Here’s a story, probably apocryphal. One of Harley Davidson’s major competitors in the UK is not another motorcycle brand. It’s conservatories. Apparently, people get to a certain point in life, with some disposable income, and then it’s a choice – do I get a Harley or do I build a conservatory?
What does this tell us? It tells us that we have to know who is actually competing with us, when it comes to the buying decision.
There are some standard tools to help with this.
Firstly is the PESTLE – this is an old favourite and there are many examples available online. This framework allows a company to examine the trends that may affect the company and have an effect on what customers choose to buy. It helps you articulate the Political, Economic, Sociological, Technological, Legal and Environmental factors that you need to consider in the development of the company.
Secondly is the Five Forces model which helps investigate a sector’s weaknesses and strengths to identify market opportunities. It analyses and rates competition in the industry, how easy is it for companies to enter the industry, how much bargaining power customers and suppliers have, and how easy is it for customers to find substitutes (Harley/conservatory?).
Finally, an emerging tool is the Red/Blue Ocean model. A Red Ocean is a highly competitive sector, a Blue Ocean is an untapped market. This framework helps identify gaps in current provision that could be met. A classic example is Cirque de Soleil, which identified the aspects that were valued by customers and those that were missing from traditional circuses. The analysis uncovered a new type of circus and this became the global phenomenon that is Cirque de Soleil.
It’s a good idea to take stock after completing these aids to analysis to see what they uncover, then have a look at a SWOT to see if your company is currently well-placed to make the most of opportunities that your analysis.
Final thought – do you know who is your conservatory?
If you need help with any of this and you are a sole trader or a business in the creative sector in the North of Tyne Combined Area, please get in touch Catherine.firstname.lastname@example.org