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Perfect Positioning is Key to Tactical Planning

A REALISTIC competitive comparison is a key step in the formulation of a company strategy, marketing plan or tactical plans. The challenge of the information and communication technology sector is that the pace of innovation makes it difficult to understand your true market position.

If you have a breakthrough product, how long will it have a technological advantage? Will Google start giving away a competing product for free? Is Yahoo! just about to launch a better product or service?

This uncertainty presents a huge challenge. It is why venture capitalists operating in the start-up space invest in 30 or more companies, with an objective of two big-hit initial public offerings, eight sustainable investments and 20 outright failures.

Positioning is particularly important when facing tough competitors with equal or superior offerings. Taking Microsoft on head-to-head is not a very clever strategy. But there may be opportunities for small companies to excel in areas “below the radar” of such big companies.

The big players may not be interested in selling to small and medium-sized enterprises, for example, or may offer a sub-par service to medium businesses.

These are all opportunities for entrepreneurs to compete or cooperate against big companies.

In terms of formulating a realistic competitive comparison, you need to assess the following criteria — both where you are positioned now and whether this position is improving or getting worse.

These criteria include:

• Customer satisfaction;
• Customer service;
• Distribution;
• Product quality;
• New product dynamism; and
• Profit margin.

It may appear easy to find a competitor’s weakness and exploit it. But there is almost always some reaction to an “attack” from a company such as yours, and understanding your competitors will help you predict what their reaction will be.

Some examples of potential responses include:

• Aggressive offence;
• Aggressive defence;
• Slow in defensive response;
• Price cutting;
• Copy-cat promotions; and
• Do nothing.

No discussion about competitive analysis would be complete without Michael Porter’s Five Forces Framework, which determines potential profitability and growth (see diagram).

Don’t be so focused on your attack that you don’t look at the effectiveness of your actions or the reactions of the competition.

The five forces are:

• The threat of new entrants (they can be start-ups etc);
• The bargaining power of suppliers (an important ingredient in industry profitability);
• Any jockeying for position among current competitors;
• The bargaining power of customers; and
• The threat of substitute products or services.

Gregory Serandos is MD of public relations and digital marketing agency Pure Communications.