Analyzing the Competition in Your Internet Marketing Plan
Web Marketing Today, March 13, 2000
One serious error I see too often is blindly going online with a "successful" business plan pioneered by an earlier online competitor. How many so-called "portal sites" are still springing up. Enough already! In many cases, competitors are now so strong that the new business has no chance of success. Internet business space is extremely crowded -- mostly by smaller players. You've GOT to understand the competition if want to devise a successful Internet marketing plan. Your goal is to identify your company's chief competitors, analyze their individual marketing strategies, and see where to position your company.
Identify the Leaders
The first step is to identify the major players. Start with the Yahoo Directory category or categories closest to your business. While the Yahoo Directory (http://www.yahoo.com) is no longer comprehensive, it will list the major players. Print out the directory, and then check out every link, making notes on your printed copy. Look for the larger companies, innovative approaches, new products, etc.
You can often see which companies get the most traffic by checking the Media Metrix 500 (http://www.mediametrix.com). You can also learn about relative traffic by using Alexa (http://www.alexa.com). A free add-on to your web browser, it ranks the traffic to each site you visit to in terms of Top 100, Top 1000, Top 10,000, etc., giving you a rough idea of your competitors' positions in the traffic pecking order.
Scrutinize the Leaders
The second step is to study the top 5 or 10 competitors carefully. You can learn a lot from their websites. Make notes on what you discover: Look for:
- Products or services offered. Note especially any that differ from your own offering.
- What is the distribution system for products: inventory, distributor, drop-shipping?
- Customer service. Look for guarantees, policies, procedures.
- Look, feel, and functionality of website.
- Capability and personalization of the e-commerce system.
- Advertising campaigns and offers.
- Strengths and weaknesses from the customer's point of view, not yours.
- Strategies and objectives.
- Look for a statement of vision or purpose, or what amounts to a Unique Selling Proposition on the site.
- Areas where the competitor holds a market advantage.
- Vulnerabilities or gaps in what is offered.
If the company is publicly traded, you can learn more under SEC filings at Edgar Online (http://www.edgar-online.com) and a variety of investment information services. Write down the names of key officers and look for interviews or speeches that will give you clues.
Highlight Strengths, Vulnerabilities, and Gaps
Third, summarize your findings into a sentence or two highlighting key strengths and weaknesses you find for each top competitor. If this is an especially imposing competitor note strategies necessary to counter their offering. Your strategies may vary depending upon your own strengths. If you have a large cash reserve, for example, you might want to blow away the competition by vastly outspending them in effective advertising. But if you're small, you'll need to use your ingenuity to leverage your strengths to take advantage of your competitors' weaknesses.
Though the accumulated research for this section of your Internet Marketing Plan may be voluminous, distill it down to a few paragraphs that capsulize your competitors and how you plan to deal with them. What you may decide after surveying the competition is that the field is crowded, and you don't have anything particular to offer that your competitors don't. Perhaps your decision should be to tailor your online offerings to areas in which you CAN compete successfully, or decide not to compete at all.
In early 2000, I see far too many copycat sites funded by venture capital trying to compete gamely for the same space. They can't all survive competing head-to-head. The smaller sites must find a niche in which they can flourish or be driven out of business. Don't put up a website just to do it; don't waste your time and money unless you have a plan to carve out a profitable business on the Web in spite of the competition.
But don't be frightened away prematurely. Remember David vs. Goliath. The larger the company, the more slowly they make decisions, and the more the officers are more interested in retaining their own jobs rather than risking security to gain a competitive advantage. You CAN find weaknesses and gaps if you look carefully for them. Then use your ingenuity to offer the customer more than he can find anywhere else.
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