How to Develop and Execute a Successful Competitive Strategy

Today's post is an excerpt from The MFS Guide to Competitive Strategy.

Having worked through the various competitive strategies and frameworks, we move on to the area of tactical execution, and, in particular, how to go about developing and executing an effective competitive strategy.

As outlined previously, we follow a 4 step approach to competitive strategy - namely research, development, execution, and evolution. Within each stage there are a number of key activities to complete which we will go into some detail about in this section.

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Competitive Research

The competitive research phase is the most time-consuming part of developing your competitive strategy - but, by putting in the hard yards during the research phase, you will reap rewards down the line as you execute and go to market with a deeply informed strategy that helps you to outmaneuver competitors.

1. Identify Competitors

The first step is to simply draw up a list of all your company’s competitors including the various competitor types:

Direct Competitors: Companies that offer identical or very similar products to your company to the same target market. (e.g. Coca Cola vs Pepsi).
Indirect Competitors: Companies that offer different products or services that meet the same customer need (e.g. cinema vs bowling alley).
Replacement Competitors: These competitors are businesses that offer a product or service that is different in both category and type - but is a product or service which your target market could choose to purchase instead of your offering (e.g. McDonald’s vs Trader Joe’s Frozen Lasagna).
Potential Competitors: Those companies that are not currently in your market but may enter in the future.

By the end of this initial identification period, you should be clear on who your main competitors are and how they are classified. The output from this task should be a list or document that outlines your main competitors.

2. Deploy Competitive Frameworks

The volume of information and data points on competitors available today is such that competitive research can quickly turn into the most gargantuan of tasks. One of the best ways to add an element of structure to your research is to deploy a competitive analysis framework. There are any number of frameworks you can adopt at this stage and some may be more suitable to your situation than others but among the most popular are SWOT Analysis, Perceptual Mapping, and Strategic Group Analysis. These frameworks will provide you with a critical lens through which you can develop a clearer understanding of your target market and the forces that shape it.

3. Understand Market Share

The next step is taking the time to understand the performance of each of your competitors and what portion of the market they own. Understanding market share will require a bit of digging - although there are some paid tools available that will provide in-depth info on company revenue and growth. You can analyze these figures and how they measure up against the total market size estimates you can find in various places online. If you are sizing up some competitors who are public, then you should look into their quarterly earnings reports to get some insights into their market penetration.

4. Conduct Some Market Analysis

It is important not to overlook external factors that will be relevant to your target market. Understanding changing market dynamics, threats, and opportunities will help you build the correct business context within which your competitive strategy will be deployed.

5. Understand Competitor Positioning

As a picture starts to emerge on the current competitive landscape, it is important to take the time to analyze how each of your competitors positions themselves within it. Your industry may have companies who are at a more mature stage of development or those early stage upstarts who are looking to disrupt the status quo. At this point, you should delve into the public-facing materials from each of your competitors to get an idea on the type of messaging they are leading with and how they position themselves within the industry. The output from this task is a distillation of your research into a short two to three sentences on how each of your competitors positions themselves.

6. Check out Competitor Capabilities

Step 5 involves delving into the product capabilities of each of your competitors. The capabilities or sophistication of a competitor product will ultimately be a key input into how each competitor is positioned. If, for instance, one of your competitor’s products possesses greater security capabilities than others in the market, you may well see them positioning themselves as the foremost security-conscious company in the market. The output from this task is a feature comparison matrix that includes both your own company and each of your main competitors.

7. Analyze Competitor Pricing

Pricing is a key part of competitive strategy. Michael Porter in his seminal book released in 1980, “Competitive Strategy: Techniques for Analyzing Industries and Competitors”, outlined what he termed the three generic competitive strategies companies namely cost leadership, differentiation, and focus. Cost leadership essentially amounts to competing on price and that is certainly one way a company can position itself as we have seen with the success of low fare airline Ryanair. By analyzing your competitors pricing, you will get some additional insight into how they see themselves and what competitive stance they themselves are adopting. The higher priced competitors might well be happy to trade on differentiation or brand recognition while any lower-priced options might well be setting out their stall to compete on price.

8. Look into Competitor Marketing Strategies

As you build up your competitor knowledge, it is worth taking a look at how each of your main competitors is approaching marketing. One of the first steps is to take a look at LinkedIn to see what kind of a marketing department each competitor has in place. That initial step will give you an idea on the type of marketing investment each competitor has made. From there, you should do some digging to see which marketing channels they are focusing on. By plugging each competitor site into some of the SEO platforms on offer today, you will be able to gauge how each of their websites are performing.

The next step is to delve into competitor social media accounts to try and identify any common themes in their updates that may give you some insights into their marketing focus. Some of the other areas to check out include competitor attendance at industry events, paid ad types, and PR or news mentions. This step will help you understand how competitors are allocating their marketing budgets.

9. Analyze Competitor Sales Models

The next task is to try to understand the sales model each of your competitors is using. Again, LinkedIn can be a good starting point here and will allow you to see the size and structure of competitor sales functions. Competitor websites may also shed some light on particular sales models. Some competitors may offer free trials on their websites while others may not. Understanding the various competitor sales models in use - and how each is performing in terms of revenue - will help you put together your own company’s sales model.

10. Gauge Competitor Customer Satisfaction

Competitive research can help you to identify some opportunity areas - particularly around customer satisfaction. The next step in your competitive research project is to take a deep dive into the satisfaction levels of your competitor’s customer base by trawling through the various customer or product review sites. Competitor case studies can also give you some insight into the reasons why certain deals closed. In addition to publicly available information, you might also be able to glean some really valuable competitor info from your sales teams and, in particular, any CRM notes on deals that ended up in shootouts between your company and a competitor or competitors.

Competitive Strategy Development

The next stage in your competitive strategy program involves taking what you have learned in the research phase and building your competitive strategy. Unless you are operating in a market of one, your competitive stance will be a key input into the broader strategic direction of your business. There are some key activities - which we will outline in this section - that can help you build the foundations of your competitive strategy.

1. Set Out Your Market Position

Taking everything you know about your industry and competitors, the next step is to identify the position in the market which will enable you to compete most effectively. There are a number of proven strategies out there that companies compete on - as laid out by Porter and his generic strategies and other more modern strategic departures such as Blue Ocean Strategy. Whatever strategy it is you intend on deploying, it is important that you set out your stall at that this point and are clear about what exactly you are going to compete on - be it price, focus, or something else entirely - and where exactly you intend to position your company within the market.

2. Hone Your Value Proposition and Messaging

Once you are clear on your competitive positioning it is time to develop the value proposition and messaging as the foundations for your competitive marketing materials. Analyze how your company’s value proposition stacks up against each of your competitors and make any updates necessary that will help you establish the position which you wish to occupy in the market. Consider what exactly you are competing on and how it impacts your value proposition and messaging.

3. Develop Some Internal Competitor Materials

Not everything you learn about your competitors needs to go into your customer-facing materials - in fact, many of the key competitive insights that you unearth will be strictly internal and will be of particular value in sales situations where your company finds itself in a shoot out with a competitor. To help you form your competitive strategy, you should develop some internal materials like a competitor comparison document. This document or set of documents should compare your company or product with each competitor and show how you stack up in terms of product features and capabilities. You should also develop some internal messaging on how your company compares - and beats - each competitor.

4. Select Marketing Channels

From your competitive research you will have insight into which marketing channels your competitors are using, and you will also have a good idea how each is performing based on comparing marketing focus with company growth and performance. As a result, your competitive research may once again become a sizable input into your broader strategy. You may have already achieved some success with different marketing channels - be it PPC, SEO, or event marketing - but, if you notice that a competitor is having a lot of joy with a particular channel, it might be worth adopting a similar approach - which, thanks to your competitive research, you know has been market-tested. Alternatively, if you notice that a lot of your competitors are focusing on the same marketing channels, there could be a case for putting together some campaigns on the less crowded, less noisy channels which may help you get your message heard.

5. Create or Update Marketing Materials

Taking what you have learned from your competitors you may need to update or create some new marketing and sales materials. If your value proposition or positioning has been updated, then this update will have a domino effect on all your public-facing materials and you will need to take the time to update accordingly. Your company’s positioning and value proposition are the foundations on which all sales and marketing materials are built.

6. Assess Your Sales Model and Pricing

Having delved into competitor sales models, the question to consider at this stage is are you happy with your current sales model or is there something you have learned from your competitors that would make you want to update your model? Consider the way your most successful competitors are leveraging sales tactics like free trials and also consider the make up of their sales teams - do competitors use field sales reps, account executives, and business development reps? Is there something here you need to consider matching in order to compete more successfully or are you happy with your current sales setup?

7. Identify Any Other Competitive Opportunities

The final action in the competitive strategy development phase is to take the time to figure out what other opportunities your competitive research has highlighted. Some of the questions to consider here include: Are any of your main competitors struggling with issues like customer churn and is there a way to capitalize? Did your competitive research highlight any strategic blind spots that you could take advantage of? An example would be a competitor or competitors being slow to react about a growing subset or demographic of customers. Does a competitor struggle to keep hold of key talent and would said talent be suitable hires for your company? Have some of your competitors become slow to react to market changes as they have grown - giving your company an opportunity to market itself as a more nimble alternative.

Competitive Strategy Execution

With your competitive research complete and your strategy in place, the next step is execution. There may be some campaigns that are specifically targeted at winning new business at the expense of a competitor, or, most likely, you will be making some tweaks or additions to your broader GTM strategy based on updated competitive positioning. Either way, there are some key activities to undertake during the execution phase.

1. Communicate Strategy Updates

Any changes to your broader strategy as a result of your competitive research must be communicated internally. If there are competitor specific marketing or sales initiatives, then they need to be communicated effectively. Employees need a vision they can believe in. Communicating an updated strategic direction or competitive positioning at a company-wide or all hands meeting will help to keep everyone in the loop and give teams a sense of purpose.

2. Update or Roll Out Systems and Processes

By this point you will have successfully updated your competitive positioning and messaging - including development of key competitive materials like comparison documents. What is vital during the execution phase is that key competitive intel is easily accessible for internal teams. This step involves updating sales portals or internal systems with important competitive intel documents and ensuring they are easily accessible.

3. Roll out Sales and Marketing Campaigns

The next step is to launch your sales and marketing campaigns. These campaigns could be a tweaking of existing campaigns with updated messaging highlighting a clearer competitive position or could be new campaigns altogether which target a certain channel that has been overlooked by competitors.

Competitive Strategy Evolution

The final stage in our competitive strategy process is evolution. It is important to understand that competitive strategy is not a one and done situation - it is an integral and live part of your strategy that must remain current. There are a number of activities in the evolution phase that you can undertake to ensure your competitive strategy does not become outdated.

1. Set up Alerts on Competitors

Free tools like Google Alerts and others can be used to set up alerts any time one of your competitors is in the news which will help you stay abreast of any strategic moves they make.

2. Set up Regular Retro Meetings

Schedule some retro meetings to gauge the progress of your competitive strategy and ask your team what is working well, what is not working, and what could work better. Continuous improvement is the name of the game.

3. Stay Nimble

Orchestrating a successful competitive strategy may involve rapid action to exploit competitive opportunities as they arise. Adopting an agile stance where activities and campaigns can be turned around quickly - many times across multiple teams or departments - will help you evolve and succeed with your competitive strategy.

The MFS Competitive Strategy guide is free to access on this link, and we welcome feedback of all kinds! If you have a competitive challenge you are looking for support with, you are more than welcome to set up a no obligation initial conversation with our team on this link.