Why Conduct a Competitive Analysis?
A competitive analysis is a technique used to identify your company’s competitors and evaluate their strategies. Establish what sets your brand apart from competitors by comparing their strengths and weaknesses to your own. With a competitive analysis, your business can construct a more effective marketing strategy that will open more doors to attract your target audience and diminish competition within your market.
Types of Competitors
No one can predict the future, but you should always consider any potential new businesses in your market you may have to compete against when analyzing current or future competitors.
There are three different types of competitors you’ll face to determine which kind is your company’s biggest rival. Direct competitors are businesses within your market that sell the same goods and services as your company. For example, a direct competitor of a bakery would be another bakery in the same area.
Next, indirect competitors are businesses that sell products or services that substitute those of your company. A restaurant acting as an alternative place for customers to eat could serve as an indirect competitor to a bakery. Lastly, no one can predict the future, but you should always consider any potential new businesses in your market you may have to compete against when analyzing current or future competitors. Thus, if a bakery hears about a café opening soon in the area, it should recognize the business as a new competitor and research more about it.
Knowing the Market
A company can learn more about their market through an evaluation of competitors, either because they want to define their target audience or are just starting out in a new market. You can better understand your market, customers and trends by watching competition. Opportunities to drive your target audience to your company and away from competitors arise when you understand what your customers want. The analysis not only identifies your company’s competition but reveals in what areas your competition outperforms you, which is crucial in helping you improve your performance within your own industry. The knowledge and resources your competitors have may be better than or different from your company’s. Providing the chance to learn how they manage and adapt to those techniques can improve your business strategies. Seeing what aspects your business needs to improve on will help to surpass your competitors overall.
Competitor’s Strengths and Weaknesses
Most businesses recognize who their competitors are, so they don’t think a competitive analysis is necessary. Nevertheless, a company may know who their competitors are, but an in-depth evaluation can identify what key assets and skills their competition outshines them in. By distinguishing the advantages, a company has over their competitors, a business can develop takeaways to improve its own marketing strategies. The analysis may reveal what you otherwise wouldn’t have noticed, or if you need to revamp your business to offer features essential in gaining customers that your competition already offers. Remember, when analyzing the competition, you are not comparing product specifications, but rather the strengths and weaknesses of you and your competitors.
To establish what makes your brand unique from other competitors, evaluate to which degree competitors in your market contend for the buyer’s dollar from a customer’s point of view. You’ve heard of the saying, “The customer is always right,” right? Even if the quote isn’t always necessarily true, the customer is always right when it comes to their wants and needs within a market. Understanding how your current and potential customers use and rate the competition helps to identify their wants and needs for you to reevaluate the qualities your business offers. Developing a marketing plan to give customers the features they want will compel them to your product or service will give your company an upper hand advantage with competition and increase revenue.
“IMPROVEMENT CREATES MORE VALUE FOR YOUR COMPANY, BETTERING SERVICE FOR YOUR CUSTOMERS. “
Analyzing competitors motivates companies to constantly be innovative in improving their brand and adapting to competition in the market. There’s always room for improvement, so being self-aware and knowing where your competitors are exceeding encourages you to enhance key assets. Improvement creates more value for your company, bettering service for your customers. That way your business not only stays in the market but can be the leading authority. Improving your company’s disadvantages to set yourself apart from competition avoids any weaknesses being exploited in product development and help prevent competition from entering your market. Customers appealing to your product or service over others is a result of knowing what your competitors offer and taking the extra step to offer more.