Marketing is much more than just a sales or advertising program. But manufacturers who limit their thinking about marketing risk putting their companies in a position that is not defensible against their competitors.

Manufacturers can gain a deeper understanding of external markets using Market Intelligence, a system to collect and analyze external information from the marketplace. One important Market Intelligence tool is Competitive Analysis, which gives companies a more complete picture of their competitors so they can differentiate their businesses and position themselves intelligently in the marketplace.

Essential steps of Competitive Analysis include:

• Identifying competitors. “It sounds straightforward, but a basic mistake manufacturers make is not knowing who their competitors truly are,” said Mike Ford, WMEP Manufacturing Specialist. You may have competitors you aren’t aware of, such as a distributor who competes with you for your end user customers. Having this knowledge doesn’t necessarily mean cutting off the distributor, who might be a major customer. It may mean using a different approach than with your end user customers. Fully understanding who your competitors are gives you a clearer picture of the dynamics of the marketplace.
• Identifying competitors’ strategies. This is important to determine their standing in the marketplace and where they’re heading.
• Assessing the competitors’ strengths and weaknesses. Companies may know who their competitors are, but then fail to “make an effort to understand their strengths and weaknesses, leaving themselves vulnerable to attack,” said Ford.
• Estimating the competitors’ reactions to your efforts. By understanding your competitors’ standing in each market and their strategies, you can predict how they will respond to your actions. For example, a metal fabrication company may have a new fastener that they think will allow them to “own the aviation market,” said Ford. The company may know who its competitors are in that market, but they also need to know how important that market is to those competitors. Their response will indicate how important the market is. “They may resist strongly and respond by lowering their price,” said Ford, which can spell trouble for the new fastener.
• Selecting competitors to challenge and avoid. Once there is a clear understanding of where competitors are positioned in the marketplace, it becomes much easier to take strategic action.

A useful tool for understanding where your company is positioned in relation to competitors is the Competitive Matrix, a tool from the Strategic Repositioning toolbox. To use the matrix, companies identify their top three products/services, then the critical factors for success for those products/services (for example, delivery, quality and/or price). The company grades itself on the success factors, then identifies three top competitors and grades them as well. To take the matrix to the next level, it can be used to create a survey that is sent to customers, who grade the company and its competitors. Customer perceptions can then be compared to internal perceptions, providing valuable information and direction.

Because the matrix points out the strengths and weaknesses of a company and its competitors, it becomes apparent where opportunities lie. “A company can determine ahead of time which market areas might be difficult to penetrate because of a competitor’s strengths and which areas the company can capture because it has an advantage,” explained Ford. The matrix helps a company realize its strengths and identify the segment of the market that values those specific strengths. This close match is difficult for competitors to duplicate, which makes the company’s position more secure.

Neglecting to develop information on competitors means “you don’t know what differentiates your business,” said Sam Miller, WMEP manufacturing specialist. “You can’t position yourself in the marketplace. People who don’t have that knowledge invest a lot of time in quoting. If they don’t have a good sense of their target market, they quote everything. If they get a good sense of what their competitive position is, they can do a better job of focusing quoting resources.”

In fact, following up on lost quotes is another good way to find out about the competition. Asking why the quote was lost and who won it can yield valuable information. It’s surprising what information people will pass along when they’re asked.

It is important to note that the above methods are practical tools for both collection and analysis of competitor information which can deliver real Market Intelligence that you can act upon to create new growth opportunities for your business. Research data or competitive information does not necessarily produce actionable intelligence with real market potential, i.e. Market Intelligence. It’s usually a good starting point. But research typically becomes Market Intelligence only after meaningful and effective analysis like with a Competitive Matrix or Order Analysis. Without real analysis, your research can end up as just data with no strategic value for your company and its future.

Here is a list of some useful research sources of competitor information:

• Customers
• Suppliers
• Annual reports
• Trade shows
• Online resources: Hoovers (www.hoovers.com), Harris InfoSource (www.harrisinfo.com) and Standard and Poors (www.standardandpoors.com)
• The Wisconsin Innovation Service Center (WISC), affiliated with the University of Wisconsin-Whitewater (Contact WMEP for more information)
• Trade associations

Competitive Analysis is vital to keep your company from flying blind against competitors. Investing the time and resources to develop competitive intelligence puts your company in an active, rather than reactive mode. “Anything and everything you can do to develop intelligence on a competitor is essential to your company’s success and growth,” said Ford.