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FROM THE EDITOR
Responding to a Reader Query
In a mini-survey back in June 2003, I asked you what article topics you’d
like to see explored in upcoming issues of the Bulletin. I’ve been using
your responses to guide my topic choices ever since. And I’ve been getting
very few "unsubscribe" responses, so I gather you’re finding my tips
helpful. Thanks again to those of you who responded to that survey!
In this issue I respond to an entrepreneurial reader’s request: "Where can
I find information on competitors? I’d like to get to know the market I’m
entering better."
Remember that competitors come in three flavors, and I don’t mean Vanilla,
Chocolate and Strawberry. Current, potential and substitute businesses all
compete with you. The current competitors you probably know by name, if
you’ve been in business very long.
The potential competitors may not even be in business yet, so don’t worry
about them—but do take note of whether there are high or low barriers to
entry in your line of business. If the barriers are low, as in the "career
coaching" and "home organizing" categories, better watch your back!
Substitute competitors are the most frequently overlooked players in the
game. If a person could be lured away by a substitute, you need to know
that. Must I remind you that people don’t buy products, they buy solutions
to problems? To discover and defend against substitute competition, think
about other ways they might solve the problem that brings them to you. A
person needing "home defense" might shop for a burglar alarm—or for a
rottweiler.
Here are three specific action steps you can take to increase your
competitive intelligence:
#1: Read about your market area and about your industry. Look for relevant
directories and periodicals. To find details about specific competitors,
use the Dun & Bradstreet Directory or the Thomas
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Register. You’ll get snapshots of parent/subsidiary relationships, ballpark financial figures,
estimates of sales, descriptions of product/service line, and more. To
find general business news for your region, search for periodicals like
those published by American Business Journals or Crain Communications. And read your
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Bonus Tip:
Visit your competitors from time to time. Why not? Observe customer
traffic, wear and tear, overcrowded or under-utilized space—any change to
these observable factors might tip you to their next move.
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local paper, even the want ads. Competitors’ hiring may tip you
to their expansion plans.
#2: Join your local chamber of commerce and other business/professional
groups, such as the Rotary Club or the local chapter of the American
Marketing Association. Some groups meet at local businesses. Some include
spotlights on members. Go! People talk, and you’ll be there to hear them.
#3: Talk to sales reps and suppliers. If they call on you, they most
likely call on your competitors too. Part of their stock in trade is
gossip. Get your share! Bankers, real estate agents, and others in the
financial community are also "in the know". They won’t relay confidential
information, but they can help you spot trends and confirm hunches. And
finally, don’t forget to talk to your customers! They may shop with
competitors. Encourage them to tell you why.
Resources
Find out if American Business Journals
publishes an edition for your metro area.
Find a trade publication covering your industry.
"How to deepen ties with current customers"
"Spy on your competitors: 4 steps"
TOOL BITS
bCentral Tools for Competitor Research
Product Line Planner to the Rescue
Are you just getting to know an industry sector? Not even sure who’s
competing with you? If you sell directly to consumers, you’ll find our
latest tool, the
Product Line Planner, helpful.
The tool produces reports on products and businesses in the retail trade, accommodations,
and food service sectors. Using the tool, you can view specific sales
information by product line or by kind of business.
If, for example, you are interested in selling "optical goods" (glasses,
sunglasses, contact lenses, etc.) you could use a "Kinds of Business
Selling Product Line" report to discover what types of stores carry these
goods, their total sales for this product, and the proportion of that
sales to their overall store sales. Two types of report are available: one
displays the data by product line and the other by kind of business. Click
on the hot-linked codes in the left column to switch from one view to the
other. All reports are free during this introductory period, so click
away!
For Market Area Research, Use Demographic Profiler and Household Spending
Use the
Demographic Profiler
tool to find out more about the
population in your current trade area, or to evaluate the potential of new
trade areas. View population and household counts by several demographic
variables including gender, age, race, household income, and more, for any
geographic area you specify. This data helps you understand your
competitors’ customer bases—and your own.
Use the
Household Spending
tool to generate estimates of market
potential for specific products and services, segmented across demographic
variables and geographic regions. A quick estimate is easy to make using
the Household Spending report. The first line of that report shows the
market potential for any selected product in any selected geography. To
get that report, simply select your product category and choose the
geographic selection that best describes your market area. If your
business is an existing one, subtract your annual sales from the "Total
Market Potential" in that top line. What’s left is an indication
of the sales that are currently going to your competitors. If you are
starting a new business, you already know the answer: all of your area’s
sales are going to competitors! You can fall back on the research tactics
described above to help you discover who your closest competitors will be...
and how you can win a share of that total market potential.
Resources
"Forecasting a Market Area’s Sales: Belinda’s Bullish on
Broad Ripple"
"Forecasting a market area’s sales—with accuracy"
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SURVEY
Last month I asked you to e-mail me if you had a direct mail "war story"
to share.
Scroll to the end of this Bulletin to read Tom Cox’s tale and our Direct
Marketing guest expert Tom Mac Arthur’s reply.
New survey: Where do you find competitor information?
Visit our survey and share your tips.
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I look forward to your feedback.  Click here to write to me and I will try to respond promptly.
Best regards,
Sarah White, Editor, the Bulletin
Third Wave Research
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