It’s critical to evaluate your competitor’s strengths and flaws, compare them to your own, and then look for a gap in your market. A competitive analysis is crucial since it will aid in the development of your own business plan. Features, market share, price, marketing, differentiators, strengths, weaknesses, location, culture, and customer evaluations should all be included in a competitive analysis.
It is critical to do competitive analysis throughout the lifespan of your business in order to keep updated with market trends and product offers. Competitive analysis can help you understand what services are presently accessible to your target market, as well as which concepts are being overlooked.
Here are some of the main benefits it may provide for your company:
1. A Clearer Understanding of Your Market Climate
Market research involves collecting and analyzing information about your customers and competitors. You can do it in 3 different ways:
- Online research (entails using existing information from the web);
- Field research (you collect information using questionnaires and surveys);
- Third-party research (you consultant market research conducted by other commercial agencies or firms).
Evaluate what your competitors have to offer and how they differ from you. Consider whether they provide greater value than you. Do they tend to their customers’ needs better than you tend to yours? Is the quality of their products, services, and experiences better than yours? These are some of the questions you might ask yourself to help you figure out how to enhance your business.
2. Identify Strengths and Flaws
You must have a solid awareness of who your top competitors are and who you may be losing business to attain and sustain a competitive advantage in reaching and selling to your target market. You’ll get the following business insights from a thorough competitive analysis:
- An understanding of how your existing and potential customers rate the competition
- Positive identification of your competitor’s strengths and weaknesses (and how you compare against them)
- A mechanism to develop effective competitive strategies in your target market
3. Create / Modify a Go-To-Market Strategy
An effective GTM strategy requires a deep understanding of your ideal customer, market and competition, product offering and pricing, and channels necessary to reach your customers. Competitive analysis helps you to understand market dynamics so you can find an optimal way to reach your target customers. This will ensure you that the marketing messages you invest in from an advertising perspective and the channels in which you amplify those messages are the right ones and will deliver you not only a higher ROI but more brand awareness as well.
Analyze Competitors With an Open Mind and a Realistic Attitude.
It’s a tough world to do business in, but it’s impossible for companies who expect it to be easy (or stay easy if the stars do align).
If you’ve ever had any contact with super successful entrepreneurs or business owners, you’ve probably heard the phrase “don’t drink your own Kool-Aid.” Don’t let success fool you into a false sense of security because that’ll only compound things if and when they do get rough. The closer your perception of your business is to reality, the easier it’ll be to get back on track when the time comes.
Here’s an example: your company has experienced three straight years of sales growth. When year four starts off slower than expected, you don’t think anything of it because, hey, things will sort themselves out in quarter two. Before you know it, you’re in Q4 staring down at a 50% decrease in sales for the year. So what really happened?
Once you realized there was a problem, you eventually discovered that a new competitor opened up shop around the same time you started taking a hit. The new guys used aggressive marketing tactics, offered a great customer experience, and set their prices just a hair lower than yours. Huh – no wonder you lost so many clients. All the information was there for you to see, but you weren’t looking for it because – you guessed it – you were “drinking your own Kool-Aid”.
It’s difficult to balance pragmatism with the confidence and courage that it takes to run a successful business, but that’s how you know it’s the right thing to do!
Tali is a results-driven digital marketer with a track record of growing her clients’ businesses and driving revenue.
As the business owner at WSI Digital Path, Vaughan, she takes great pride in delivering powerful but cost-effective solutions for her clients.
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