In my previous blog (Developments in the manufacturing industry influenced by COVID-19), I already wrote about the main trends in the manufacturing industry as a result of the current corona crisis.
Two of them, the partial return of manufacturing to Western Europe and the accelerated automation and digitalisation of production and operations, can have a big impact on your competitive position.
A good competitive analysis is therefore more important than ever! And that includes the above, somewhat separate, but highly topical question!
Companies like Uber and Airbnb have radically changed entire sectors with their "disruptive" offerings and business models. In the Netherlands this week, Coolblue suddenly emerged as a new supplier of green electricity and gas. But there are also new players in the Dutch manufacturing industry that have shaken up traditional sectors considerably. A strong example is 247TailorSteel which, with its Sophia® portal, literally makes it possible to order customised metal sheets, tubes and edge parts online 24 hours a day, 7 days a week, receive a quotation in one minute and have these products delivered within 48 hours.
So: who is the Uber in your market? But also: who are your main traditional competitors?
Practical approach
Of course, in a good competitive analysis, you don't need to identify all possible competitors; this is also impossible, when you realise that in the Netherlands, for example, there are hundreds of plastics processing companies and more than ten thousand metal processing companies!
Rather, limit yourself to the 10 to 15 relevant competitors you regularly encounter on your "playing field" of products and customers.
And then try to make an overview using the following questions, among others:
- Who are our biggest competitors?
- What is their revenue and market share?
- What are their main products?
- Which market segments, customer groups and geographical markets do they supply to?
- What are their relative strengths and weaknesses?
- What innovations and new products are they working on?
- Where exactly are they in the chain and are they moving forwards or backwards in it?
Besides these direct competitors, it is also important to look at the threat of "substitutes", i.e. alternative solutions or techniques (3D printing, for example!) that can replace our products and those of our direct competitors. AND therefore to the Uber in your market: new players suddenly appearing with their new offerings and revenue model.
A major pitfall in competitive analysis is making the playing field of competitors too broad. Therefore, try to link them to your most important Product-Market Combinations. It often turns out that you are then only dealing with a handful of real competitors per PMC, and also that you are therefore playing on different fields at the same time!
Useful sources of information
So what are useful sources of information for your competitive analysis? Obviously, these are the websites of your competitors themselves, but also trade fairs with accompanying (online) catalogue, and of course the websites and membership lists of industry associations.
Another source closer to home is of course your own customers with whom you have regular contact, but an analysis of your issued tenders can also give a lot of insight: which ones are you winning? From whom and why? And which ones did you lose recently, from whom and why?
When a competitor gets a new owner or management, this is also an important signal; it almost always follows strategy changes that affect your competitive position.
Therefore, try to make your competitive analysis a regular activity. After all, its results can help you adjust your strategy in time and maintain your competitive advantage with adjustments in, for instance, your positioning and your product portfolio!
Returning again to Uber, AirBnb, but also 247TailorSteel as "disruptive" new competitors: they always distinguish themselves mainly with a completely new business model.
I will talk about new business models and their impact on the manufacturing industry in a subsequent blog.
Our message for '21 is: "stay healthy as well as decisive!" So map out your competitors, not only for now, but also for the longer term!
Copyright: Thijs Jaarsma, Jaarsma + Lebbink
