HOW YOUR BUSINESS CAN BEAT YOUR COMPETITORS

For your small business to succeed, you need to know almost as much about your competitors as you do about your own company and customers. 

Unfortunately, many small business owners make the mistake of waiting until a competitor has opened up shop across the street and is cutting into profits to find out who and what they're up against.

A competitive analysis allows you to identify your competitors and evaluate their respective strengths and weaknesses. By knowing the actions of your competitors, you will have a better understanding of what products or services you should offer; how you can market them effectively; and how you can position your business.

Competitive analysis is an on-going process. You should always be gathering information about your competitors: look at their websites, read their product literature and brochures, get your hands on their products. See how they present themselves at trade shows. Read about them in your industry's trade publications. Talk to your customers to see how they feel about competitive products or services.

Below are four easy steps on how to analyze your competitors:

Step 1: Identify your competition
Every business has competitors, and you need to take the time to discern who your customers can approach to get a product or service that fills the same need as yours does. Even if your product or service is truly innovative, you need to look at what else your customers would purchase to accomplish this task. For example, you may be opening a Website that offers online Bingo. Your competition would be other Bingo sites, other Web gaming sites, the Bingo hall down the street, and any other businesses that are competing for the same leisure-time currency.

Begin by looking at your primary competitors. These are the market leaders, the companies who currently dominate your market. They are probably the ones who you find yourself bumping up against in your search for new customers. If you're a florist, it would be other florists in your neighbourhood. If you're a computer consultant, it would be other consultants with the same specialty.

Next, look for your secondary and indirect competitors. These are the businesses who may not go head-to-head with you, but who are targeting the same general market. Sticking with the florist example, it might be a small local roses-only store, a national floral delivery service, or the flower/plant department of your local supermarket or discount store.


Finally, look at potential competitors. These are companies who might be moving into your market and who you need to prepare to compete against. For example, you might have an independent frozen yogurt stand; you will need to prepare to compete against national frozen yogurt franchises, even if they are not yet in your market.

Step 2: Analyze strengths and weaknesses
After you've figured out who your competitors are, determine their strengths and find out what their vulnerabilities are. Why do customers buy from them? Is it price? Value? Service? Convenience? Reputation? Focus as much on "perceived" strengths and weaknesses as you do on actual ones. This is because customer perception may actually be more important than reality.

It's a good idea to do this strengths/weaknesses analysis in table form. Write down the names of each of your competitors. Then set up columns listing every important category for your line of business (price, value, service, location, reputation, expertise, convenience, personnel, advertising/marketing, or whatever else is appropriate to your type of company). Once you have this table set, rate your competitors, and be sure to put in comments as to why you've given them that rating. You might even want to put strengths in red and weaknesses in blue, so you can tell at a glance where each competitor stands.

Step 3: Look at opportunities and threats
Strengths and weaknesses are often factors that are under a company's control. But when you're looking at your competition, you also need to examine how well prepared they are to deal with factors outside their control. These are called opportunities and threats.

Opportunities and threats fall into a wide range of categories. It might be technological developments, regulatory or legal action, economic factors, or even a possible new competitor. For example, a photo developing store needs to know how well its competitors are prepared to deal with the advent of digital photography. Or a company that sells over the Web should analyze how its competitors are prepared to deal with online security issues.

Again, an effective way to do this is to create a table listing your competitors and the outside factors that will impact your industry. You will then be able to tell how they can deal with opportunities and threats.

Step 4. Determine your position
Once you figure out what your competitors' strengths and weaknesses are, you need to determine where to position your company vis a vis the competition. Some of this may be obvious from the results of your analysis, but it also pays to take a hard look at how your business operates.

One of the most effective ways to do this is to create a strengths/weaknesses opportunities/threats analysis of your business. Rank your company in the same categories that you ranked your competitors. This will give you an even clearer picture of where your business fits in the competitive environment. It will also help you determine what areas you need to improve, and what characteristics of your business you should take advantage of to gain more customers.

The bottom line: look for ways to leverage your strengths and take advantage of your competitors' weaknesses.

In conclusion, a good competitive analysis will include price points, the mechanism by which a problem is addressed, cost estimates, distribution and sales channels, and any strengths or weaknesses of the competitive solution.

It is also important to keep your competitive analysis updated on a regular basis, as market conditions are highly dynamic - and larger competitors can change strategy very quickly. Doing a quick review of conditions once a month and making needed changes should be sufficient for keeping up to date.

Price points and the price elasticity of similar products may need to be watched more closely than once a month, as many companies drop pricing in an effort to gain market share when results are not what they would have wanted to see. Missing a competitive price reduction can lead to losing market share unexpectedly.

Be sharp and help your business to succeed.

You can request for a competitive analysis worksheet to help you get started. Send a request mail to naijaoptions@gmail.com

In conclusion, a good competitive analysis will include price points, the mechanism by which a problem is addressed, cost estimates, distribution and sales channels, and any strengths or weaknesses of the competitive solution.

It is also important to keep your competitive analysis updated on a regular basis, as market conditions are highly dynamic - and larger competitors can change strategy very quickly. Doing a quick review of conditions once a month and making needed changes should be sufficient for keeping up to date.

Price points and the price elasticity of similar products may need to be watched more closely than once a month, as many companies drop pricing in an effort to gain market share when results are not what they would have wanted to see. Missing a competitive price reduction can lead to losing market share unexpectedly.

Be sharp and help your business to succeed.

You can request for a competitive analysis worksheet to help you get started. Send a request mail to naijaoptions@gmail.com

Follow naijaoptions on facebooktwitter @naijaoptions andgoogle+. If you have questions, send a mail to naijaoptions@gmail.comand we will respond with possible options. For more references, check out http://naijaoptions.blogspot.com.
'; (function() { var dsq = document.createElement('script'); dsq.type = 'text/javascript'; dsq.async = true; dsq.src = '//' + disqus_shortname + '.disqus.com/embed.js'; (document.getElementsByTagName('head')[0] || document.getElementsByTagName('body')[0]).appendChild(dsq); })();
Powered by Blogger.