the best deal while also attracting new customers
Ratings and reviews, so you know what your competitors’ customers are thinking, expecting, and loving so you can learn from it and do better.
Inventory status, so you can stay aware of demand and supply and optimise your inventory and prices accordingly.
Since direct competitors are your business’ immediate threat, you must ideally monitor them on a daily basis so your response to any change is quick and effective!
Indirect competitors are those who offer products that are different from yours but target your audience and satisfy a similar need.
For example, a company selling skincare products is an indirect competitor to a company that sells make-up products. Both companies target people who want to look and feel more beautiful and confident. Another example of indirect competitors is restaurant and grocery stores or Amazon and Etsy/Instagram.
You need to monitor your indirect competitors to understand your audience better and gain inspiration from them since you are trying to convince the same people to buy your products and services. Additionally, while they might not be a major threat to your business right away, they could become a direct competitor when you expand your business.
Key aspects of indirect competitors that you should stay on top of are,
Sales and promotion tactics, since they are targeting your audience and satisfy a similar need, it could work for your business too.
Customer experience, this will help you understand your customer better and give them a better experience
Price, because this will tell you more about your audience’s purchase power
Customer acquisition strategies, again since you share an audience, their strategies can be adapted to your business.
Although indirect competitors are not immediate threats, monitoring them can give you a wealth of information that will help you make impactful strategic business decisions. Track them on a biweekly or weekly basis so you do not miss out on any major market opportunities.
These are businesses whose products or services are entirely different from yours but your customers might choose to spend on their product instead of yours.
An example of replacement competitors are cinemas and streaming services. While what they have to offer is entirely different in terms of cost, experience, etc. depending on the situation (social, economic, political, etc) a customer might choose one over the other and not both.
The main reason to monitor replacement competitors is to be aware of any major events in the industry or segment so you can be prepared for the eventuality that your customers may choose them and have a plan to recover your customers. You don’t have to monitor them constantly.
Now that you have a fair idea of the types of competitors, it’s time to take out your list of competitors and start mapping your competitors as direct, indirect, and replacement. Once you do this, you will be able to prioritise and spend your resources more effectively to monitor your competitors.
The bottom line is, whether they are direct, indirect, or replacement competitors, it is important to monitor them. However, monitoring all your competitors to the same extent is not only impossible but also wasteful of your resources. Since your direct and indirect competitors have the most impact on your revenue, leveraging technology to effectively monitor them will prove profitable for your business.
Some exclusive features of Pricechecker can help you identify your top competitors and undertake the monitoring process in the best way possible. Match rate helps you to find how many competitors match the products you have. To learn more about how you can take advantage of these benefits check out our trial package.
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