A competitor analysis is an essential part of any company’s marketing plan. It allows an owner to identify and evaluate the strengths and weaknesses of both potential and current competitors, in relation to their own products or services. We have a look at the value of a competitor analysis and how you can create one that is instrumental to your success.
A good competitor analysis benefits your company by:
– Aiding in the development of marketing strategies
– Providing you with an understanding of competitors’ business strategies
– Identifying business opportunities that are under-served
– Minimising the impact of threats from competitors
– Helping owners to make informed business decisions
To create an effective competitor analysis you need to be objective. It’s not good enough to simply know what your competitors offer, you need to conduct thorough research into your industry.
The key areas to cover when generating a competitor analysis include:
Identify your competitors
Make a list of your competitors and divide them into strategic groups. You will have primary competitors who are your direct competition, secondary competitors who are vying for the same general market, and potential competitors who may be moving into your market in the future.
Competitor product or service summaries
You need to gather data in order to create a comprehensive analysis. The internet is a vital resource and should be used to search competitor websites and find customer reviews. Read through printed material, such as newspaper or trade publication articles, brochures and where possible annual reports. Examine their products and services, observe their interactions at trade shows and talk to consultants in the industry. You can also ask customers for their opinion on a competitor’s product or services.
Competitor strengths and weaknesses
In order to achieve a realistic outcome you need to be realistic and objective, and view their products or services as if you worked there. It’s easier to establish strong and weak points by using a table. Include categories like: quality, value, convenience, location and reputation. It’s also important to look at the internal strengths that include financial resources, strategic partnerships, operational efficiencies and highly motivated staff.
Competitor strategies and objectives
Try to identify the market objectives of each of your competitors – such as trying to establish themselves as the market leader. Then focus on the type of strategy they will use to reach their goals – like reducing prices or buying out competitors. You’ll get a better idea of strategies and objectives if you analyse a competitor’s actions over a period of time.
Once you have completed your research you should have sufficient data to determine the outlook in your industry. By adding your company to your analysis you can clearly see how you rank according to your competitors. It highlights your position in the market and shows you were you can improve your service.
Your competitors can change rapidly, which is why a competitor analysis is an ongoing process. It provides you with valuable information about your industry, your competitors and your own business, and this enables you to make informed decisions. With an effective analysis you will stay a step ahead of competitors and contribute to the success of your business.
Entrepreneurs who are looking for ways to strategically develop their business need the professional advice and support infrastructure provided by Lean Enterprise Acceleration Programmes. Contact LEAP on 011 449 7074 or visit www.leapco.co.za.
We would love to hear from you, so please comment on this article.