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.
2. Performance record
3. Channel Support
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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?
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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The matrix will evaluate expected competitor responses. When a strategy is developed it will be field-tested with the input of selected channel partners.
Finally, effective marketing channels strategy will address key competitive issues including:
A competitor evaluation program is just one of the ways market leaders work more closely with their channel partners to ensure a more sustainable competitive advantage.