by Mike Edwin and Juliya Semenova

This article, the first in a two-part series, will discuss the importance of performing a competitor analysis and the most appropriate tools to use when collecting information. An upcoming article will explain how to conduct effective market assessments.

Controlling expenses, increasing market share and investing in capital projects – all are important to the success of any organization. But so is another often-overlooked strategy: Understanding your competition.

Indeed, knowing who your competitors are and what they plan to do in the next few years is critical. When you do, you can better position your products and services to meet customer demands. You can beat your competitors to the market with new offerings. You can proactively deploy scarce resources. And in doing so, you can and maintain or increase your market share.

One proven way to assess your competition is to perform a competitor analysis that centers on the following five questions.

Question 1: Where is the market heading?

To begin a competitor analysis, it is important to evaluate the direction of the market.

In particular, you will want to look emerging trends. Trends – which fall into a number of categories – can differentiate organizations and allow them to emerge as market leaders. Some examples are listed in the table below.

Question 2: How does your organization compare?

In order to have a valid baseline for comparing your organization to others, you should understand their current position in relation to your competition.

• What makes your organization different?
• What does it do better than the competition?
• In what areas could it improve?
• How do your organization’s strategy and goals compare to those of your competitors?
• Does your organization have growth potential?
• Does your organization have the right people?
• Does your organization have the right systems?
• What is your organization lacking?
• Can you obtain this data? Where?

To answer these questions objectively, you will need to collect internal information and compare it to benchmarks and standards.

How your organization is perceived in the market is also important. Customer and employee satisfaction surveys, market surveys, awards recognitions, and rating programs are all critical in formulating a comprehensive picture of how your organization is positioned, and what areas are imperative for future success.

As competitive intelligence emerges, be sure to evaluate and incorporate it into your strategic planning process.

Question 3: What are your revenue and expense streams, and how do they compare to your competitors’?

Your organization’s financial status in relation to that of your competitors is particularly critical in the health care market. Specifically, you need to understand your revenue mix. Doing so will provide you with the ability to set strategic objectives for improvement of current operations and growth. Questions that will help you understand where your revenues come from include:

• Is your organization more leveraged than its competitors in one or more revenue groups?
• Do your competitors focus on more products and services that do not rely on government funding? Should you?
• Are there opportunities to capture greater market share in key areas?
• Are their particular services and process where your organization can gain efficiencies and improve its bottom line?
• What is inhibiting your organizational ability to improve its bottom line?
• Can your organization translate its core competencies into greater profitability?

Question 4: What initiatives are your competitors undertaking?

The future of your organization is directly related to your ability to stay abreast of developments in the market. In particular, the following initiatives on the part of your competitors can dramatically redefine your market (and push your competitors to the forefront):

• Facility and other capital improvements
• New service line developments
• Renovation or modifying existing services
• Expansion of programs
• Development of satellite locations
• Changes in management team
• Changes in staff
• New marketing campaigns
• Technological advancements
• Process or operational improvements (e.g., lean process, balanced scorecard)

Collecting intelligence on your competitors’ plans will not only help you prioritize your internal objectives, but will also help you re-evaluate whether they align with the needs of the customers that you are serving.

Question 5: What are the potential impacts on your organization?

Perhaps the most important aspect of the competitor analysis process is interpreting the information that you have collected to decipher the most critical factors to your organization’s success.

Not every initiative that your competitor undertakes will have a significant and lasting impact on your business, and many of these initiatives won’t even be relevant given your organization’s strategic mission. The key is to determine what may have a direct effect on your bottom line, reputation, market share, and customers – and the only way to do this is to know your customers and provide them with the highest quality of service in the most efficient (and profitable) manner possible.

What next?

Now that you know all of this, do you let the competition dictate your actions? The answer is an emphatic no. Competitive pressures should never serve as the only guide to your business. You should, however, learn from the data you have collected. Know what opportunities exist – as well as the vipers in the pit, then make this information part of your strategic plan.

This information is not worth anything unless you can effectively translate this data into your strategic plan. In the second part of this series, we will discuss how to conduct effective competitive market assessments and translate the knowledge gained into your strategic plan.

Mike Edwin is a senior consultant in Wipfli’s health care practice.  He specializes in community and facility assessments, market research data collection and analysis, and strategic planning for long-term care services and providers. Mike can be reached at (608) 274-1980 or medwin@wipfli.com.

Juliya Semonova is a senior consultant in Wipfli’s health care practice. Juliya assists health care clients in the areas of business service and program planning, performance management, and business process design and analysis, among others. Juliya can be reached at (414) 431-9387 or jsemenova@wipfli.com.