Competitor analysis is key to shaping your company’s strategies. It determines your strengths and shortcomings within the market, giving your business a distinct advantage over your direct and indirect competitors. Analyzing competition also teaches you more about your own company.
If you are unclear on how to do competitor analysis, start by asking yourself these questions:
- Who are my competitors? Are they a direct competitor?
Typically, it is a company that sells the same products or services as yours or fulfills the same customer needs you meet. This company could be bigger, smaller, or similar to yours.
- What are their strengths, weaknesses, opportunities, and threats? This is called a SWOT analysis.
- Are there any gaps in the market that my company can fill?
- Are there any gaps in the products and services offered by my competitors?
- Finally, how can I use this information to increase my company’s market share?
Research your competitors well to get the answer to these questions.
Why is competitor analysis important?
The benefits of competitor analysis are huge. It can set the rhythm and speed of your business’s success.
Understand your advantages and disadvantages
This is where doing a competitor SWOT analysis helps. Analyzing your competitor’s strengths and weaknesses will help you identify your business’s advantages and disadvantages in the market.
Determine your past, present, and future business strategies
Analyzing your competitors helps you formulate effective strategies for your company. Knowing where you stand in the market can give you early warning signs of threats and opportunities. Use these insights and foresight to take steps that will lead you to your goals.
Know the objective and profile of competitors
By understanding where your competition stands in the market, you can think of strategies to either beat them or fill the gaps.
Identify what you need to get ahead
You learn from the success and failure of other brands. This analysis establishes the reasons behind the failure of unsuccessful companies, thus helping you identify the key assets and skills needed to beat your competition.
Know your threats to tackle them better
While analyzing your competition, you identify threats and challenges your competitors bring into the ecosystem. It helps you fortify your company’s strategy against the competition.
Leverage category convergence
Brands today are offering products across variant segments. Today brands are competing in segments where they have been historically absent. Hence, consumer perception of your brand plays a prominent role in defining competitive benchmarks.
Sources of information to study competitors while doing competition analysis?
Recorded data: It includes data that is published publicly, such as annual reports, brochures, newspaper articles, and press releases.
Observable data: It is collected from several sources, such as competitor pricing, promotions, and patent applications.
Opportunistic data: This kind of data involves exclusive planning. It is basically derived from customers, suppliers, seminars, and conferences.