Setting up your business and getting noticed in any industry or market is challenging as a start-up. But going beyond surviving to thrive needs more than hard work and a quality product – it needs smart work and a keen eye on the competition. And that’s where competitive analysis comes to your aid.
To stand out from your competitors, you should know who they are, their products or services, and what customers think of them. Being well-informed about the competition can help you play on your strengths to stay one step ahead of them.
What Is Competitive Analysis?
Competitive analysis is a structured way to analyze your competitors’ products, services, sales tactics, strengths and weaknesses. Based on your observations, you can innovate and improve your product or service to differentiate it from your competitors and implement it before they can. Doing competitive analysis before spending a large amount on product launches can help you prepare better for the market where your business offering will have to face the test of attracting and retaining consumers.
5 Steps To Help Start-Ups Get Started With Competitive Analysis:
Competitive analysis is a thorough process carried out by experienced advisors. But as an entrepreneur, you can do a basic analysis to get a look and feel of what challenges lie ahead. Here are five easy steps to get you started on your DIY (do-it-yourself) competitive analysis and help you work well with experienced advisors:
Know Your Competition
The first step is to identify who your direct and indirect competitors are. Direct competitors are the ones who sell the same kind of product or service as you do and are in the same vicinity as you. Indirect competitors are the ones who might not be selling the same thing as you but are in the same general category as your business. To give an example, Mary is a restaurant owner. Her direct competition is all restaurant owners and fast food joints nearby. But her indirect competitors are hotel chains as their target audience is different.
Research, Research, Research!
Once you have made a list of your competitors, it’s time to delve into their businesses’ “what” and “how”. Start with the kind of products or services they offer, and compare them to your own. Do they offer more than you do? If yes, what extra utility or service are they providing that you are not? Next, study the quality and price of their product, and compare it to your own.
Check how strong a presence they have in the market and their reach. Do they supply products only in your town? Or do they cover a wider geographical area than you do? If so, you might want to re-evaluate your distribution cycle and reach. Do they give out more discounts or hold promotional campaigns for higher sales? Such campaigns are attractive to customers. Being aware of your competition’s sales tactics can help a lot.
The customers’ attitude toward your competitors’ offerings is the most important thing to check. Is there any particular quality that customers find more useful in others’ products? Or even the other way around – is there anything that customers want but have not yet got in other products? You could be the first to introduce it and win their approval and brand loyalty! This step has become easier with social media and online reviews. However, doing a detailed customer survey with the help of your marketing and sales teams is always a good idea.
SWOT stands for Strengths, Weaknesses, Opportunities and Threats. By studying these four factors, you can get a fair picture of where your competitor’s business stands. By comparing them to your own business, you can gain a deeper insight into how to present your product or service. You could play on your strengths and not challenge areas where your competitor beats you. Similarly, you could turn your competitor’s weakness into your strength. In the case of indirect competition, it is vital to check if they plan to come into direct competition by launching the same product or service you offer.
Innovate And Implement
Now that you know your competitors’ tactics, it is time to apply all that gathered knowledge to improve upon your own product design and sales. If you realize your competition is doing better because of lower pricing, try reducing your product cost or justify your higher price with premium or unique offerings. Or if they offer extra facilities, try incorporating them into your business too. Incorporating these changes will require work at all levels, from design to production to operations to marketing. So ensure your team is looped in at every stage.
In the case of well-established markets, some big businesses might already have a national or international presence. As a start-up, you might still be a long way from this, but you can take steps to safeguard your local markets till you can think of expanding. Innovation and experimentation in marketing and publicity can help during such times. Using social media tools to create a brand name and image for your business could be your ticket to the next level.
Competitive analysis is not a one-time thing. Like you, your competitors constantly think, innovate and upgrade their businesses. To stay ahead in the race, you must make competitive analysis a regular and disciplined procedure in your business – just like accounting and bookkeeping. Doing it at least once yearly will help you be abreast of not just your competitors’ intentions but also changing trends and customer preferences. It is the end consumer you have to please, so knowing his mind is the key to success.
Remember, competitive analysis is not so much about spying on your competition; it is about constantly pushing your boundaries to make and sell better products and services to your customers. It is an activity for self-improvement. And the best time to start is now.
Contact KSSP Partners LLP in Markham for Your Business Consulting Needs
A professional business consultant can help you understand the competition in the market and chart out strategies to improve operating efficiency. At KSSP Partners LLP, our business and tax consultant can help you develop an efficient business structure, control expenses, and stay updated on your industry. To learn more about how KSSP Partners LLP can provide you with the best consultancy services, contact us online or by telephone at 289-554-5997.