One common and useful technique is constructing a competitor array. The steps include:
- Define your industry - scope and nature of the industry
- Determine who your competitors are
- Determine who your customers are and what benefits they expect
- Determine what the key success factors are in your industry
- Rank the key success factors by giving each one a weighting - The sum of all the weightings must add up to one.
- Rate each competitor on each of the key success factors
- Multiply each cell in the matrix by the factor weighting.
This can best be displayed on a two dimensional matrix - competitors along the top and key success factors down the side. An example of a competitor array follows:
| Key Industry Success Factors |
Weighting | Competitor #1 rating |
Competitor #1 weighted |
Competitor #2 rating |
Competitor #2 weighted |
|---|---|---|---|---|---|
| 1 - Extensive distribution | .4 | 6 | 2.4 | 3 | 1.2 |
| 2 - Customer focus | .3 | 4 | 1.2 | 5 | 1.5 |
| 3 - Economies of scale | .2 | 3 | .6 | 3 | .6 |
| 4 - Product innovation | .1 | 7 | .7 | 4 | .4 |
| Totals | 1.0 | 20 | 4.9 | 15 | 3.7 |
In this example competitor #1 is rated higher than competitor #2 on product innovation ability (7 out of 10, compared to 4 out of 10) and distribution networks (6 out of 10), but competitor #2 is rated higher on customer focus (5 out of 10). Overall, competitor #1 is rated slightly higher than competitor #2 (20 out of 40 compared to 15 out of 40). When the success factors are weighted according to their importance, competitor #1 gets a far better rating (4.9 compared to 3.7).
Two additional columns can be added. In one column you can rate your own company on each of the key success factors (try to be objective and honest). In another column you can list benchmarks. They are the ideal standards of comparisons on each of the factors. They reflect the workings of a company using all the industry's best practices.
Read more about this topic: Competitor Analysis
Famous quotes containing the words competitor and/or array:
“Competition is. In every business, no matter how small or how large, someone is just around the corner forever trying to steal your ideas and build his success out of your imagination, struggling after that which you have toiled endless years to secure, striving to outdo you in each and every way. If such a competitor would work as hard to originate as he does to copy, he would much more quickly gain success.”
—Alice Foote MacDougall (1867–1945)
“Any one who knows what the worth of family affection is among the lower classes, and who has seen the array of little portraits stuck over a labourer’s fireplace ... will perhaps feel with me that in counteracting the tendencies, social and industrial, which every day are sapping the healthier family affections, the sixpenny photograph is doing more for the poor than all the philanthropists in the world.”
—Macmillan’s Magazine (London, September 1871)