In business, this is one of the most important questions you can ask before you develop a strategic plan to grow your business.
It is also important to focus your attention on the companies who are the most successful in the industry. Who has the largest market share? Who has the most profitable business model in your industry?
Once you have identified the big winners in your industry your next objective should be to identify their Unique Selling Points and try to determine why consumers trust them and ultimately buy from them. Avoid the temptation to ignore or denigrate your competitors. Instead the objective should be to study them closely and ultimately learn from them.
So what areas should I focus on in regards competitive analysis?
Strategies relating to business development, relationship building, marketing, joint ventures/strategic alliances, pricing, positioning in the marketplace, segmentation and targeting should form the basis of your competitor analysis. Focus on at least 3-5 competitors to commence with; competitors that you go head to head with to attract the same customers.
Now comes the self-analysis. What does your company do better than the competition which causes your customers to buy from you? This may require an anonymous survey of your customer base to get an accurate answer and the use a prize as a carrot in order to ensure you get adequate feedback.
The next challenge for a company is to create a compelling value proposition which clearly differentiates you from the competition and which will lay the foundation for your Unique Selling Points (USP’s). The next core question you need to ask is “What are the market communication strategies we should use in order to maximise this differentiation?” You will at this stage have garnished an abundance of information from your competitor analysis into what strategies work best for the most successful companies in your industry. This raises an additional question “Do we have the resources and capabilities to do something similar which will get buy in from our team?”
If the answer is yes to the above question then there is no point in re-inventing the wheel in regards communicating this compelling value proposition to your target audience, which should result in a swathe of warm leads to feed your business development sales funnel.
In conclusion, avoid the temptation of ignoring or dismissing your competition as no business operates in a vacuum. Instead respect them, learn from them, devise strategies to beat them and then ensure you are following the best strategy to protect your newly improved market position.