June 12, 2020

Market Strategy E3: Competition Evaluation

16 minutes

Competition Evaluation
Competition evaluation is the process of comparing and examining businesses that offer similar services. It's tempting to assume that everyone in a particular industry is competition to one another, but often times there are enough differences to support many types of businesses within the same industry.

With dentistry, for example, there is enough variance between the different specialties as well as those who take different insurances to support multiple dentists in the same geographic trade area. Certain dentists specialize in pediatrics, others in adult care, and others in crowns and full mouth procedures for the elderly population.

Looking at national statistics, it's clear to see that there is normally a dentist for every couple thousand people, but it's possible to break down that data to get an even more precise picture of the competition.

Taking the urgent care industry as an example, competition varies both from an operating and a geographic standpoint. From an operating standpoint, there is the walk-in, episodic category. Is the competition actually legitimate? Do they have extended evening and weekend hours? Do they have X-ray equipment on site? Are they staffed with MD's or do they have lower level providers?

Form a physical standpoint, at first glance there may be five players in a five mile radius. But when you start to break it down more granularly, you may see that two or three are located in an area thats an older part of town that lacks appealing retail like Chic-fil-A or Kohls.

Minute clinics will also pop up on google when searching for an urgent care, but they are not setup to give the same level or care as a traditional urgent care. It will still serve as competition for ailments such as the common cold, but it's worth noting the difference.

Certain operators view competition vastly differently. While some look at competition as reason to stay away, others will search out the competition and deliberately open across the street as a means to compete for market share. Within the urgent care industry, many of these are hospital backed locations that serve as loss leaders for surgery referrals or some other sort of continuity of care.

Another important metric when evaluating competition is the average client review. The three main platforms that are known for having the most accurate reviews are Facebook, Google, and Yelp. Typically, Google will have the most data between these three, but it never hurts to examine every platform.

When researching the reviews, be wary of mediocre reviews. This doesn't say much about how the competition operates their business. Rather, be on the lookout for extremely good or extremely bad reviews. As an vague rule of thumb, average reviews under 3.5 stars on Google could be considered ripe for disruption from competition, while anything above 4.5 stars could be considered strong.

Of course, the average review score alone doesn't paint the whole picture. Anything less than 20 reviews is almost negligible, so the more data the better.

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