A competitive analysis is an exercise that a business goes through as part of the marketing strategy. The goal of the analysis is to evaluate the strengths and weaknesses of the business’s own products and services and compare those strengths and weaknesses to competitors. This analysis helps to identify what makes the business and its offerings unique in the marketplace, which then enables more efficient marketing.
All businesses can benefit from doing a competitive analysis, but product sellers that sell very similar goods as their competitors, such as retail, likely benefit the most. This is true because companies in crowded markets need to do all that they can to differentiate from competitors, and that’s exactly what a competitive analysis does.
To conduct a competitive analysis, first be ruthlessly objective about your business and its competitors. What you intend to uncover will be unique, but you should at least answer the following questions for your business and its top competitors:
- Where is the business located, and why is this a strength or weakness?
- What are this business’s competitive edges?
- Does the business have any major weaknesses?
- How are the annual sales growing, and why?
- What are its key product or service offerings?
- What is the business’s price structure?
- How much market share does this business have?
- Are there any major threats to this company’s existence?
- What does this business do better than any other business?
In retail, once a competitive analysis is done, the resulting insights can be applied to the business’s physical space. Use what you have learned about your business’s competitive edge, and apply these ideas by perhaps changing themes of the store on a regular basis, redesigning product displays, and enhancing the customer experience by utilizing attention grabbers that differentiate your business.