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External
Analysis and Competitive Advantage |
In
the grand scheme of things, knowing our "competitive
advantage"
is the key to the success of any organization.
If we are not aware of how we can best compete, we will not be able to sustain any lasting existence, much less any long-term success. This is the third article on understanding this concept of competitive advantage and will address our external market; the service area in which we compete. By thoroughly analyzing our environment, we will learn a great deal about how to maximize our level of success.
As a bit of a review, the entire series is based upon the SWOT analysis. That stands for strengths, opportunities, weaknesses and threats. The strengths and weaknesses are internal issues. The object, upon really measuring our strengths and weaknesses, is to maximize the strengths and minimize or eliminate our weaknesses. This month we will look at the other side of this coin, our external environment.
The External Environment- Service Area Profile
Important to our understanding of the market(s) we serve is a service area profile. We need to clearly understand a number of variables including:
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Economic- things like income distribution, major employers, growth rate, seasonal changes, etc., are important factors.
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Demographic data- age, gender, ethnicity, marital status, education levels, residence locations, occupational mix and other demographic data are important to our understanding of the market.
Health Status- for our purposes, we need to know the demand level for eye care services.
This kind of information helps us understand the services we should provide and can guide our efforts in a number of areas.
The External Environment- Competitor's Analysis
Often, we do not really define our target market. In many small, health-related organizations, we simply hang out a shingle and hope someone comes to see us. In contemporary health care, it is imperative that we know who our patients are, and just as important, we must define our real competition. It may not be Lenscrafters or Walmart Vision Center, because they may attract a completely different kind of patient/customer. A patient, who may choose to come to you, comes for a reason. They prefer the personal service small businesses provide, they were referred by a friend or family member, or a myriad of other reasons. You may just have the image in the community they seek. Whatever the reason, you need to be aware of why folks come in, and just as important to the equation, do they stay? To do that you should define the competition in the service area, and eventually your real competitors will become clear.
The first step in the process is to undertake a service area competitor's analysis. We must look at all the businesses in your service area who provide the same or similar services and products you provide. There are multiple variables that must be considered, but generally we are evaluating each on the basis of their strengths and weaknesses. Potential strengths include their financial resources, image, market position, cost advantage, innovation, management ability, experience, and what I refer to as "distinctiveness." What makes them stand out, or not stand out in the marketplace?
In evaluating weaknesses, we look at things such as their lack of strategic direction, old facilities, inferior financial position, missing competencies and capabilities, low level of current technology, and generally a bland approach to doing what it is they do. They are simply one of many in the marketplace.
The External Environment- Identifying Competitive Advantage
To effectively compete, we must fully understand how we are perceived in the marketplace. What are our actual versus perceived strengths and weaknesses? What are our opportunities and strengths? Let's evaluate several methods to do just that.
Surveys
A well-designed questionnaire that is distributed to current and potential patients can indicate a great deal about our operational effectiveness. Current patients can be asked to complete a survey in-office at the time of service. Potential patients can be queried via email, snail mail of face-to-face distribution at health fairs, and other community events. Collected data can be complied and categorized to provide information about current services and things you may want to consider adding. For example, if you are an independent Optician, and utilize an OD next door for two days per week, are they the best days? Can you better schedule the OD to provide exams at times more convenient for your audience? Do you offer necessary turn around on delivery of spectacles? If not, should you add additional laboratory services to increase the efficiency of the dispensary?
If you are an independent OD, are you spending the right amount of time with each patient? Do you offer competitive service when compared to your competition? We can learn a great deal by asking our patients to complete a simple survey. Keep in mind that it must be designed well, and be short. A lengthy document will not be received well, and your percentage of returns will not provide the data you need.
Focus Groups
You can also look to focus groups of patients. Bring them in for a session in the office or in a different, more social setting and ask them how you are doing. Seek out a wide variety of patients and listen to what they say about your practice. Many times you will hear things like, "I had to wait too long," or "the glasses were too expensive." Common things like this we can easily work to fix, if in fact you find consistency in responses. But very important to the concept of focus groups is to seek new avenues of service that they may want. Have you considered adding sports vision, CRT, or low vision services? If they indicate a need, you should heed their advice.
Delphi Study
The Delphi Method was developed in the 1950s by the Rand Corporation to help identify trends in the market. It is a widely utilized approach to analyze environmental data. To accomplish this, find selected experts in your field and ask them questions about where they see the market going. A small group can accurately predict trends, and as few as 10 will provide valuable information. Go to your state professional associations and seek leaders that can assist you. Send them a summary paper describing what you are trying to accomplish, and either conduct personal interviews or send them a document consisting of open-ended questions, in this case regarding where the market is going. This is an iterative process, and when the first round is completed, you compile the data and categorize it. Send the questions back to the panel with the categorized responses back so they can review the answers provided by their peers and respond again, once they have reviewed them. The process continues until consensus is reached. Once accomplished, the results are an effective indicator of market direction.
Conclusion
Evaluating the external market is a major component in understanding how we can best compete in the marketplace. It is the
'opportunities and threats' component in the SWOT analysis. This article has attempted to provide methods you may wish to utilize to evaluate your opportunities and threats. In combination, the articles from the last three months have attempted to evaluate your competitive advantage, and we hope the information has been helpful.
In the coming months the author will be writing about successful independents across the country who have successfully maintained their competitive advantage and we want your help. Please forward to me via email names and contact information for independent Opticians and ODs you feel are examples to emulate. Being an independent used to be the dream of all, and it still can be. Join me in taking a look at many of them, and by sending me those you think we can all learn from as we attempt to successfully compete in today's eye care marketplace. We look forward to hearing from you!
References on request |
