Whether you’re entering an industry for the first time or looking for ways to take your business to the next level, it’s important to conduct regular industry analyses. An industry analysis is meant to help you review various market and financial factors in your industry that affect your business, including evaluating your competition.
Industry analyses are useful in a variety of fields ranging from manufacturing to retail, and involve multiple factors including geographical area, industry outlook, regulatory environment and target audience. By investigating and analyzing your competitors, you can determine the best strategies for achieving business success.
There are two principle methods by which businesses can conduct an industry analysis. The first is a quantitative analysis, which involves the use of mathematical forecasting to assess data. The second is a qualitative analysis, which requires owners to use their own judgment when reviewing information. Once you’ve assessed your competitors’ strengths and weaknesses, you can identify and implement strategies to boost your own company’s performance.
Here are the steps necessary for conducting a thorough industry analysis.
1. Getting Ready
Conducting detailed research is the first step in an industry analysis. Generally, businesses have the option of either hiring an outside firm to gather data or performing their own research. Fortunately, a great deal of competitor research can be accessed easily if you know where to look. If you decide to do it yourself, start by compiling a list of your competitors. Next, determine the questions you want to answer during your analysis. Some of the most common questions to ask may include:
- What products and services do my competitors offer?
- Do my competitors target the same markets and audiences that I do?
- Are my competitors making money?
- How fast are my competitors growing?
Additionally, businesses should assess where their competitors rank on factors like customer service, quality of goods and prices. The goal is to eventually determine how you can distinguish your business from competitors while achieving the desired profits.
2. Examining Your Competitors
Once you’ve determined the goals of your analysis, it’s time to collect actual data. While you can gather a great deal of valuable information from secondary sources like journal articles and marketing reports, don’t overlook less obvious references, such as competitor advertisements and product brochures. These documents can offer useful insight into competitors’ pricing along with their advertising budgets and most marketable product features.
Additionally, take time to review your competitors’ financial data. Feel free to visit competitors with brick-and-mortar locations. While you should refrain from using dishonest tactics to gather info, asking other business owners questions as though you were a client is a widely accepted practice for conducting an industry analysis. You can also observe product placement within the store, and even purchase a few items to see how they stack up against your own.
3. Analyzing Competitive Data
After collecting competitor data from various sources, you can begin analyzing it to form conclusions. The goal is to determine your competitors’ strengths and weaknesses while evaluating how your own business stacks up.
A key part of the analysis step involves assessing a product or service itself. Begin by listing out the top features of your various products or services. Next, note whether or not your competitors offer those features. Pay close attention to the products or services that your target audience sees as most important. Additionally, you should note how well those features work and whether customers feel that these benefits meet their current needs.
Are there things that your offering does better than the competition, or vice versa? Answering that question could help you offer a better product or service. Stay abreast of your customers’ good and bad points and look for places where your business can shine.
4. Evaluating Your Position
Evaluating competitors’ strengths and weaknesses also enables you to identify your own place in the market. Along with pinpointing advantages your company has over the competition, you can identify future problems before they mature into crises and adjust strategies accordingly.
For example, you may need to revise prices, add features or explore different markets for your goods to stay ahead. The goal is to align your industry analysis with a demographic study of your target customers so you can make the most educated decisions moving forward.
You can’t plan for your company’s future effectively until you first determine the place you occupy relative to your competition. A thorough industry analysis is crucial to achieving success in the business world. By assessing your competitors, you can identify market niches and figure out just what it is that your target customers desire.