Competitor analysis

Understanding the competition in your export market

View transcript for Episode 21 - Understanding the competition recording
To have a better chance of gaining a competitive edge in a market, you need to understand competitor pricing and market share.

Knowing the price of similar products or services, who and where they’re targeted at, and how much your competitors sell, will help you find your position in the market.

So let’s start with competitor pricing.

There are easy ways to start researching it. These include asking your existing customers what prices they pay your competitors. Looking at competitor websites. Examining competitor annual accounts and reports, if published. And looking at both global and regional marketplaces, such as Amazon or Alibaba.

It’s also important to understand how they arrived at their prices. Do they have a local business or do they import? What are their direct costs and profit margins?

If you have this information you’ll find it easier to price your own products or services accurately.

Competitor market share.

Now let’s look at their market share.

Understanding this will help paint a picture of whether there is space for you to easily enter. You can find information from the same places you would find information on price. But also look at trade associations, market research or third party consultancy work, your own sales team, distributors and agents.

Remember that sales and market share is not just about undercutting competitors. If you understand the market, you can target the under-served sections of it. And you may have a chance to price at a higher level, based on a unique selling point.

What you’ll learn

  • why competitor pricing and costs are important to your export plan
  • what market share is and how to work it out
  • how to find this information for your target market

Where to start

Three important factors in understanding the competition in a new market are:

  • competitor pricing
  • competitor product positioning
  • market share

Knowing the price of similar products or services, who and where they're targeted at, and how much your competitors sell will help you find your position in the market. This will give you a better chance of gaining a competitive edge.

Competitor pricing

Try to find out as much information as you can when looking at competitor prices in your target market. Look at retail and wholesale prices, and place all your competitors on a scale from most to least expensive. In some markets it is also wise to look at regional, as well as local and global competitors.

The best places to find competitor pricing are:

  • your existing customers and prospects — ask directly what prices they are paying from your competitors
  • competitor websites
  • annual accounts of competitors, if published
  • global and regional online marketplaces, such as Amazon or Japan’s Paypal Mall

It’s also useful to understand how your competitors arrived at their prices. Are the businesses local or are they importing into the market? What are their direct costs, variable costs and overheads? How do their costs, margins and profits compare to your business?

Once you have this information you'll find it easier to price your own products or services accurately. For example, you may want to set a slightly lower price than your competitors to gain a first foothold in the market.

Competitor market share

Knowing the market share of your competitors will show you which products or services are most popular with customers, and which competitors have the most influence over the market as a whole. It will also provide you with a picture of whether the market is full of competitors, and therefore harder to enter, or underserved, with an opening for your business.

Market share can be calculated by volume of sales (number of units sold) or by their value (sales revenue).

To work out the market share of a competitor as a percentage, divide their annual sales by the total sales of all companies in the sector over the same time period, then multiply by 100.

You can find competitor information from:

  • trade associations
  • competitor websites
  • online reports and market research
  • third-party consultancy work you commission
  • company annual reports and accounts — often a great source of free information
  • your own sales team, distributors and agents
  • direct contact with your existing customers and prospects

Once you have all the information in your export plan, you can choose a target for your own market share and form a strategy to get you there. However, sales and market share are not just about low pricing. If you understand your competitors — their market positioning, sales and distribution channels and value proposition — you may have the chance to price at a higher level, based on your unique selling points (USPs). This could offer customers benefits over your competitors, and result in higher market share and margins for your business.

Look at different types of competitors from across the market – large and small, direct and indirect, local and regional – not just the obvious market leaders. This will give you a much more accurate view of the competitive landscape and where you may fit into it.

International trade adviser

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