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CMO/Marketing Strategy • Market Research • Product Marketing
Most information technology product and service companies claim to know who their competitors are. In some cases this perception matches reality—but not in many instances. Throughout 15 years of marketing information technology, I have often encountered significant inability to identify competitors.
This experience is supported by research. A broad study (including, but not limited to, IT firms) conducted by the Hinge Research Institute in 2009 showed that the average firm can identify only about 20% of its competitors, when compared to a list of competitors provided by its own customers.
Why IT Companies Don’t Know the Competition
There are numerous reasons why an IT provider might be unable to name its competitors. Here are four primary reasons.
1. The IT provider thinks of customer needs only in the context of its own solutions.
However, customers often imagine a wide range of possible solutions for a particular set of problems. Hence, the customer’s list of perceived competitors may be larger.
2. The IT provider marginalizes competitors who do not provide as complete a solution.
Hence, it ends up ignoring a significant portion of the competitive landscape that is not being similarly marginalized by the customer.
3. The IT provider views gaining competitive knowledge as counterproductive.
It feels time and money invested in the discovery process should be routed to the development of its own solutions. In my experience, many companies who take this approach have similar views towards acquiring better customer knowledge—to their own peril.
4. Knowledge of the competitive landscape is simply out of date.
The last systemic review may be too far in the rearview mirror. I have had clients where the workforce has more knowledge of current competitors than do the company’s executives, who have a historic knowledge and an accompanying historic approach to creating competitive advantage.
Two Other Problems that Add Insult to Injury
Lack of competitor knowledge is compounded by two other typical problems: inability of the provider to identify the customer as the competitor, and inability of the customer to identify the full range of solutions available from the provider. I’ll explain those two points in greater detail.
1. Competing with the customer.
Many companies are unable to identify when they are competing with other companies and when they are competing with the prospect’s internal IT resources. Accurate knowledge of this can have a profound impact on how the business development process is handled; when the competitor is the customer, additional sensitivity and a different approach to messaging may be required (among other considerations).
2. Customers aren’t aware of all that you have to offer.
Many current customers are unaware of the full range of solutions offered by an IT provider. This might simply be due to the fact that customers tend to focus on their immediate needs, and mentally discard the rest of the provider’s solutions as irrelevant. But the IT provider needs to overcome this barrier to figure out how to be the starting point when new needs arrive. I worked with a client earlier this year whose systems engineering company was considered to have a very good reputation by 100% of its customers; however, only a mere 20% of those same customers were able to identify all of the services that the firm had to offer.
A simple and effective way to learn the competitive landscape
One effective method of identifying competitors is to ask customers who they identified as potential solution providers—both at the point when solution research started and at the point when a purchasing decision was made. These two lists reveal your broad competition and also those who compete with you most closely to solve your customer’s problems. You can use this knowledge to build better brand and marketing strategies.
Peter Mirus is CEO and Senior Strategist at STA Tech Marketing, providing fractional CMO, brand/marketing strategy, and marketing execution to growth-minded, tech-oriented companies.VN:R_U [1.9.7_1111]Competitive Knowledge: Critical for the Successful IT Company,
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