Everyone knows that competition drives business. Competition helps to weed out bad companies, and make good companies grow. But competition can either work for you or against you, and it’s up to you to avoid the latter. But can a company do that? And why is competitive analysis so vital? Here are a few reasons why.
Learning from the successes and mistakes of others
A competitive analysis should include extensive research of the most successful as well as the most unsuccessful companies within a company’s specific industry. Many methods are tried and true just as many methods have been proven ineffective. A company can make researched decisions about current marketing tactics, pricing, and customer relationship management for their company based off of what has been done in those companies that have a successful track record.
Investigating history can also help you predict the future. Are you curious how your consumers will respond to a change that you make to your product/service or a change that occurs in the market? Examine how consumers responded to your competitors in similar situations.
Finding your edge
Chances are that you have some competitors in your industry that seem relatively similar to you. At a glance, a company may have a product, service, or structure that looks uncomfortably similar to your idea, service or structure. Does that mean you should give up, turn around and find another industry with no competition whatsoever? Of course not. What if Steve Jobs had taken one look at Microsoft’s products and decided that the world didn’t need another computer operating system? Millions of tourists across the world wouldn’t be misusing their iPad’s by taking photos with them in public.
Completing a competitive analysis can help you find that one thing that sets you apart from even the strongest of competitors. Whether it’s in your marketing strategy, customer service, product differentiation or pricing, finding your competitive advantage can be the difference between your company’s success or failure. Find your competitive advantage and make sure that your consumers understand how and why it sets you apart.
An in-depth analysis of your competitor’s strengths and weaknesses can give you a good idea of where their current shortcomings are. It is difficult for any company to do well at everything. What are their consumers complaining about? Find those areas where your competitors are falling short, and exploit those weak points by ensuring that your company excels in the same areas. Only through competitive analysis can you fully understand and appropriately respond to the unmet needs of consumers in your market.