Are you looking to get your business off the ground, or establish it among the competition? A thorough competitive analysis is an essential component of creating a successful business plan. By analyzing the strategies and tactics of competitors, you can identify potential opportunities, anticipate potential hurdles, and come up with winning tactics to make your business stand out from the crowd. In this guide, we’re going to break down the process of conducting a competitive analysis to help you get the edge you need to achieve your business objectives. Whether you’re a veteran entrepreneur or just taking the first plunge, this is what you need to gain a competitive edge and ultimately propel your venture to success.
Key Takeaways
- Identify your competitors: List every business that competes in your industry. Make sure to include both direct and indirect competitors.
- Gather information: Collect as much information as possible about each of your competitors, including their products or services, pricing, marketing strategies, target audience, and customer reviews.
- Analyze the data: Once you have gathered all the information, analyze it to identify trends and patterns. Look for unique areas such as where your competitors are excelling and areas where they are falling short.
- Identify your competitive advantage: Based on your analysis, identify what sets your business apart from your competitors. This could be your unique selling proposition, a lower price point, superior quality, or exceptional customer service.
- Develop your marketing strategy: Use the information you have gathered and your competitive advantage to develop your marketing strategy. This should include how you plan to position your business in the market, your pricing strategy, and your promotional tactics.
Step 1: Identify Your Competitors
When it comes to understanding the market you’re entering, it is crucial to identify whom you are pitched against. Direct competitors are those businesses that offer similar products or services to what you are providing, while indirect competitors refer to those that offer different products or services which may meet the same needs as yours. Starting a coffee shop, for example, would mean that direct competitors are other coffee outlets in the vicinity, while indirect competitors could be fast-food restaurants or convenience stores which also sell coffee.
To get a clear picture of who your rivals are, a basic online search should be the starting point. Industry reports and directories can also be used to identify hidden competitors. Once the competitors have been identified, making a list of them and their characteristics – name, location, a brief description of products and services – should be the next step, as it will help keep track of the techniques employed by your competitors and make it easier to obtain data about them.
Step 2: Gather Information
It is important to gather as much information as possible about your competitors, but be sure to focus on the most relevant information. Look for information that will help you understand the reputation of your competitors in the market and how you can differentiate yourself. Here are some ways to gather information about your competitors:
- Customer Surveys: Conduct surveys of your customers to get their feedback on your competitors. Ask them what they like and dislike about your competitors and how you can differentiate yourself.
- Industry Reports: Look for industry reports that provide information about your competitors. These reports can give you insights into their market share, revenue, and growth trends.
- Reviews: Read customer reviews of your competitors on sites like Yelp, Google, and Facebook. Look for common themes in the reviews, such as complaints about pricing or poor customer service.
- Social Media: Check your competitors’ social media profiles to see how they engage with their customers. Look at the type of content they post, how often they post, and how they respond to comments and reviews.
- Website: Visit your competitor’s websites and take note of their products or services, pricing, and any promotions or special offers they are running. Look for any unique features or benefits they offer that you could incorporate into your own business.
Step 3: Analyze the Data
Once you have gathered all the information about your competitors, the next step is to analyze the data to identify trends and patterns. Here are some tips for analyzing the data you have collected:
- Marketing Strategies: Look at the marketing strategies employed by the competitors. Identify the channels they use to reach their target audiences, such as social media, email marketing, or advertising. This will help you determine which channels you should use to reach your target audience.
- Pricing: Analyze your competitors’ pricing strategies. Look for patterns in their pricing, such as discounts or promotions. This will help you determine how you should price your products or services.
- Strengths and Weaknesses: Look for areas where they excel and areas where they fall short. This will help you identify opportunities for your own business to distinguish itself and provide value to customers.
- Target Audience: Analyze your competitors’ target audience. Look for patterns in their customer demographics, such as age, gender, or income level. This will help you identify segments in the market that you can fill by targeting a different audience.
- Unique Selling Proposition: Identify your competitors’ unique selling proposition. Look for what sets them apart from their competitors. This will help you determine how you can differentiate your own business and provide value to customers.
Step 4: Identify Your Competitive Advantage
Based on your analysis, identify what sets your business apart from your competitors. This could be your unique selling proposition, a lower price point, superior quality, or exceptional customer service. Whatever it is, make sure it is important to your target audience and that your competitors are not already offering.
Step 5: Develop Your Marketing Strategy
Use the information you have gathered and your competitive advantage to develop your marketing strategy. This should include how you plan to position your business in the market, your pricing strategy, and your promotional tactics. Make sure your strategy is aligned with your target audience and the needs of the market.
Conclusion
Creating a successful company plan involves carrying out a competitive analysis that gives you a clear perspective of where you stand in the market. You can perform a comprehensive review of your competition by following the steps outlined in this article. By remaining impartial and seeking genuine information, you can harness your analysis to refine your plan, developing an irresistible value proposition that puts you ahead of the competition. Remember these tips and you will be fully prepared to assess your main competitors accurately, pinpoint their strong and weak points, and seize all untapped opportunities.