Business is not just about your customers, or you. It is also about the people who you are competing against. Competitor analysis should be a key foundation of your business strategy. But is it?
“No one does business in isolation,” Hywel Griffiths of APD Resolutions states. “You could try putting your head down and ignoring whatever else is going on, but you risk missing opportunities, or underestimating potential threats.”
“Knowing more about what your competitors are up to can help greatly in devising new strategies of your own to get ahead, and stay there,” advises Hywel.
Why the Competitor Analysis?
Making your own, informed decisions about your business strategies, means understanding where you fit in the wider scheme of things.
This is the primary goal of competitive analysis: to gain the knowledge necessary to make the most of opportunities and deal with potential threats.
“Focus on your competitors’ strengths and weaknesses because this will help you form and refine strategies of your own”
Hywel emphasises that this type of analysis is not primarily about product or service specifications, but focused on their key assets and skills, and how they deploy them. It means checking what is present, and absent.
What Do You Need to Know First?
Before getting started with the competitor analysis, you need to be clear about the following:
- who your competitors are
- what their strengths are and what threats they pose
- what their weaknesses are, and how you can use them as opportunities
- what their objectives and strategies are
“You must ask yourself this question: if I make certain changes, how will my competitors respond to them?” Hywel says.
“Also think about the general level of competition in your business,” suggests Hywel, “and how this might impact on how your potential customers make their choices.
Your Information Sources
Planning a competitive analysis is one thing, executing it is another.
“Look at recorded data such as press releases and reports,” Hywel says. “Also check observable data, including advertising campaigns, price lists, promotions, websites, applications and tenders.
“Finally, use opportunistic data to find out more,” suggests Hywel. “This includes trade shows, seminars, meetings, and even employing your competitors’ ex-employees.”
Forming Your Strategies
“Think in terms of using the knowledge you’ve got to form competitive strategies focusing on key areas,” Hywel suggests.
These areas are: product or service; distribution; pricing; promotion and advertising.
“A thorough analysis of your competitors should inform competitive strategies. This means looking at how they engage with their target audiences, and whether they out-perform you in this area”
It is also about how what your competitors do reflects on what you do:
- How does your brand reach and image measure up?
- What is your market share in comparison?
- What is your position?
- What can you offer that your competitors do not?
“The goal of your competitive analysis is to give you the leverage you need to gain a competitive edge,” Hywel concludes. “Looking at others is a way of finding ways to differentiate yourself.”