Which Competitors Should You Be Monitoring? Identifying the Right Competitors to Track: A Strategic Playbook

Introduction

In today’s market landscape, where digital disruption rules and competition is only a click away, understanding your competitive environment is more critical than ever. No company exists in a vacuum, and tracking your competitors, whether they’re direct or indirect, new or established, can give you a valuable edge. But the million-dollar question remains: Who should you monitor? The world of business rivalry is not a clear cut one-size-fits-all, and this article aims to shed light on that.

The Importance of Competitor Monitoring

As Airbnb co-founder Brian Chesky once said, “If we tried to think of a good idea, we wouldn’t have been able to think of a good idea. You just have to find the solution for a problem in your own life.” Airbnb is now a formidable rival for traditional hotel chains globally. This serves as a prime example of the importance of keeping a finger on the pulse of not just your immediate competitors but also emerging ones in the broader market.

Direct Competitors: The Usual Suspects

Direct competitors are businesses offering a product or service that could directly replace yours. A well-known example in the tech industry is the ongoing rivalry between Apple and Samsung. Both compete directly in the smartphone market with similar offerings, targeting overlapping customer segments.

Tracking direct competitors allows you to stay up-to-date with industry benchmarks, compare pricing strategies, understand strengths and weaknesses, and foresee potential threats.

When Microsoft was designing the Surface Pro, it had one clear competitor in mind: the Apple iPad. By studying the iPad’s features, user experience, and consumer feedback, Microsoft managed to design a device that addressed some user complaints about the iPad, such as the lack of a keyboard and USB ports. As a result, the Surface Pro gained a unique selling point in the saturated tablet market.

Indirect Competitors: The Unseen Rivals

Indirect competitors may not be selling the same product or service, but they’re competing for the same customer dollars. As such, these competitors can provide a wider understanding of consumer behavior and potential gaps in the market.

Netflix and Fortnite provide an interesting case. At first glance, they are far from competitors. Yet, Netflix stated in its 2019 shareholder letter, “We compete with (and lose to) Fortnite more than HBO.” Here, the competition was for users’ leisure time, not for similar products.

By monitoring indirect competitors like Fortnite, Netflix can glean valuable insights into what attracts its users, the level of engagement, and how it might adapt its strategies to remain competitive in the attention economy.

Emerging Competitors: The Disruptors

Often, companies get so caught up in monitoring their immediate competitors that they overlook the emerging ones, which can be a significant misstep. Emerging competitors might be smaller or newer businesses, but their innovative approaches can shake up the entire industry landscape.

Look at how Slack redefined workplace communication. Before Slack, the market was dominated by long-established email systems from giants like Microsoft. Despite the fierce competition, Slack’s unique features and user-centric design quickly won over a significant portion of the market.

Keeping an eye on such emerging competitors can provide early warnings of potential disruptions and opportunities to adapt your strategies accordingly.

Selecting the Right Competitors to Monitor

While competitor monitoring is crucial, resources are finite. As such, determining who to monitor should be a strategic choice. To do this:

• Analyze your direct competitors: Start with those who share your target audience and offer similar products or services.
• Look beyond your industry: Consider indirect competitors who may be vying for the same consumer dollars.
• Keep an eye on the horizon: Stay informed about emerging businesses that are breaking new ground in your market.

When Blockbuster failed to recognize Netflix as a significant competitor early on, it missed the chance to respond strategically to the emerging threat. By the time Blockbuster launched an online rental service, Netflix had already established a strong market presence.

Conclusion

Understanding and monitoring your competitive landscape is a key to sustaining your business in today’s dynamic market. By strategically tracking your direct, indirect, and emerging competitors, you can anticipate changes, identify opportunities, and make more informed strategic decisions.

But remember, competitor monitoring is not about imitation. As the story of Apple and Samsung shows, while keeping a close eye on each other, they both continually strive to innovate, differentiating themselves in unique ways. After all, your goal is not to become your competition but to outperform them.

While the task may seem daunting, the potential rewards – in the form of improved strategies, better customer understanding, and the ability to anticipate market shifts – make it well worth the effort. So, keep your friends close, but your competitors closer.