Why Competitive Intelligence is crucial for the Small-to-Medium Business market (SMB)
Let's look at the world through the eyes of a business owner who falls under the SMB market. The definitions of the SMB market may vary but generally accepted revenue qualifiers fall between the $10 million - $100 million bracket.
The bulk of Australian businesses earn less than that and hence become part of the Small Business market. Now from my experience across all sizes of businesses I see the 'big boys', the corporate giants adopt certain practices that help them stay relevant in the marketplace. I see no reason why the smaller fish can't apply a lot of what the larger companies do.
I have been involved with the CI (Competitive Intelligence) function either directly or indirectly and see the obvious value it has for a corporate. Let us see how it applies to an SMB (this might also apply to small businesses in most cases). From the perspective of the SMB owner let us see how staying ahead of the competition will impact the overall success. Here are the top 5 reasons why an SMB must invest in CI (Competitive Intelligence) practices:
Top 5 Reasons Why SMB's Need Competitive Intelligence:
1.Increased Customer Acquisition
Through Competitive Intelligence (done right) you can get a clear picture of how consumers view the products / services in the market and what criteria they use to evaluate who they do business with. An unbiased approach to this will help a company refine their product / service and help position it most favourably, thereby adding to their customer base.
2. Enhanced Resource Management
An SMB needs razor-sharp focus and many business owners try to enter new markets or introduce new product lines too early in the piece and spread themselves too thin. The result? Disaster. Competitive analysis will reveal where the money is to be made and help prioritise initiatives. The analysis will cover SWOT-based reports on competitors and will allow the SMB to identify gaps in their competitors' armoury and exploit the same in the most efficient way.
3. Improved Growth Planning
A common misconception is that competitive analysis does not incorporate any market elements. A holistic approach to CI will examine intricate elements of not just market dynamics, but also consumer behaviour, products etc. This kind of analyses will allow a company to explore and expand it's core offerings into possibly complementary product lines or entering new markets as an example. While analysing growth initiatives, risk analysis is a key tool which is typically informed by competitive analysis.
4. Increased Market Share Protection
Competitive analysis will identify sources of competitive threat and a good analyst will incorporate threat mitigation strategies. While growth is on the agenda for many business owners, not losing ground is also a strong priority. Defending their turf is easier when business owners have a good grip on the competitive landscape.
5. Higher Profitability
Another very common misconception is that if a business is growing it is being profitable. Growth can occur without profitability and while a large corporate can get way with a deliberate 'loss leader' strategy, many smaller businesses cannot. Competitor analyses will use benchmarking models on various elements including pricing, promotional activities, distribution methods etc. This gives a priceless understanding of how similar businesses are operating and staying profitable. Imitation is the best form of flattery. In business, it can be the difference between profit and loss. Instead of being just a low-cost player, competitive understanding will help a business truly be differentiated.
The trick is to be able to an efficient and ongoing competitive intelligence piece without blowing your marketing budget.
If you run a small-to-medium business and are keen to see how this could benefit you, give me a call and I would be happy to chat further.