Their economic situation will remain tense for the years to come, industrial productivity has decreased considerably, but free enterprise inspires many business people to build trade relations with their neighbours. Countries like Poland and Hungary think about trading with the west for their growth.
Exporters from developing countries will recognise that these countries’ traders will post a strong competitive threat to them, since they aim at the same markets.
Obviously, the customer can only spend his money once. So he will make a selection from the wide range of products offered in the market place.
A customer’s purchasing motives should be known, so as to profit from his purchase. The supplier should also be able to satisfy the customer’s needs and wants better than the other competitors.
The success of many suppliers to West European markets depends largely on knowing, what the competition does to win customer preference. The suppliers do not hunt for undetected ‘holes in the markets,’ but fight each other for their share of the market.
Experience teaches them that a good competitive analysis is very effective to avoid a head-on collision with a competitor. If not avoided a showdown results in which, suppliers who enter a market after their competitors can never win.
So exporters entering a market, where competitors are already present, have to seek a different strategic position. They can try for instance, to be better or faster and more successful in winning customer preference than their competitors.
Therefore, they must know who the competitor is, how strong he is and to what degree he can threaten their market position.
Competitive marketing analysis:
If the competitor is known, it is possible to, fight with him.
Part of the management task is to describe the competitor and his activities. This can be done by checking his marketing assets:
The products which offer competition can be found from any distributor or retailer. He will be able to specifically describe the present competition in his area or store. The retailer welcomes competition amongst his suppliers, as it brings prices down.
But he too, has to make a choice about which product to distribute, as his selling space is physically limited. It is necessary to go to the shops or wholesalers on a regular basis (e.g. quarterly), to find out in what way the competitors products are better. The products could be more unique or more attractive and their quality should also be noted.
It is not always commercially wise to imitate these products, as those products could even be protected by patents or a trademark, which makes imitation illegal and punishable.
In most European countries the products must carry the name of the manufacturer or importer.
The names should be noticed. Other details like, if they are small or if they belong to a multinational, are they manufacturing locally, or do they import their products (in that case, who are the potential supplying competitors) should be found.
These will reveal a lot about their ability to defend their market shares. The big ones will have the knowledge, experience and money to effectively fight a new market entry or market presence.
It is very important to note the competitors’ prices. Price is one of the main motives for buying – next to quality.
In most free economies in the western world, the potential buyers will force a price-fighting with the competing suppliers. Consequently, price- setting largely depends on the competitor’s prices.
That goes for their (trade) discounts, their bonus or commission rates. These should be found out.
How does the competition canvass, sell, advertise or promote their products? Do they employ sales representatives? Do they have special promotional material? Are they successful? Their example should be taken but always, something special; something that no competitors can copy should be added.
Newspapers, magazines, brochures and catalogues tell a lot about the competition and about how they view their potential customers. So these should be regularly read.
The same goes for the distribution methods of the competitors. Which channels have they selected to reach their buyers? Or do they supply them directly? Sometimes, when the time or the means to find these answers is not available, the competitive channel selection can be a good guideline.
The arrival of media like television has made ‘teleshopping’ popular. Cable networks link households to television advertisers offering consumer goods (from consumer durables to fashion and jewellery). Direct mail or mail order has become big business.
In general, the competition, and the way in which they execute their marketing, could tell a lot about the markets in which operation has to be carried out. “Observing the competition” should be an integral part of the marketing activities. It provides valuable information and makes one prepared for any attack from their side.
The competition should not be blindly followed at all times. If an entrepreneur is convinced that he is doing the right thing, then he should go along with it, even when the competitor follows a different path. The competitor may even be beaten.