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Competitor Analysis in Product Marketing.

In my personal opinion, a competitor analysis should focus on, and revolve around, where competitors are most vulnerable -- in other words where natural marketing opportunities exist.

One of the best ways to begin this analysis is to write a history of your industry and your competitors. This history will illuminate your competitor's goals, strategies, beliefs, and capabilities, and challenge your assumptions.

Are you facing a particularly difficult and confusing competitive situation? A competitor analysis begins with an understanding of competitor behavior in your market. Try getting a handle on the situation by writing a history of your market.

Determine where your competitors are most vulnerable.

While writing the history, focus on extracting and assembling your competitor analysis by building a framework of their History, Goals, Strategies, Beliefs, and Capabilities.

History: A history of your industry is a key component of understanding your current situation, and the trend and possibilities for moving forward.

Goals: This is basically a summary of how competitors are currently operating in your industry. Now, from your history, you should begin to notice obvious competitor trends. Your assumptions about future goals should take on additional significance. Try to understand the competitors' assumption of risk, corporate values, and long term commitments.

Beliefs: What do your competitors believe about the issues in your market? What are the differences in beliefs between competitors? Are competitor beliefs uniform or are they different in your industry? How have these beliefs changed over time? Most importantly, can you find gaps or dogmatic misconceptions?

Strategy: From this point, you begin to understand your competitor's strategies. This is a synopsis of what competitors are trying to accomplish during the next five years. Test your assumptions. Check literature and attend some conferences or trade shows. Talk with others who may have information.

Capabilities: How have competitor capabilities changed over time? Does this yield any additional clues into their financial resources? Will they be able to sufficiently respond to any changes in paradigm that you might create?

Here's an example ...

A street has competitive gas stations. The street runs toward a major city and is a perfect location for daily commuters. At the start, there was plenty of demand for every gas station.

Over many years, new competitive gas stations were built. In response, existing stations installed computerized self-serve pumps to improve their competitive cost position. Price wars continued until all stations were barely profitable.

We all know them. After you fill-up, you walk inside a dusty smoke filled building. You see a couple shelves of junk food. A pot of stale coffee sits near the front door. At the register is an employee smoking a cigarette.

The strategic situation looked bleak -- except for one station.

That owner decided to be different. He went backwards to reinstate service and increased prices. In fact, he went beyond to provide incredible service. Sure, some customers continued to go to the other stations for lower prices. But a certain segment of customers came to his store for the better service. He bought his neighbor's station, merged the two facilities, and expanded his convenience store. He hired an architect to design a new brightly colored, recognizable building. He bought a franchise from a popular coffee vendor -- employees served fresh brewed coffee. He used the increased customer volume to leverage vendors -- further increasing his profits.

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