Competitive analysis is the process of ethically collecting, analysing, and comparing information about your competitors’ performance in the market with respect to yourself. It can help you, as a small- or medium-sized enterprise (SME) owner, to evaluate the strengths and weaknesses of your business rivals, prevent them from entering your market share, and develop strategies to help your brand stand out in the marketplace. Also, competitive analysis can help you learn from the mistakes of your competitors, and give you a competitive advantage in the industry.
By tracking how your competitors conduct their business operations you can:
- Gain a better understanding of their products and pricing policy, and the overall marketplace.
- Target your customers and identify potential markets.
- Track market trends, forecast market challenges, and update your business strategies accordingly.
- Identify and manage business risks and opportunities.
When conducting competitive analysis, first identify your competitors. Look for SMEs that offer the same, similar, or related products by going through their websites, social media pages, and print advertisements. Then you want to:
- Gather information about the marketing strategies of competitors. Look into their online and print ads, SEO practices, periodic reports, and branding campaigns to know how they promote themselves to attract customer attention and how much of their budget they allocate for the same.
- Assess their product and pricing system, and seek feedback from competitors’ customers to know the perceived value and image of their products.
- Do your own mystery shopping to know more about the products, prices, and customer service of your competitors.
- Determine the strengths, weaknesses, and market share of your competitors.
- Review the market objectives and strategies of your competitors. Understand if they’re aiming at innovation, widening their market share, maximising profits, or becoming industry leaders. Then, develop your own business tips and approaches to counter these effectively.
- Compare their product quality, pricing policy, customer service, and marketing plans with that of yours to know how your brand is positioned in the market.
Since market trends are dynamic, try to conduct competitive analysis on an ongoing basis, and update it every six or 12 months to constantly stay ahead of the competition.
Competitive analysis is crucial for the profitability of your SME as it helps you evaluate your business rivals and develop strategies to better your market performance.