You should be very aware of your first-level competitors— in many cases, you'll know them by name and may even belong to the same business associations they do. If you don't know much about their business operations now, make sure that you do soon! It's to your advantage to know as much as you reasonably can about the details of their businesses. Study their ads, brochures, and promotional materials. Drive past their location (and if it's a retail business, make some purchases there, incognito if necessary). Talk to their customers and examine their pricing. What are they doing well (that you can copy) and what are they doing poorly (that you can capitalize on)?

Secondary data, as well as information from your sales force or other contacts among your suppliers and customers, can provide rich information about competitors' strengths and weaknesses. Basic information every company should know about their competitors includes:

• each competitor's market share, as compared to your own
• how target buyers perceive or judge your competitors' products and services
• your competitors' financial strength, which affects their ability to spend money on advertising and promotions, among other things
• each competitor's ability and speed of innovation for new products and services

There may be a wealth of other facts that you need to know, depending on the type of business you have. For example, if you're in catalog sales, you'll want to know how fast your competitors can fulfill a typical customer's order, what they charge for shipping and handling, etc.

Every competitor has definitive weaknesses and strengths that may be points of potential advantage for your company and products. In most cases, larger companies cannot make decisions or allocate resources, personnel, and materials as fast as a smaller company under changing market conditions. Smaller companies may have to be content with a limited, but profitable, objective of taking what they can from the market before larger competitors catch up later.

It is also important for smaller companies to decide when the cost of direct competition is both unwise and ineffective. For example, a small, local soft drink company cannot afford to match every new flavor and size of soft drink that larger national companies introduce and support with marketing programs. It must develop its own unique flavors and stick to selling and distributing only the sizes that sell rapidly in its own markets, with limited marketing spending support.