Understanding Your Competition is the First Step

Understanding the strengths and weaknesses of your competitors is crucial if you want to be successful in business. After all, how can you appeal to your target customers if you don’t understand the appeals they are getting from similar businesses?

In order to fully grasp the marketplace in which you operate, you need to perform a competitive analysis. Luckily, it’s not as hard as you would expect, even if you don’t have an MBA or a long track record in business.

What is a Competitive Analysis?

A competitive analysis is a comprehensive survey of the businesses you directly and sometimes indirectly compete with designed to identify their strengths and weaknesses relative to your own. Having this information is valuable for a number of reasons:

• Develop more potent marketing strategies
• Innovate your products and services
• Develop a more dynamic and relevant workforce
• Anticipate challenges before they affect you
• Identify a new base of customers

Follow these basic steps to begin conducting your own competitive analysis:

Step 1: Gather Information

In order to conduct the most thorough competitive analysis possible, you need to understand exactly what to analyze. It helps to create groupings organized around some broad categories:

• The businesses you compete with
• The products and services they offer
• The market share of each competitor
• The strategies they have used in the past
• The strategies they currently use 

Step 2: Create a Competition Grid

Now that you have all the relevant information in front of you, use it to create a competition grid. This simple tool makes it easy for you to compare your own business to your competitors.

Take a piece of paper, and write the names of four or five products or services that compete with yours down the left side of the paper. You might think you have no true competitors, but this is rarely the case. It helps to imagine what your customers would buy if they didn’t buy what you offer.

Across the top of the paper, write down the main features and characteristics that relate to the product or service. These can include things like:

• Target market
• Price
• Size
• Method of distribution
• Level of customer service

If you are analyzing a service rather than a product, you might include criteria like.

• Prospective buyers
• Availability
• Price
• Contact methods

Once your grid is complete, you have an easy visual reference clearly laying out the products and services that attract the same customers you want to attract. Plus, you can see at a glance the strengths and weaknesses of each entry.

Step 3: Plan Strategically

A competitive analysis is really just a tool to help you plan for the future. If you conduct one and then do nothing with the information, it’s been a useless exercise. Take the information you have gleaned, and use it to begin refining your strategies for the short, mid, and long term. If you’ve conducted a competitive analysis in a thoughtful and honest way, it can be an invaluable resource to help you grow your business.

Tell Your Customers about Your Strengths

Now that you know which features of your business are stronger than your competitors, it’s time to let all your current and future customers know about it. Get strategic marketing expertise and assistance by partnering with Studio C5.

Request a free digital marketing consultation.