Most companies accept the need to know their markets, but many of than fail to realize the importance of knowing and acting against their competitors. Michael Clay and Thomas Fawcett explain what can be done.
Although many companies have marketing policies and even occasionally written marketing policy statements, there can be few marketing managers who have detached themselves completely from the pressures of day to day operations to develop a strategy covering relationships with competitors. Marketing actions in this field tend to develop as a result of short-term tends, such as a series of orders lost on price or service, rather than as part of a planned offensive campaign. The efforts of sales managers, planners and salesmen are usually concentrated on establishing good quality products, on providing good service and on selling at a fair price. The danger is that these admittedly necessary functions may be carried out in a competitive void as if competitors do not exist, as if the only occasion when the competition needs to be recognised is when the company finds its performance is slipping against its own plan.
There are a number of reasons why one needs to know a good deal about the enemy:
1 . It is difficult to judge your own performance if you are not able to relate it to the opposition. For example, you might feel satisfied with a growth in turnover of four per cent per year if you did not know that the leaders in your trade were achieving eight per cent. Again, you might be satisfied with a margin of to per cent, but not if your rivals were achieving 15 per cent.
Disappointing though such discoveries might be, they are probably symptomatic of something worse. They almost certainly mean that there is something seriously wrong with management or plant and that the company's position is likely to get even worse, rather to than stay static in relation to the competition. And what happens if the market contracts and a bout of price cutting starts? It means the company will be making a loss while the opposition may still be making a profit. In fact, if the enemy knows enough about you he can force you out of business almost any time he likes, simply by cutting prices.
2. Price is, of course, only one of the tools of competition, and it is equally important to know what standards are being achieved in the way of product design, performance and service generally. It goes without saying that if the competition develops significant advantages over your product, you are in trouble. The important thing is to make sure that you know about it before the product is launched. Again, if delivery times are shorter than yours, or are more reliably maintained, you need to know. And the same is true if improved distribution arrangements, such as the setting up of local stock points, are being made. In fact, there are few activities of an opponent which do not affect you in some way. If you can get advance warning of new developments it means you are better armed to combat them or even to pre-empt them.
3. So far we have been looking at the situation from a defensive point of view, but it is, of course, equally important to have a knowledge of your competitor's weaknesses so that you can take advantage of them.
4. It is important too to keep an up-to-date picture of a rival company in case another rival makes a bid for him. Such a takeover could result in the creation of a new company of a size that would render your situation perilous. It is, therefore, necessary to be able to react swiftly to any such bid and to have sufficient information on hand to make a prompt counter-bid possible. Indeed, the possession of adequate information might either prompt you to take the initiative in making bids, or might even enable you better to fight off an attempt to take over your own company.
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