Consumers are more likely to respond and interact with brands’ posts and ads on Friday than any other day of the week, according to ...
Increase your competitive advantage
E-commerce consultant Paul Becker discusses how e-retailers can differentiate their businesses from the competition.
Do you know what the following have in common? "6 ways to combat showrooming," "Retailers who will close the most stores" and "How retailers can best compete with Amazon."
They're recent headlines about the increased competitive pressures brought on by the web. So how can smaller retailers coexist in an environment driven by major web players? They can differentiate and own their own slices of the market.
That's not always simple to do. I've spent more than 15 years analyzing and developing marketing and sales strategies for consumer brand manufacturers' online businesses. In doing so, I've learned how companies can apply business intelligence to help them leverage their existing competitive advantages, and spot untapped opportunities.
If you're feeling squeezed by the competition here's a business intelligence process that'll help you hone your competitive edge.
Conduct a market analysis
First things first: You need to identify the best market opportunities. You'll need to gather current market size data for your products or retail category, sales data by channel and industry growth drivers and trends.
For example, when I joined toy maker Hasbro in 2000 I was part of a team tasked with developing consumer Internet and direct-to-consumer e-commerce strategies—something Hasbro wasn't that familiar with since it primarily sold wholesale.
A manufacturer with more than $4 billion in annual sales, Hasbro needed to learn more about who purchased its and its competitors' products, and how, so it could spot new opportunities.
We started by obtaining syndicated research on industry retail sales by channel and by looking at rival Mattel Inc.'s web activities. Then, we used visitor intercept research across our sites, which let us ask questions of, and learn more about, the consumers who had just visited. This helped us understand how consumers shopped and what their needs were.
Armed with this information, we conducted focus groups that identified needs the industry was not meeting. One of the key findings was that consumers wanted a way to comparison shop online across multiple retailers. As a result, Hasbro developed a comparison shopping strategy with retailers that enabled consumers exploring a toy brand like Playskool on Hasbro.com to view a list of retailers that sold the line and click to visit a Hasbro-branded landing page on those retailers' sites. It was convenient for consumers and strengthened Hasbro's relationships with merchants that sold its toys.
This marketing effort combined with other improvements, such as e-mail marketing, transaction-enabled brand sites and destination portals, generated a 15% increase in annual household spending on Hasbro brands overall by consumers we built relationships with.
Conduct a competitive analysis
Once you've identified market opportunities you need to understand more about your competitors' strategies so you can differentiate your own.
You should gather information about and get an understanding of competitors' product portfolios, business models, pricing strategies and price points, primary sales channels and information about how customers interact with them.
I did this when I headed retail marketing for Ancestry.com Inc. In 2006-2007, my team and I were challenged to reverse declining sales of the family history software maker's direct-to-consumer and e-commerce-driven packaged goods business unit.
We took stock of the products in the market that were most important to our success, namely online subscriptions, packaged software and books, and conducted a competitive analysis to identify what differentiated Ancestry's products.
Looking at our Family Tree Maker software, we identified that competing products could not be packaged with online databases or tools as robust as ours, or be offered with as large a selection of complementary products. Armed with these competitive advantages, we surveyed consumers about their motivations and needs, which fed modeling we would later use.
In addition to internal sales data, we used syndicated research services like MRI Mediamark and Simmons to identify the characteristics common to consumers interested in family history to quantify the untapped market opportunity.
The compiled data helped us identify how we could make Family Tree Maker more competitive. It helped us develop distinct products and pricing for online and retail store channels, including product bundles only found in stores. We also crafted advertising strategies to market to these segments, such as consumers planning family reunions.
Understand the big picture
Such data gathering and analysis can also help an e-retailer conduct what analysts call a SWOT analysis that identifies a business' strengths, weaknesses, opportunities and threats.
As marketing director for ProCaps Laboratories, a manufacturer and direct seller of vitamins and nutritional supplements through its own e-commerce site and through channels like QVC and HSN, my team completed market and competitive analyses that filled 13 PowerPoint slides, and used those to identify direct-to-consumer and e-commerce SWOT, which amounted to about 50 potential action items.
Strengths included our product selection and innovation, branding opportunities we could take advantage of by following U.S. Food and Drug Administration guidelines before competitors did, how our products better met needs in two market segments, and per-unit pricing. Potential weaknesses reflected gaps in our product portfolio and our entrenched competitors. Opportunities consisted of the aging baby boomer market, being first to market with products and products that better met the needs of large numbers of consumers dissatisfied with competitors' products. Among the threats were a more competitive landscape and general consumer concerns about the quality of vitamins and supplements.
By identifying the most attractive market segments and opportunities—for example, we offered the lowest-calorie meal replacement—we started testing the openings the SWOT revealed.
This allowed us to focus test marketing budgets on products with the greatest market potential. As a result, we devoted resources to optimize the product page for the meal replacement product for usability and search engine optimization, and directed paid search ads to the page. The effort brought ProCaps greater brand awareness, search traffic and sales conversions.
You can apply this approach to market and competitive analyses to your own business. With a little digging you'll spot the opportunities you can leverage to increase your competitiveness.