COMPETITOR
EVALUATION
IN
MARKETING
CHANNELS
STRATEGIES

Issue No 17

As markets become increasingly crowded and price competitive, effective marketing channels strategies rely on detailed and regular competitor evaluation.  Market leaders are often characterised by the quality of their competitor intelligence and the comparative strength of their channel performance.

Competitor information in most companies is often inadequate.  Competitor intelligence is often no more than market share data arbitrarily complied, providing little insight to competitor strategies and competitive advantage.

Companies are usually aware of how they compare to competitors’ product features and price.  However, meaningful competitive analysis must extend to channel, brand and financial performance.  Competitor market segmentation, channel partner profiles, channel structure and business plan targets provide vital insight to future competitor activity and competitors’ strengths.

The following is a guide for evaluating competitor activity.  A coordinated marketing channel strategy should include answers to all or most of these questions – the answers must be compared to your own performance and where they differ it is important to ask why.

1. Marketing and channels strategies.

• What is the value proposition offered by each competitor in each channel?
• On which market segments and channels do competitors concentrate?
• How are competitors’ marketing channels structured and motivated?
• What alliances do competitors have, and what do these alliances achieve?
• What approach is applied to pricing strategies?  Are your competitors price cutters?
• What are the competitors’ points of differentiation?

2. Performance record

• How do competitors meet channel partner needs?  How well do they meet these needs?
• Are competitors’ channel partners more loyal?  If so why?
• What proportion of channel partners’ business is shared with competitors?
• Why do we win or lose business when competing against each competitor within each channel?

3. Channel Support

• What support do competitors provide channel partners in addition to sales and marketing support?
• What is the nature and quality of reach competitor’s service and support?
• What is the reputation of competitors within the channels?
• What are the strengths and weaknesses of each competitor?

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4. Financial

Market leaders not only have a detailed understanding of their own costs to serve their channels and channel partners – they are also able to estimate their competitors’ cost to serve each channel.  How do your costs compare?

5. Communication

• What methods does each competitor use to inform channel partners about its products and competitive advantages?
• What key messages are communicated in competitors’ promotions and sales campaigns?
• What co-operative arrangements are in place between the competitors and their channel partners?

These are only a few of the questions that apply in different competitive channels situations.  Developing and maintaining effective competitive analysis information must also involve key channel partners.  Quality channel partner programs will include shared competitor information and other business planning tools.  Two additional points are also noteworthy;

Firstly, a form of competition that is often underestimated: indirect competition.  For technology-intensive products and services, competition may not come from a similar product, but from channel partners’ attitudes.  Suppliers must assist channel members identify indirect competition and develop successful responses.

Secondly, a strong competitive analysis program identifies opportunities to exploit new and untapped markets or market segments.  The most effective marketing channels strategies examine overall market opportunity and wider competition before focusing on specific market segments.  Optimal channel and channel partner selection will depend on evaluation of the market opportunity and wider competitor activity.

When faced with competitive data we need to ask ourselves “What do I do with this information?”  Competitive intelligence is only useful when it is complemented by competitive analysis, and when the results are effectively communicated to channel partners.  A strategy matrix needs to be developed.

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