An essential part of running a profitable business is knowing who your competitors are. It is therefore a good idea to carry out a competitor analysis to get an overview of the size of your competitors and their importance in the market. The scorecard model is an easy and useful tool to give you an overview of your competitors in the market. If you are not yet familiar with the model, read on for a sharp introduction.
So the shield model is a smart model that you can use to identify your competitors in the market. It takes the form of a classic target divided into four different rings. Competition increases as the size of the rings increases - the further out you go. The model's four rings are based on the four elements:
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When conducting a competitor analysis, it is also important to be aware of the following factors:
Thus, the shield model is based on four rings, which determine the size of the competition field. The final assessment depends on how you view your competitors. If you compete on price, you should pay attention to all products in the same price range. If you operate in a niche market, on the other hand, it is the specific products that compete to be the best in the market. It is therefore a good idea to get an overview of the market and the competition.
In the inner ring, competitors are all the companies that offer the same product or service at a similar price as your company. The target audience will typically include your products as more or less similar, which means that competition is narrow and based primarily on the brand value of each company. A classic example of this type of competition is Coca Cola and Pepsi.
In the next ring, competitors are companies that offer products in the same product category as your company. Here, the products will not necessarily have the same price, which therefore often becomes the decisive element. This also means that competition in this circle is a little wider. An example of this could be the airlines SAS and Norwegian, which both offer flights but at different prices.
In the ring closest to the consumer, competitors are companies that meet the same consumer needs as your company - although the products are not necessarily the same. This can be seen as both an advantage and a disadvantage, as one can replace the other. An example of this might be air and train companies. Both companies provide a journey/transport which is the essential need that the consumer is looking to have met.
In the outermost ring of the model, all firms serving different needs would be considered a competitor. This means that there is a broad competitive situation here, where your firm is in principle competing with all firms for consumers' income. For example, competitors can range from beauty products to kitchenware.
This was an introduction to how you can get an overview of your competitors and how they position themselves in the market. Knowing your market and which companies to pay particular attention to is an essential part of running an effective and growing business. If this post has made you curious about how else you can examine your business's competitiveness, please don't hesitate to contact us.
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