Transcript - competitor and marketDocument Transcript
Investigating Entrepreneurial OpportunitiesCompetitor and market researchProfessor Colin GrayIt’s very important to have a clear idea of the likely competitive forces that face a new venture.The well-known management guru Professor Michael Porter of Harvard has developed a fiveforces classification that’s widely used to analyse competitive pressures – these includeexisting competitors, new direct entrants that are promoting similar products, and new indirectentrants who offer different products that provide similar benefits. In addition there arepressures from large dominant customers and large dominant suppliers. It’s crucial to knowwhat prices and promotional messages competitors are pushing, plus how reliable they’reperceived to be. How does Julian analyse the competitive pressures facing him?Julian BrowerFor me as a learner I was very keen to get specific targets and goals and to break down thewhole concept of analysing competitors and the forces that were going to affect my businessand compartmentalising them was very, very helpful. I can actually now sit down and lookindividually at say bargaining power of suppliers. What does that actually mean? And I coulddo that without worrying about the other factors involved so for me compartmentalising. Asan engineer I think in specific chunks and lumps so you know looking at er threats of - of - ofother companies coming in and stealing or using my idea it was just a way of condensing outimportant factors based on individual areas like new threats, bargaining powers of customers,threats of substitute products and services. So I found that quite useful. Now I didn’t evenknow it existed but once I knew it existed I could then apply my particular problems to it and Icame up with some very interesting areas. For instance threat of substitutes. You know thereare companies out there that are already doing exactly the same thing but not quite the same.So you know Gum Tree which is already offering these advertising services. Well I don’t thinkit would take much for them. But I happen to know that is not in their strategy because I did abit of research. I wouldn’t have done that had I not thought about the five forces. And otherInternet companies are already doing this and have the infrastructure in place. But they arenot doing it. Why arent they doing it? That was the other thing that came out of it. What is itthat they are not doing? And I had to find out a little bit about that as well. Local newspapers– so whats the threat from them? They could actually just come in and provide a substituteservice. But once again highlighting it, compartmentalising it, allowed me to actually go into itin a bit more detailProfessor Colin GrayAnd you didn’t see the traditional sort of er cork board or the notice board that was found in avillage shop or other community spaces as being a threat to you?Julian BrowerWell that was in fact very interesting because that as a threat why would they bother to cometo me when they’ve already got a system? And we’re actually dealing with communitybusiness people who don’t like change. But once again it highlighted it. It went into SWOTas a threat and came out as an opportunity. How do I convince those people that its worthy ofthem pulling down their AO board which adds a little bit of variety to a relatively boring dailylife in a village shop – that’s maybe a bit unfair but that’s the way I thought of it. So I looked atways of overcoming er that idea so you know they don’t need to change at all. But I think myidea was that eventually they would see the other shops around them doing it and they wouldtalk to their other village shops and theyd ask and eventually theyd cotton on and say wellactually we are getting a lot more money. Because I actually worked out roughly in my area ofthe local fifty or hundred shops how much they were making out of it and one of my marketingideas was to say to them you know youre getting 50p per slot. Youve got half slots there soyoure getting twelve quid a week. I can make that thirty five quid a week without you eventouching anything and I can do that by adding all these taxi companies, all these pizza
companies, all these kebab companies, all these take away companies, your local Sainsburyswho do a national thing. And I can turn that into thirty plus quid. So that’s how I could turnthem around I think – success or not depends on actually what happens. I actually got acouple of local shops to analyse it in great detail.I went out there and I spoke to my friendly local Indian gentleman who supplies my localnewspaper. He’s brilliant – brilliant businessman. He came back with loads of objections.Throw me the objections I said. I don’t want to know whats good about it. I want to knowwhats wrong about it because then I can look for opportunities. So the threat – the threatsection got bigger and then it sort of progressively got smaller over the month and then it gotbigger again as I went out and found – you know good business is about as much aboutknowing your threats as - as developing your opportunities.Professor Colin GrayAnd there are no other people doing similar things? It seems to me that some of the thingsyouve said seem so straightforward – so obviousJulian BrowerBut you know – someone asked me this question about another business. Why arent theydoing it? I said well – my argument to that is I was queuing up at a roundabout with a two-lane queue and there was a queue a mile long on one side and nobody on the other side.Why are they there? So I went down the other side. It’s because people go with what theyknow - they know best. They think because theres a queue that must be right. So that’s theway people think. Entrepreneurs don’t think like that. They look at a queue. They see a longone. They go in the short one. They deal with the problem at the other end of the queue.Because its not being done does not make it wrong. It means that most of the people – eightyper cent of the people – wont do it because they’re not risk – risk type people. So you knowwhen you see something like that you - you have to – you don’t accept other people’s opinion.You go and find out for yourself why it doesn’t work. And if anybody comes back to them andsays no it cant be done any entrepreneur will know this. If it says "no it cant be done", thatmeans your ears prick up and off you goProfessor Colin GrayAnd how did you find out for yourself what the competitive forces were that you actually werepotentially facing?Julian BrowerThat’s a tough one. That’s very tough because companies arent going to give theirinformation away and I think it discusses this in a lot of detail in the in the course – coursenotes – how to go to companies – you have to be a bit sneaky. You know you have to go toyour local newspaper. You say you want to advertise. Local newspaper is probably an easyanswer. But you have to sort of delve through – for instance you might want to go toCompanies House, spend three or four quid on the um electronic version of their financialstatement and try and work out how they’ve earned this sort of money. There are a couple ofbig companies that I wanted to compete with. One of them um er is a national news companywho was a potential competitor to potentially provide a substitute product. And I needed tofind out a little bit more detail and they are very clever in their financial statements. Theydon’t give any details away. So how was I going to do it? So um I actually went through toone of their local newspaper shops and um and asked questions and managed to get detailsabout firstly who was involved, who was their area manager. Unfortunately I couldn’t takethat any further because I think they’re quite smart. But I think you have to be sneaky. Youhave to be inventive in the way you as qu4stions. Competitors are doing it all the time.Youve got people going into one supermarket chain from another supermarket chain writingdown the prices. That’s the way it works. You go into a bookshop. You write down the ISPNnumber and then you go off on line and you buy it cheaper. That’s the way you have tobehave in this business environment.Professor Colin GrayIt struck me also some of the areas and some of the potential people advertisers wereactually pizza – pizzerias there was Sainsburys and the Tesco locals and so on and so forth.
They are the sort of people who advertise also in Thomsons and in um local Yellow Pages.How would you see yourself competing with them?Julian BrowerWell they are quite viable threats. But I think one has to look at what their offer is and –andtheir offer is based on a one year placement. So you have no flexibility in there. So if youre acompany selling logs from oak tees and then you suddenly change to beech trees becausethat’s the crop youre cutting, its no good going into Thomson Directory. Okay you could saylogged trees but there are other areas where you want to publicise – three bags for two – thething about e-board was it was very, very geared into time and how you could utilise. Youcould change it at any minute. When you bought a slot on e-board it was yours and you coulddo what you liked with it within the profanity rules. You could do what you liked with it and youcould do quick turnovers so the sorts of markets we were looking for or I was looking for werethe markets that wanted a ver fast turnover. So the local er national um the local countryhouse – National Trust country house doing a special promotion on this Saturday oh Ive gotsomeone from the Antiques Road Show coming down. Youre there. Bang.Professor Colin GraySo you could appeal more effectively to the customer’s time – timeframe of decisionJulian BrowerYes I think that’s a very important point of this. So its something that newspapers wereoffering on a weekly basis but e-board was offering on a one-second basis. It was the abilityto get your change of - your plan out very quickly. So that was one of the marketingstrategies. Certainly in the sell that was that was what I was offering.