In order to increase revenues, businesses often have to find new ways to increase their market presence and undercut their opponents. Doing so, however, can be quite tricky given how long some of the competitors’ track records are. Regardless, at some point, it is practically impossible to increase revenues unless one is taking customers away from other businesses.
Well, to be able to get more buyers who might already be loyal to certain brands, market analysis is crucial. For those unfamiliar, this is the process where the company will do a thorough investigation of their competitors and figure out as much as they can about their operations. Why would they want to do something like this? Because according to a full-service manufacturing corporation, Universal Manufacturing Corp, it will allow them to build a strategy that can help with customer acquisition. So, what are some of the most important things that businesses should do when analyzing their market counterparts?
Start With The Numbers
Before getting into the details of other company’s operations, the best possible start is to take a look at the numbers. And given how practically all relevant information tends to be disclosed in public financial statements, getting access to the relevant numbers should not be difficult. As far as the figures that should be considered, it is important to look at the opponent’s expenses.
Doing so will help one create a picture of how much their competitors are spending on some of the common categories of costs. For example, if the cost of goods sold for a product-based company that makes the same item as someone else is five times lower, it means that they have found a way to reduce their direct expenses by an extreme amount. Thus, it may be time to look into ways to do the same and, in turn, increase profit margins.
Another important set of numbers would be some of the common ratios that showcase how efficient a certain business is. For example, the turnover ratios can show how fast a business is selling their items, collecting their receivables, and so on. This information can be crucial to figure out if one’s business is falling behind the industry’s standards or if they are doing better than others. If they do prove that competitors have better ratios, it will give them a tangible direction in which they can move from that point on.
Analyze Online Presence
Once the dollar figures are analyzed, it is time to take a look at some of the intangibles. The most obvious one in this day and age would be the online presence. According to Universal Manufacturing Corp, businesses that have a large online footprint are much more likely to have low acquisition costs and higher conversion rates. This is a direct byproduct of people purchasing things from the internet. So, to better understand the opposition, one can take a look at how they handle their website, e-mail correspondence, social media accounts, and similar.
Communicate With The Customers
The next step would normally be to get in touch with various people who might be able to answer questions from the first-hand experience. To start this process off, companies can send surveys to existing customers of their opponents. Although the response rates are generally going to be relatively low, since people will seldom volunteer relevant information, one could still gain valuable insight. The most important things that a business should look to find out from this stage is how satisfied the customers are.
Communicate With Former Employees
After reaching out to the customers, one could try getting in touch with people who used to work for their competitors. Since most markets have individuals that shift between companies and turnover rates are almost never nonexistent, there will be people who fit this description.
Universal Manufacturing Corp points out that the hardest part of the process will be finding them and incentivizing them to talk about their experience with former employers. In the end, being tactful and planning this stage of the process thoroughly will help increase the response rate and obtain some high-quality answers.
Try Direct Communication
Depending on how the correspondence with the former employees goes, companies may not even have to rely on the last option which includes them contacting the actual competitor. Although this step is relatively uncommon and does not happen as much anymore, it has proven to quite useful in the past.
What it means is that the company will try to get in touch with their competitor and ask them about their operations. Obviously, a fair share of opponents are going to be hesitant and refuse to disclose absolutely any information. Some, however, may be willing to interact this way and help build a partnership between the brands.
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