CUSTOMER RELATIONS

SELF - LEARNING MATERIAL 5

WEEK 5

Understanding your Competitors

Understanding your Competitors

INTRODUCTION
Welcome to the Self-Learning Material (SLM) for Customer Relations!
Developing a relationship with your customers is one of most effective strategies a
business can adopt. Studying customer relations strategy can help you deliver
tremendous ROI, boost customer acquisition, loyalty, and satisfaction.

This self-learning material was designed to provide you with fun and meaningful
opportunities for guided and independent learning at your own pace and time. You will
be enabled to process the contents of the learning material while being an active
learner. Further, this also aims to help learners acquire the needed 21st century skills
especially the 5 Cs, namely: Communication, Collaboration, Creativity, Critical
Thinking, and Character while taking into consideration their needs and
circumstances.

Read the simple instructions below to successfully enjoy the objectives of this
self-learning material. Have fun!

1. Read the lessons with understanding and comprehension for you to easily grasp
the topics.
2. If you have any questions or topics that you cannot understand, do not hesitate to
ask your subject teacher.
3. Activity Notebook is required for answering the exercises.
4. Do not forget to answer the pre-assessment before moving on to the lesson proper
and other activities included in the module.
4. Read the directions carefully before doing each activity.
5. Observe honesty and integrity in doing the activities.
6. Review your answers before passing.
7. Always submit the activities on time.
8. Have fun in learning and answering your self-learning modules. It will be easier for
you to absorb all the learnings that you will acquire if you are enjoying what you are
doing.

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If you encounter any difficulty in answering the tasks in this module, do not hesitate to
consult your teacher or facilitator. Always bear in mind that you are not alone. We hope
that through this material, you will experience meaningful learning and gain deep
understanding of the relevant competencies. You can do it!

OBJECTIVES

At the end of the self-learning material, you should be able to:

 Understand the concept of competition

 Identify possible competitors of a business

LESSON 5.1 Understanding your Competitors

WHAT IS COMPETITION?
Competition is defined as whenever two or more parties strive to meet a common
goal that cannot technically be shared. For businesses, this goal is typically tied to
sales to customers, but can also include brand awareness.

Defining your competition is an important consideration, as you need to be careful not

to define it too narrowly. If you fall into this trap, it is likely that competitive or substitute
offerings can enter the market unexpectedly and disrupt you significantly.

Instead, it is better to define the competitive landscape more broadly. Taking into
consideration direct competitors, as well as any close substitutes which may be
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providing better solutions to the same target market. These two distinct competitive
categories are known as:

 Direct competition: Someone who offers the same product or service and
compete in the same market.
 Indirect competition: Someone who offers a different product or service and
competes in the same market to satisfy similar customer needs.

WHO ARE YOUR COMPETITORS?

All businesses face competition. Even if you're the only restaurant in town you must
compete with cinemas, bars and other businesses where your customers will spend
their money instead of with you. With increased use of the Internet to buy goods and
services and to find places to go, you are no longer just competing with your immediate
neighbors. Indeed, you could find yourself competing with businesses from other
countries. Your competitor could be a new business offering a substitute or similar
product that makes your own redundant.

Competition is not just another business that might take money away from you. It can
be another product or service that's being developed and which you ought to be selling
or looking to license before somebody else takes it up.And don't just research what's
already out there. You also need to be constantly on the lookout for possible new
competition.

Knowing who your competitors are, and what they are offering, can help you to make
your products, services and marketing stand out. It will enable you to set your prices
competitively and help you to respond to rival marketing campaigns with your own
initiatives.

You can use this knowledge to create marketing strategies that take advantage of your
competitors' weaknesses, and improve your own business performance. You can also
assess any threats posed by both new entrants to your market and current
competitors. This knowledge will help you to be realistic about how successful you can
be.

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The following are number of different ways to get a handle on your competition:

1. Keyword Search
The easiest way to discover the competitors in your area is through doing a Google
search for your keyword. Most of your customers will search for you through a simple
search like ‘<service you provide> + city name,’ so you might search “Milktea Shops
in Guimba” to start.

You can also search through Facebook, Twitter, and Instagram for your keywords if
that makes sense. These places will give you a better view of the competitive
landscape – and may even be more up fresh than the original search that you did
using your original search parameters.

2. Conduct a competitive analysis

If you’re looking at your competitors because you’re writing the competition section of
your business plan for a bank loan, angel investment, or venture capital, it’s a good
idea to start with a competitive matrix, SWOT analysis, and explore Porter’s Five
Forces.

 Using a competitive matrix. A competitive matrix is a great tool for comparing

specific features or perceived benefits between your business and the
competition. It’s a simple table that allows you to check boxes regarding how
customers are being served and who actually offers those solutions. Starting
with this matrix can give you an idea of potential strengths and weaknesses and
can help you kick start the next analysis.

 Conducting a SWOT analysis. Reviewing your competition easily fits into the
SWOT analysis framework, where you’re looking at your strengths,
weaknesses, threats, and opportunities. This is a simple method to quickly
identify where you’re beating out or falling behind the competition and develop
any strategic changes you need to make.

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Example:

 Learn about Porter’s Five Forces. The most well-known framework people
use for strategic development (including competitive analysis) is Michael
Porter’s Five Forces. This framework can help you map out the various
competitive tensions at play, and assess the attractiveness (or otherwise) of the
industry you are looking to compete in. Similarly, his generic strategies
framework can help entrepreneurs assess which marketing strategy is worth
focusing on as a basis for competing.

Example:

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3. Direct competitors
These companies are the ones you need to find out the most about because they’re
your fiercest competitors. When customers are making purchasing decisions, their
products or services always end up on the short list. With this group, you’re vying for
the same customer dollar. More than likely, you have three or four companies that fall
into this category.

4. Indirect competitors
These companies offer alternative products and services than your offering. Usually,
you don’t worry about these companies too much, but you should keep tabs on what
they’re up to. Sometimes an indirect competitor can become a direct competitor.

5. Substitutes or new entrants

A substitute product is anything that delivers the same set of benefits to your
customers as you do, but is not a competing product. For example, DVD rental is a
substitute service to cable TV. There could be new companies or entrants coming on
the scene that might change your industry completely, such as satellite radio has done
to the radio industry.

The clearest way to identify your competitors is to figure out if you weren’t around, who
would supply your customers to fill their needs and what customers would buy to solve
their problems? In answering this question, don’t restrict your thinking only to
companies similar to your own. Consider firms outside of the realm of possibility such
as those who compete in the industry from a corporate strategic viewpoint. When
contemplating the future, it’s necessary to envision any number of possibilities.

ACTIVITY 5
Identify the direct competitors, indirect competitors, and substitutes or new entrants of
the following businesses.
1. Jollibee
Direct Competitor/s:
Indirect Competitor/s:
Substitutes/New Entrants:
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2. Apple
Direct Competitor/s:
Indirect Competitor/s:
Substitutes/New Entrants:
3. Proctor and Gamble
Direct Competitor/s:
Indirect Competitor/s:
Substitutes/New Entrants:
4. Milktea Project
Direct Competitor/s:
Indirect Competitor/s:
Substitutes/New Entrants:
5. CATMAN Inc.
Direct Competitor/s:
Indirect Competitor/s:
Substitutes/New Entrants:

WAYS TO BETTER UNDERSTAND YOUR COMPETITORS

No matter what product or service your business offers, it will always face competition.
Understanding your competitors and their business practices is the key to success.
It’s important to know what products or services they offer, how they market their
business, the nature of their distribution and delivery system, how they implement new
technology and how customers view their brand. Obviously, these factors are not
always simple to assess.

Speak to Your Customers

This is a simple step, but many businesses don’t do enough of it. No one can give you
a clearer picture of the competition. If a new customer once got their product or service
from another business, ask them why they made the switch. Also, while it might be
difficult to hear, it’s also important to reach out to former customers and find out why
they stopped using your business and switched to a competitor. You can’t make useful
changes without gathering the right information from the right source.

Speak to Your Suppliers

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Like an office manager in the corporate world, suppliers know the inside scoop on
every business they work with. Getting to know your supplier well is a smart move.
While they may not be willing to share detailed information, you may be able to get a
general idea of what a competitor is purchasing. They might also provide insight into
new products or technology, so you can beat the competition to quality and cost
improvements. All information is useful when scouting out the competition.

Speak to Your Competitors

If you use the right approach, you can learn a lot of information about a company by
simply contacting them and asking the right questions. While they certainly won’t
divulge all of their business strategies, it’s possible to get high-level information such
as the size of the company, current product offerings and new markets they may be
moving into. Again, even small pieces of information are helpful in putting together the
overall puzzle.

Go to Industry Seminars, Conferences and Expos

Whenever those in the same industry meet at a convention, expo or seminar, plenty
of valuable information is shared through informational sessions, exhibit booths and
networking events. Seeing your competitors in action will give you valuable insight on
their business. If there is more than one competitor in your market, you can learn a lot
about the differences between competitor A and competitor B, and vice versa.

Check Social Media

Simply monitoring social media sites such as Facebook, Twitter, Instagram and
LinkedIn can offer a lot of insight into what customers and competitors are saying. One
of the distinguishing characteristics of the internet is that people speak their minds.
This is especially true on review sites such as Yelp or Trip Advisor. Google also offers
users the chance to review businesses, all of which is available for free online.

Watch Who Competitors Hire

It’s easy to ascertain where a company is focused by looking at who they hire. A new
social media marketing director? A manager for a branch location? Job listings are
packed with information about a company. And on sites such as Indeed and Monster,
among many others, you can find job listings from all the competitors in your market.
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These ideas can help you gain more detailed insights into what the competition is
doing. Use them to improve your position. In a highly competitive business world, you
need every advantage you can get.

ASSESSMENT

DIRECTION. Answer the following questions.

1. You want to beat your competition, but ultimately you want to best serve your
customers. Therefore, you should know what your competitors’ strengths are. But
how will you identify that?

2. It is said that indirect competitors are not as important as direct competitors. In this
case, how will you treat them?

3. Should competition be the focus of companies? Explain your answer.

4. How can you say that a competition between two businesses is stiff?

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REFERENCE

Website:
Understand your competitors. Info Entrepreneurs.
https://www.infoentrepreneurs.org/en/guides/understand-your-competitors/

Why You Need to Know Your Business’s Competition. Alan Gleeson.

https://www.liveplan.com/blog/why-do-you-need-to-know-your-competition/

How to Identify Your Competitors. Bjorn Wallman.

https://onceinteractive.com/blog/how-to-identify-your-competitors/

7 Ways to Better Understand Your Competitors

MSU. https://www.michiganstateuniversityonline.com/resources/leadership/ways-to-
better-understand-your-competitors/

How to Find & Define Who Your Competitors Are. Qualtrics.

https://www.qualtrics.com/au/experience-management/brand/how-to-find-
competitors/

5 Things You Should Know About Your Competitors. Kristen McCormick.

https://thrivehive.com/5-things-you-should-know-about-your-competitors/

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