Competitor analysis or the monitoring of competitor use of Internet marketing for acqui-
sition and retention of customers is especially important because of the dynamic nature
of the Internet medium. As Porter (2001) has pointed out, this dynamism enables new
services to be launched and elements of the marketing mix such as price and promotion
changed much more frequently than was traditionally the case. Copying of concepts
and approaches may be possible, but can on some occasions be controlled through
patenting. For example, Amazon.com has patented the ‘One Click’ approach to pur-
chase, so this term and approach is not seen on other sites. The implications of this
dynamism are that competitor benchmarking is not a one-off activity while developing
a strategy, but needs to be continuous.
‘Benchmarking’ is the term used for structured comparison of e-commerce services
within a market. Its purpose is to identify threats posed by changes to competitor offer-
ings, but also to identify opportunities for enhancing a company’s own web services
through looking at innovative approaches in non-competing companies. Competitor
benchmarking is closely related to developing the customer experience and is informed
by understanding the requirements of different customer personas as introduced earlier
in this chapter.
Traditionally competitors will be well known. With the Internet and the global mar-
ketplace there may be new entrants that have the potential to achieve significant market
share. This is particularly the case with retail sales. For example, successful new compa-
nies have developed on the Internet who sell books, music, CDs and electronic
components. As a consequence, companies need to review the Internet-based perform-
ance of both existing and new players. Companies should review:
well-known local competitors (for example, UK or European competitors for British
companies);
well-known international competitors;
new Internet companies local and worldwide (within sector and out of sector).Chase (1998) advocates that when benchmarking, companies should review competi-
tors’ sites, identifying best practices, worst practices and ‘next practices’. Next practices
are where a company looks beyond its industry sector at what leading Internet compa-
nies such as Amazon (www.amazon.com) and Cisco (www.cisco.com) are doing. For
instance, a company in the financial services industry could look at what portal sites are
providing and see if there are any lessons to be learnt on ways to make information pro-
vision easier. When undertaking scanning of competitor sites, the key differences that
should be watched out for are:
new approaches from existing companies;
new companies starting on the Internet;
new technologies, design techniques and customer support on the site which may
give a competitive advantage.
As well as assessing competitors on performance criteria, it is also worthwhile categoris-
ing them in terms of their capability to respond. Deise et al. (2000) suggest an equation
that can be used in combination to assess the capability of competitors to respond:Agility Reach
Competitive capability = ––––––––––––––––
Time-to-marketCompetitors
Competitors
Competitor analysis
Review of Internet
marketing services
offered by existing and
new competitors and
adoption by their
customers.