Why your COMPETITIVE ANALYSIS should be a key element of your Business Planning
Incorporating a competitive analysis into the business planning process can help a business to make more informed decisions, identify opportunities for growth, and develop effective strategies for achieving long-term success.
A competitive analysis?
As of today, the market has never been so crowded, favored of course by the global economy. Many products can more easily mimic each other in terms of their attributes and offered benefits and you should never forget that you do not do business in a vacuum.
Keep also in mind that while you hopefully focus on your competitive advantage and sharpen your business’s response to critical success factors, your competition is doing the same. Just as athletes learn how competitors train, what their approach to the sport is, and where their weaknesses lie, so do businesses. This information is your competitive advantage. The following strategies can help to distinguish your offering in the market and create a competitive edge.
What is a competitive analysis
A competitive analysis is a process of evaluating the strengths and weaknesses of your competitors in order to better understand the competitive landscape of your industry or market. The goal of a competitive analysis is to identify opportunities for your company to gain a competitive advantage, as well as threats that could negatively impact your business.
Do your own research (DYOR) : The analysis typically includes researching and analyzing information about your competitors, such as their products or services, pricing, marketing strategies, and customer service. It also often includes analyzing market trends and industry dynamics, as well as identifying opportunities and threats for your business.
Conducting a competitive analysis can help a business to:
- Understand the competitive landscape of the industry
- Identify opportunities for growth
- Develop effective marketing strategies
- Identify potential competitors
- Understand how to differentiate from competitors
- Benchmark their performance against competitors
- Identify areas for improvement
When was the last time you ran a competitive analysis for your brand? It is important to note that a competitive analysis should be an ongoing process as the market and competition are constantly changing, and it is necessary to periodically update the analysis to keep the information relevant and actionable.
What can I expect as benefits of doing a competitive analysis
Knowing who your competitors are, and what they are offering, can help you to make your products, services and marketing stand out. It will enable you to set your prices competitively and help you to respond to rival marketing campaigns with your own initiatives.
There are several reasons why a business should conduct a competitive analysis, including:
- Identifying opportunities for growth: competitive analysis can help a business identify areas where there is room for growth and potential for new market share.
- Developing effective marketing strategies: By understanding the strengths and weaknesses of competitors, a business can develop marketing strategies that capitalize on its own strengths and exploit the weaknesses of its competitors.
- Staying aware of industry trends: A competitive analysis can also help a business stay aware of industry trends and changes in the market, which can inform strategic decision-making and ensure the business stays competitive.
- Benchmarking performance: A competitive analysis can help a business to benchmark its own performance against competitors and identify areas for improvement.
- Identifying potential competitors: Conducting a competitive analysis can help a business to identify potential competitors and anticipate their moves in the market.
- Differentiating from competitors: By understanding the competition, a business can differentiate itself from its competitors and create a unique value proposition that resonates with customers.
- Supporting decision making: A competitive analysis can provide valuable insights that can inform strategic decision-making, such as product development, pricing, and distribution strategies.
Overall, conducting a competitive analysis is an important step in understanding the competitive landscape of your industry or market and can help a business make more informed decisions that lead to long-term success.
What are the key elements of a competitive analysis
A competitive analysis typically includes the following key elements:
- Identification of direct and indirect competitors: This includes identifying companies that offer similar products or services to your own, as well as those that target the same customer base or operate in the same industry.
- Analysis of competitors’ strengths and weaknesses: This includes evaluating the strengths and weaknesses of your competitors in areas such as product or service offerings, pricing, marketing strategies, and customer service.
- Analysis of market trends and industry dynamics: This includes researching market trends and industry dynamics to understand the current state of the market and how it may evolve in the future.
- Identification of opportunities and threats: This includes identifying opportunities for growth and areas where your company may be vulnerable to competitive threats.
- Analysis of your own company’s strengths and weaknesses: This includes evaluating your own company’s strengths and weaknesses in relation to your competitors, and determining how you can leverage your strengths and address your weaknesses.
- SWOT analysis : SWOT analysis is a strategy tool that helps businesses identify their own strengths and weaknesses, as well as any opportunities and threats they face.
- Benchmarking: This includes measuring your performance against competitors and other companies in the industry to identify areas for improvement.
Why should the competitive analysis be part of my business planning?
Definitely, and there should be no question here, Yes, a competitive analysis should be an integral part of a business’s planning process. A competitive analysis can provide valuable insights that can inform the development of a business plan and help a business make more informed decisions.
Just take the below 2 different strategies when you market your offering (product, solution, service tec..) as a market positioning example (and there many other options)
Competing on Market Differentiation OR Competing on price : Your business will have many of the characteristics as listed below. Pick the one upon which you will base your competitive advantage. You will use this one element in your marketing materials to separate you from your closest competitors.
Competing on Market differentiation
❏ Perceived quality
❏ Customer service
❏ Benefits
❏ Reputation
❏ Brand equity
❏ Niche focus
❏ Other__________
Competing on price
❏ Efficient production
❏ Technology
❏ Innovation
❏ Lower overhead
❏ Other_________
In Conclusion
A competitive analysis will help your business in:
- Developing a clear understanding of the competitive landscape of the industry, which can inform the development of a business strategy.
- Identifying opportunities for growth and new market share, which can inform the development of a marketing plan.
- Developing a unique value proposition that differentiates the business from its competitors, which can inform the development of a positioning statement.
- Identifying areas for improvement, which can inform the development of an action plan to address these areas.
- Benchmarking the performance of the business against competitors, which can inform the development of performance metrics and goals.
Overall, incorporating a competitive analysis into the business planning process can help a business to make more informed decisions, identify opportunities for growth, and develop effective strategies for achieving long-term success.
In conclusion, a competitive analysis is a process of evaluating the strengths and weaknesses of your competitors in order to better understand the competitive landscape of your industry or market. It can provide valuable insights that can inform strategic decision-making, such as product development, pricing, and marketing strategies. Conducting a competitive analysis can help a business identify opportunities for growth, develop effective marketing strategies, stay aware of industry trends, benchmark their performance against competitors, identify potential competitors, differentiate from competitors and support decision making. Incorporating a competitive analysis into the business planning process can help a business make more informed decisions and develop effective strategies for achieving long-term success. It is important to note that a competitive analysis should be an ongoing process as the market and competition are constantly changing, and it is necessary to periodically update the analysis to keep the information relevant and actionable.
Eric LAMBERT
“Hope is not a strategy and success is a reward”.
I am a High-impact leader and consultative strategic business partner who grows revenues, improves processes, and develops top-performing sales teams.
