Competitors refer to other companies or organisations in the same field or industry offering similar products and services that have an effect on the profitability of a company. A company needs to have a complete understanding of its competitors and the competition in the industry in order to effectively compete and remain profitable.
Competitor analysis is a process used by companies to gain a better understanding of their competitors. The analysis involves researching and studying the products, services and practices of the competition, in order to identify current opportunities, as well as potential future opportunities. Competitor analysis serves as a tool for making informed and strategic decisions, such as where to focus resources, how to differentiate from competitors, what markets to enter, and how to obtain and sustain a competitive advantage.
The purpose of competitor analysis is to understand the current and emerging competitive landscape, allowing you to make informed decisions that can benefit your business. It is an ongoing process and requires ongoing monitoring to ensure that the competitive environment is accurately assessed. A thorough competitor analysis allows for better strategic decisions, more efficient resource management and planning, and an understanding of how the competitive environment could impact a company’s ability to succeed.
When performing competitor analysis it is important to take the time to truly understand your competition. Researching the competition involves gathering information and analysing data regarding competitive products, services, marketing strategies, and distribution channels. It also involves gathering financial data and tracking the competitive positioning of their products and services over time.
To ensure comprehensive competitor analysis, it’s important to consider three main perspectives:
1. Competitive Positioning: Understanding the competitive landscape and the current competitive positioning of its products and services.
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2. Competitor Strategies: Gaining a better understanding of the competitors’ strategies, including pricing strategies and marketing plans.
3. Competitive Advantages: Determining the advantages and disadvantages of the competitors’ products and services, and the likelihood that their advantages will remain an advantage in the future.
The overall research strategy should involve multiple sources, including market research, competitor websites and trade associations. This comprehensive research should be used to develop a comprehensive overview of the competitive landscape and a clear understanding of each competitor’s strengths and weaknesses.
When determining the strengths and weaknesses of each competitor, it’s also important to consider the benefit that each product or service has relative to their customers. This can involve considering preferences, needs and expectations.
Aside from researching market dynamics, competitor analysis should also include conducting customer research. This can involve conducting surveys and interviews. Customer research can provide important insights into customer preferences and needs that the competition may not meet. It is also important to assess a company’s ability to respond to customer needs and preferences in a timely manner and to measure customer satisfaction with its products and services.
Another important aspect of competitor analysis is to assess a competitor’s overall financial health. Assessing the financial performance of a competitor can provide valuable insight into their future strategies and potential opportunities.
It’s important to remember that competitor analysis is an ongoing process and requires continual monitoring. As the competitive landscape changes, it is important for companies to adjust and update their competitor analysis. The data and insights gathered through competitor analysis can help inform strategic decisions and maintain a company’s competitive edge in the marketplace.