What Is Competitive Analysis & Should I Do It?

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What Is Competitive Analysis & 

Should I Do It?

Competitive analysis is the identification of competitors and the evaluation of their strengths and weaknesses. This identification and assessment enable a business entrepreneur to position his/her business in the market strategically.

It also provides one with a distinct advantage and allows one to come up with barriers that prevent competition that would hamper market entrance. Moreover, competitive analysis is a move to exploit any weaknesses that are found within a product development cycle.

The first step you should undertake is to identify the current and potential competitors in the market. You should look at the market from the competitor's perspective.

You should then group the competitors according to the degree that they contend for the buyer/customer's dollar. You can also group them according to their competitive strategies so that you gain a better understanding of what keeps them going and motivates them.

After grouping your competitors, embark on an analysis of each of their strategies and identify the areas that they are most valuable. To achieve this, evaluate their strengths and weaknesses.

The strengths and weaknesses of a competitor are based on the availability and unavailability of critical assets and skills that are needed for optimum competition in the market.

The following are reasons why you should carry out researching your competitors:

It Facilitates in Understanding Your Market

Do you want your business to grow? Understanding your market will promote its growth. Market research about other companies that are in your domain will help you in understanding their price trends, quality of products and services, and monitoring of their services.

By comprehending how they serve their customers, you can apply the same in your business and enable it to grow.

It Enables Keeping Track of the Operations of Your Competitor

Through competitor analysis, you can keep track of how your competitors handle their business models and operations. It gives you a chance to predict how they can react to online operations. This will enable you to have a contingency plan in place.

Moreover, studying your competitors’ track of operations provides you with a competitive edge by helping you learn.

Come Up With Strategies For Growth For Your Business

Comparative market analysis is a vital aspect of competitive analysis that aids in strategic planning and business scaling.

The competitive analysis allows you to study the success stories of your competitors and enable you to implement their strategies in your company/organization to propel growth.

Using a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis will enable you to formulate business strategies for the success of your business.

Market Share Improvement

Is gobbling down your competitor’s market share your goal?  Competitive intelligence will help you to achieve this goal. It helps you to undertake reasonable measures that enable you not to make mistakes that your competitors make.

Some software tools can help you to come up with reasonable steps that can enable to improve market share. Such tools allow one to learn things that your competitors would not be willing to tell you.

Plan Expansion and Diversification For Your Business

Proper planning is the right way towards diversification and development of your business. This can be achieved by adding new products to your business.

Diversification of your product portfolio is the right way of expanding your business through studying expansion plans of your competitors.

Analysis of Present and Past Strategies of Your Competitors

Why do new researches while you can learn from your competitors? Analyzing and evaluating the present and previous strategies of your competitors enables you to understand and observe their growth trajectory and how it impacts their business.

It also helps you to identify the mistakes they made in coming up with their strategies. One of the essential purposes of carrying out competitive analysis is saving time and expenses.

Therefore, learning from your competitors is the right way of saving time and expenses.

Learning from them will not only educate you on the best strategies to employ in the market but will also teach you about how to avoid mistakes while crafting strategies for your business.

Understanding the Competitive Advantages and Disadvantages of Your Competitors

Disadvantages are part of the growth of a company and understanding the obstacles that your competitors face is very important. As a business owner, you need to look beyond the location, customer service, and product pricing of your competitors.

Use competitors' analysis as a tool for understanding the strengths of your competitors, such as talent, operational efficiency, and financial resources.

Combining SWOT analysis with competitive analysis is advised so that full understanding of the advantages and disadvantages your competitors can be realized.

Coming Up With Barriers to Prevent Competitors From Entering Your Market

After dominating your market, it is advisable to devise barriers that will prevent others from eating up the success you have created.

Since you have a competitive edge and dominance in your market area, the competitive analysis will assist you to come up with barriers to prevent your competitors from eating up your success.

Using defensive strategies will help in the creation of such barriers. Defensive barriers are, for instance, aggressive distribution and marketing strategies.

The use of those will ensure you dominate the market, and your competitors won't eat up your success.

The Exploitation of Weaknesses In The Product Development Cycle

Identifying gaps in the products and services offered by your fellow competitors is an example of excellent competitive analysis.

There is no perfect product or service; hence, you should seek to determine the weaknesses of the products and services offered by your competitors.

This will enable you to come up with products and services that solve the flaws that you identified and through this, you will attract more customers towards your products and services.

Advertise Better for Your Business

Playing the spy is one of the significant advantages of competitive analysis. Tracking your competitor's keywords and developing a better-enhanced marketing strategy that will enhance your SEO is an excellent way to advertise better.

Competitive Pay Per Click (PPC) assists one in understanding how a competitor carries out paid campaigns so that you can learn before spending money on advertising ads.