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Find out what your competitors are up to...before it’s too late

Now is the time to work out how to counter your competitors' next move. When you read the article in Feb. 2009 Industrial Market Trends which reports from a survey conducted by McKinsey Quarterly: 'A majority of executives who faced a competitor's innovation or pricing change found out about the move too late and were unable to respond before the change hit the market.’ In other words, if you don’t find out what your competitors are up to, you won’t be able to take action before your competitors' launch a new attack strategy. In this day and age, no one can afford to allow a decline in earnings.

There’s only one way to start to plan new tactics - you need to be informed of market changes that could make your customers switch to an alternative brand.

Get instantaneous feedback on your competitors’ moves.

You need to know your competition. You’ve to be more pro-active in order to stay ahead. In traditional market research you start with what you know your own customers are looking for and use customer input to make decisions on the future. Sadly Coca Cola forgot to do this when they launched New Coke in the 80's. The day after ‘New Coke’ was announced, Pepsi gave every employee the day off in celebration of their certain ‘victory’. No one wanted ‘New Coke’ and ‘Original Coke’ had to be launched in its place.

But this is now, and the global marketplace is an even more fiercely competitive arena. Yet companies continue to fail to conduct sophisticated ongoing analyses of their competitor's potential actions.

Execs accept loss of earnings due to competitor price or product change

According to a 2008 survey by the McKinsey Quarterly, executives mostly track competitors via news reports, industry groups, annual reports, market share data and pricing data. The report shows that a majority of executives faced with a competitor's innovation or pricing change, say that because they found out about the move too late, they were unable to respond before the change hit the market. An additional 20 percent didn't even find out about a price change until it had been in the marketplace for at least one or two reporting cycles.

Despite that, executives say they're "quite happy with the results they obtain," McKinsey notes. Around 40 percent of all respondents, and nearly 50 percent of C-level execs, say that they would continue to conduct their analysis of competitor's moves the same way they have been.

All the same, respondents said their competitors' moves "had the potential to cause a noticeable reduction in their earnings — an average of 7 percent." So although the threat to their bottom line is very much there, "any response tends to be rather slow," McKinsey Quarterly adds. "Indeed, 20 percent of those facing an innovation and 11 percent of those facing a price change say they are still planning a response.""

It isn't that most companies are considering a high number of options either. Half the respondents weigh up only one or two options and only 11 percent consider five or more. Plus, according to the report, most companies don't look beyond two years ahead and half don't examine more than one round of counter-moves by any competitor.

“On the whole, businesses tend to go for the most obvious counteraction”, the report says. Along with matching price changes and innovations, the other top responses were making intuitive decisions and not responding directly at all.

Building customer loyalty works...

Bill Conerly, an economist and business consultant who runs the ‘Businomics Blog’, says doing nothing is a perfectly viable response to a threat. “Granted,” he says, that would "work very well for three to six months," Using Starbucks response to McDonald’s selling premium coffee drinks as a vehicle for teaching corporate strategy, Conerly names other ways businesses could respond to threats:

• Find different ways to build customer loyalty through rewards or other incentives
• Cut costs to maintain profits while sales are falling — though he does not recommend this strategy
• Request government regulation, if applicable

Clearly, there's more than one way to respond to competitors and their actions. But how do you become more aware in the first place?

Today it's simple to set up online panels for market research projects.

The answer is clear. It lies in building up your online panel through carefully targeted database sampling.

Now it’s easier than ever before to set up database sampling for any online market research project. MARSC.net extracts balanced, statistically correct samples from your database based on stored demographic information. So you can gather information about your competitors’ activities, directly from the mouths of your customers.

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