One of the most important factors in the long-term success of any business is continuous research and assessment of the competition.
The best companies in the world remain at the top of their game by keeping a close on eye on competitors. As a small business owner, you must be willing to learn from the competition and use your findings to help gain advantage in the industry,
A competitive analysis does more than help you understand your competition. It can provide you the necessary intelligence to inform strategic decision making, illuminate your own strengths and weaknesses, reveal opportunities where you can gain competitive advantage, and enable your team to better understand your industry in order to effectively achieve your objectives.
But in order to conduct a proper analysis, it is critical that you fully understand the process, as described in the following five simple steps:
Identify true competitors
Interestingly enough, the first step is the one where so many companies fall short—identifying the right competition; you could waste a lot of time and money trying to beat a business that isn’t a good comparison to yours, so.
Your true competitors are your direct competition—those who offer a similar product or service that could pass as a substitute for yours, and operate in your same geographic area. Consumers have to choose between your company and theirs when it comes time to make a purchase.
Research top competitors
Competitive research involves identifying key information about your direct competitors that may help them gain market share.
The key is to identify internal details such as the company’s product and service characteristics, who is buying their products, how they are reaching them, and what unique selling points or key differentiators they use to help position themselves.
This information is often readily available and can be found on their website or marketing materials, by using information from the internet and industry publications, or by simply asking existing and potential customers.
Strengths and weaknesses
Once you have gathered the necessary information, you must create a list of each competitor’s strengths and weaknesses within the industry.
Be sure to make note of any reasons a customer might choose a competitor's product or service over yours. This will assist you in identifying their competitive advantage as well as potential opportunities.
Remember to be objective and to avoid bias, especially when identifying weaknesses.
Goals and objectives
It is important to also identify each competitor’s current and future goals and objectives. This can typically be identified using the details provided in their mission or vision statements, as well as in marketing advertisements.
A mission statement sets out why an organization exists and helps to clarify what the business is currently trying to achieve. A vision statement provides strategic direction and describes what the company wants to achieve in the future.
How a company advertises also creates a great opportunity to uncover the objectives and strategies of that business. Most of the information you need about products, services, prices, and company objectives should be readily available. If that information is not available, you may have identified a weakness.
Once you have completed the above steps, the last thing left to do is to compare your findings about the competition to your own company.
Knowing how you compare to the competition is critical for the long-term success of your business. Knowing who your competitors are, and what they are offering, can help you to make your products, services and marketing stand out. It will enable you to set your prices competitively and help you to respond to rival marketing campaigns with your own initiatives.
About Stingray Advisory Group LLC: Stingray Advisory Group LLC is based in Grand Rapids, Michigan and a proud Local First member. By creating dynamic customized solutions for business growth, we empower businesses and entrepreneurs with the tools to further their development. To learn more or schedule a consultation, visit www.stingrayadvisorygroup.com.