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Identify your competitors, it's crucial to survivalBy Bud Gayhart
Narrowing the definition of a competitor allows you to take steps to attract and retain customers based on competitive advantage. One way to define competitors is by how they compare in terms of quality, value and price. Using the hotel industry as an example, we see that hotels differentiate themselves from one another in many ways, but the "quality" of their lodging facility is a major feature separating one provider from another. For instance, travelers planning a trip to Las Vegas find a wide range of lodging options. A simple search for a Saturday night stay using the search engine on www.vegas.com generates a list of hotels with prices and quality ranging from $161.25 at the Villa Roma Inn to $1,150 for a salon suite at Wynn Las Vegas. Would you consider these two hotels competitors? While each provides lodging for travelers, the differences between the two facilities indicate they are not direct competitors; they just happen to be located in the same city. Taking a closer look at what differentiates these hotels, we see that a "standard room" at the Wynn Las Vegas includes floor-to-ceiling windows, a seating area with couch, table, chairs and ottoman, bedding with 320-thread count European linen, automatic bedside drapery-controls, flat screen LCD high-definition television, cordless phone, fax, soaking tub, separate glass-enclosed shower, private toilet, his and her sinks, LCD TV in bathroom, hair dryer, electronic door locks, alarm clock and radio, laptop-sized in-room safe, iron and ironing board, pay-per-view movies and voice mail. The more upscale salon Tower Suites operate as a boutique hotel within the Wynn Las Vegas, and were the first in Las Vegas to earn Mobil Travel Guide's highest rating -- five stars. In granting that rating, Mobil praised the Tower Suites for its fine, white-glove service and accommodations that feel like posh private residences. In contrast, the Villa Roma Inn provides a more subdued atmosphere with far less opulence. The facility itself is much smaller, does not have a private lake with waterfall, nor does it have a wedding chapel. Guest rooms have standard televisions (with cable), wireless Internet service, a bathroom with "shower over tub" design, single vanity sink, and a view that is far less inviting. So, do these hotels compete for the same customer? Doubtful. The Wynn Las Vegas caters to a more discerning clientele looking for creature comforts that are not available at the Villa Roma Inn. The Villa Roma's customers are typically looking for cost-effective lodging within close proximity to the Strip. Quality of product is critical to defining competition in the hotel industry and it may be a major defining characteristic in your industry as well. Quality is a standard that can be applied to products or services. Offering your customers "the highest quality" is certainly one way to differentiate yourself from the competition. Customers will pay for higher quality if they perceive that higher quality brings value to them. Invest time identifying competition based on comparable quality. Gather information. Ask these questions: • What makes them different from your business? • In what areas are they similar? • What advertising and promotion tools do they employ? • What is their pricing strategy? • Where are they vulnerable? Conduct a SWOT (strengths, weaknesses, opportunities, and threats) analysis of the competition. This will help identify the true opportunities available to separate your company from the competition, become more important to the customer and find niche markets that generate additional profits. My goal for you is to increase your business so that next year at this time you can be sitting in one of the salon suites at Wynn Las Vegas thinking about the quality similarities between your enterprise and the hotel. Bud Gayhart is interim director of the Center for Innovation and Business Development at UW-Whitewater. madison.com ©2009 Capital Newspapers. All rights reserved. |
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