Part of being successful in business is identifying and mitigating risk. Knowing who also has a share of the market is part of that risk mitigation process. You can’t really compete if you don’t know who you’re dealing with.
As a business strives to win over customers and enhance market share, there has to be a well-defined strategy to go about it, and conducting research on your competitors is a vital part of it. Without looking at what your competitors are offering—their strengths, weaknesses and how they are attracting and retaining customers—you will not be able to gain success. Studying the competition means you should learn from their success and failures. For instance, if a competitor is offering great customer service, take inspiration from it and instead of copying their idea, come up with a plan on how you can excel in improving your service.
Competitor research gives you better understanding of customer expectations
Studying what competitors are doing will give you a thorough insight into your customers’ expectations. It is likely that your competitors are selling the same product at lower prices, or offering better service without charging the customers any extra amount. So while you keep track of such things, you can lower your product price or focus on improving your service. Knowing what your competitors are offering would help you better understand customer expectations; hence, you can modify the experience accordingly.
Competitor research gives you a better insight about your flaws
The greatest advantage of studying your competitors is that you get better insight about your flaws. Your competitor might be selling an improved version of the same product or they might be better with building customer relationships. Analyzing helps you identify loopholes in your product/service which you can work on. Gathering customer feedback on how to improve your products is essential.
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Competitor research allows you to improve your USPs
Analyzing the competition will help you improve your unique selling points. For instance, if you own a casual clothing brand for women and by studying your competitors you learn that other brands are selling their clothes by highlighting low price and trendy designs, you can come up with different unique selling points like online store, monthly sales and fresh arrivals every week. Similarly, competitor research will enable you to create USPs for your new product. Therefore, before launching your new product you should thoroughly analyze the USPs of your competitors to come up with something better.
You can learn from the successes and failures of your competitors
While you study your competitors, you get to know about their successes and failures, which can be used as inspiration. You can avoid the mistakes that led a competitor to failure, and should learn from the practices that have contributed towards a competitor’s success. For instance, if you are opening a new restaurant, you should make a list of the reasons why some competitors failed while others succeeded. Based on that information, you can take up the best customer service practices from successful competitors and try to avoid mistakes that became the causes of your competitors’ failure.
How do you analyze your competition?
Industry research and benchmarks
You can benefit from doing some industry analysis and leveraging some benchmarks. After all, industry benchmark data is all about your competition—and knowing what is average in your industry can help guide your financial forecasts, or even inspire tweaks to your business model.
Revisit competition during monthly plan review meetings
But don’t just investigate your competition once in the early days and never think about it again. A good business plan is a lean, continuously revised plan. You should incorporate competitive analysis into your regular business plan review meetings—if not monthly, at least quarterly. The landscape can change quickly, especially if your business is a startup in an emerging or freshly disruptive industry.
Use a SWOT analysis
Reviewing your competition easily fits into the SWOT analysis framework, where you’re looking at your strengths, weaknesses, threats, and opportunities. You should do a SWOT matrix if you’re writing a business plan, but it’s wise to include a SWOT analysis in business plan review meetings, either monthly or quarterly.
Learn about Porter’s five forces
The most well-known framework people use for strategic development (including competitive analysis) is Michael Porter’s Five Forces. This framework can help you map out the various competitive tensions at play, and assess the attractiveness (or otherwise) of the industry you are looking to compete in. Similarly, his generic strategies framework can help entrepreneurs assess which marketing strategy is worth focusing on as a basis for competing.
Listen on different platforms
Also, set up some continuous monitoring. Get on your competitor’s email list. Pay attention to where they’re spending their digital advertising dollars. Set up Google Alerts so you’ll hear about it if they announce anything newsworthy. Follow them on social media.
How they treat their customers
Find out as much as possible about your competitors’ customers, such as:
- who they are
- what products or services different customers buy from them
- what customers see as your competitors’ strengths and weaknesses
- whether there are any long-standing customers
How to act on the competitor information you get
Evaluate the information you find about your competitors. Draw up a list of everything that you’ve found out about your competitors, however small.
Put the information into three categories:
- What you can learn from and do better.
- What they’re doing worse than you.
- What they’re doing the same as you.
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Keep in mind that “knowing your competition” does not equate to copying what they do. And there is a fine line between monitoring your competition, and obsessing to the point of strategic paralysis. Don’t think of your competitive strategy as a reactive game. Try to be proactive.