Before you launch a product or service (or expand into new markets), it’s critical to understand your competition. A detailed competitive analysis helps identify your company’s differentiators and what you bring to the table.
Knowing your competition will also help you build and refine your business strategy and its key components like your messaging and marketing plan. Plus, understanding your competition will better help you determine your company’s place in the market and what you can do to hit the ground running and immediately build market share after you launch.
We’ll take a closer look at some of the key elements of a competitive analysis. First, be ready to answer the following questions about your competitors and your company’s competitive position:
Not being able to answer basic questions about your competition will reduce your chances of winning a sale and possibly raising funding. Worse yet, you won’t have the information you need to form a clear strategy to beat them.
Like other forms of business-related research, a competitive analysis can quickly become overly complicated. You want to understand your competitors, but not spend huge amounts of time digging into the minute details.
Instead, use information sources like their websites, SEC filings, media articles, consultant briefings, marketing material, their customers and former employees to learn more about each competitor. Be sure, of course, to not gather any confidential information.
As you analyze each competitor, compile these key details:
This is essentially a SWOT analysis (strengths, weaknesses, opportunities and threats). With this information, you’ll not only better understand your competitors; you’ll also have the insight to create both a business and marketing strategy that can push you ahead of the pack.
Once all the information is available, create strategic initiatives based on what you’ve learned from the competitive assessment. It may help to create summary points or statements that can help you identify both opportunities and challenges. Some examples include:
From your summary, formulate the most effective initiatives to assure your company’s success. Your company can only have one competitive strategy. So, your strategy has to be the composite of what you need to do to beat the competitors that matter — those that have the greatest strengths and represent the greatest threat.
Here are some examples of strategic initiatives that illustrate the elements of a prospective competitive strategy:
With a more thorough understanding of your competitors, you’ll have the insight to build a marketing strategy and product plan that not only showcases your product or service, but also how you’re different and better.
Once you launch your product or service, it’s a good idea to keep a consistent eye on your competitors. After all, they’re likely to grow and evolve, just as your business will.
By monitoring what they’re doing (but not at the expense of your own business operations), you’ll be more likely to make strategic improvements or changes proactively, rather than reacting to a competitor and risk losing valuable market position.