Every entrepreneur who wants to stay ahead in the market niche today must know how to conduct a competitive analysis. A competitive analysis is very important for your business but unfortunately, a good number of business owners do not know how to go about it. In order to know how receptive the market is to your business and what works or does not work, you have to understand how other businesses in your industry function. A competitive analysis gives your company an edge over other companies; you can learn from the mistakes your competitors make and avoid them. Also learn from their strengths which can help you grow your business. Below are easy steps that can help you conduct a successful competitive analysis.
1. Define your goals (why do you carry out the competitive analysis).
The first step in a successful competitive analysis is to define why you decide to carry out a competitive analysis. Are you going in for the competitive analysis to improve your brand and gain an edge over your competitors? Do you want to make your customer experience better than that of your competitors? Or are you trying to drive more traffic to your business than your competitors? These are some of the questions you should ask yourself.
Ask yourself what you are trying to find out, how you plan to get your data, what information you want to have and from who? Answering the above questions will help you determine what type of data you need and design a good strategy to make your competitive analysis successful.
2. Identify your competitors.
The next step in conducting a successful competitive analysis is to know who your competitors are. There are two types of competitors, direct competitors (those who offer the same products/services and target the same customer base as your business) and indirect competitors (those who sell similar products/services but target different customers). You may be confronted with thousands of competitors depending on the type of business you run, which will make it impossible to conduct a competitive analysis for all. So it is important for you to choose your top competitors for the analysis. There are many tools on the web that can help you research your top competitors. Google search companies that offer the same products/services as your business and choose those who top the list and work with them.
3. Identify competitor’s strengths and weaknesses.
Once you’ve identified your top direct competitors, the next thing to do is to analyze their businesses from the perspective of strengths, weaknesses, opportunities and threats. Try to find out in what domain your competitors excel. Find out what their strengths and weaknesses are, what area they neglect, what gives them an advantage over you and what you can do better than your competitors. Use the information you get to weigh your competitors’ strengths over your weaknesses. Focus on the areas your competitors are missing, it might be a great opportunity for your business to gain an edge over them. With the data you get, improve your own business and focus on spec