The analysis of the competition is a process that is part of the market study where the strengths and weaknesses of our competitors are evaluated in order to obtain an advantage over them. Some data that we will obtain with this analysis and that will be very useful for our business strategy are:
1. Know where and with whom you compete: When you begin to develop your business plan, you must make a list of your competitors and draw up a geolocated strategy that implies the area of action in which you want to focus. Within that area you will have to know who your most notable competitors are and what they are doing right and wrong.
2. Identify business opportunities: With the analysis of the competition it is possible that you find a market niche that is not saturated, new (Blue Ocean) or even poorly attended. Expanding the horizons set in the current market can allow you to generate a strategy that adds more value.
3. Detect elements in which to differentiate yourself: Evaluating very well the value proposition of your competitors will be very useful to add a differentiating and innovative element.
4. Anticipate the reaction of the competition: In any business strategy, a section must be dedicated to anticipation, especially when calculating what will happen when your competitors realize that you have taken away customers.
Steps To Perform A Competitor Analysis
To analyze the competition, an exhaustive study must be carried out that indicates different variables to collect all the data. Let’s see the different steps you can follow:
1. Visit your competition: See how their businesses work, their prices, their hours if they have physical establishments, their seniority, their reputation, what their customers say, the number of employees, their economic capacity, etc. That is, all those aspects that can help you to get to know it better and get a much more complete value proposition.
2. Visit the websites and social networks of your competitors: This point is very important to carry out a marketing strategy oriented towards SEO and social networks. This study will help you obtain useful information and identify opportunities linked to the adaptation of the online world. It includes variables such as design, usability, the number of followers on networks, publication schedule, SEO positioning, etc.
3. Determine your strengths and weaknesses: This report will help you better define your advantage over your competitors.
4. Analyze the market leaders: Spend some time digging into the market leaders to learn how they work and what they do to be a benchmark.
5. Identify the key factors of success in the business of your competitors: In addition to analyzing their strengths, it is convenient that you prepare a specific point with those aspects that have most caught your attention in order to know how your competitors have succeeded. You can transfer some points to your differentiation strategy to save time and be successful.
Once you have developed all the previous steps to analyze your direct competition, you will have a clearer idea of how to get an advantage over them. It is important to carry out this study periodically since businesses are constantly changing and even more so if we are in the digital environment.
Knowing what are the trends that are succeeding at every moment of your company’s life will be vital so as not to be left behind and continue with your evolution. This first analysis must be extensive and exhaustive since it will be the one that will serve as a reference for future differentiation studies.
Mistakes When Analyzing The Competition
When doing an analysis of the competition for your business plan, you should not fall into key and very typical points that can mislead you, such as:
1. Underestimate your competition: When a previous study is done, competitors are usually detected that a priori do not seem like a threat. These competitors can give you more than one headache when you have implemented a business model because, by not studying them in depth, you discover that they develop aspects that you have not taken into account and that can take customers away from you.
2. Forget indirect competition: Do not focus only on your direct competition and open your range to other markets that share aspects with your business. In many cases, companies sell products and/or services that are similar or the same as yours even though their main source of income is something else.
3. Trust the first intuition: When starting an analysis of the competition it is important to do it in depth and not leave anything to chance. Neglecting the analysis work and settling for approximations will lead to errors that you will discover too late.
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