Powerful people, be it the proud kings or the CEO of your favourite Fortune 500 company, have a secret for success. They know that no matter how big or strong, the team with the better strategy always wins. What makes a good strategy? Why, information! Knowing as much as you can about the battlefield (or the market), your enemies (or competitors) and your treasure (your customers) gives you an edge in today’s marketing battle.
Do you take your decisions only when something’s wrong, or to keep your company ahead of your rivals? Without enough knowledge, your choices are more like a gamble than anything else. For a successful game plan, conducting a competitive analysis becomes important! On the surface, this analysis describes your rivals, their strengths/weaknesses, and your position with respect to them, which is invaluable knowledge. Moreover, some things which this analysis tells you are so crucial for your company that doing it should become an absolute priority! A well-crafted analysis helps you in:-
What Your Customers REALLY Want.
Let’s say you have a mind-blowing marketing campaign, and customers are buying your products and services. Happy times, right? Now, suppose you conduct a simple competitive analysis, and quickly spot several new firms (with marketing funds much lesser than yours), selling a lot of their new services or products. Of course, the sales are nothing compared to your giant quarterly figures. However, they’re managing to make an impact and are capturing your market slowly! Take a look at their offerings, maybe their product fits exactly what the customer needed, while yours is falling short somewhere.
Knowing how customer spending patterns change with respect to your competition helps you to perfect your own offerings. Ask for reviews from your customers (online review generation gets this done in no time), and pay attention to what they say. Your competition might already be doing that.
The Performance of Your Industry.
You might be the top ranked company in your industry, with the maximum profits, the largest market share and best line-up of products. But would it really matter if your industry is dying, or being made obsolete? Analyse your competition and notice their performance. Are the smaller players going out of business? Have your rivals recently began making decisions which lead them away from your industry? Be aware! It might look like a small or temporary problem, but could be the sign of incoming trouble.
Knowing the Correct Information From the Wrong One.
Rumours. Rumours. All managers get a lot of informal ‘tips’ and pieces of info on what their competition is doing to increase sales, improve marketing and grow bigger. Why listen to doubtful leads when you could conduct your own research? Why be scared of what decisions your rivals ‘might’ or ‘might not’ be taking? Take things in your own hands, and analyse your competition thoroughly so that you can separate the truth from the gossip and make better decisions for your company.
Knowing the Potential Game-Changers.
The new-and-fresh entrants to the market usually have ground-breaking ideas or revolutionary technology. There is always one young company willing to take more risks, work harder and move faster that you. Watch out for huge companies that come from other sectors but try and diversify within your market. Firms like Google (smartphone industry), and Virgin Airlines (aviation industry) are great examples. Conducting competitive analysis of all the major and minor players in your industry gives you a hint on who’ll become the next Google. You could learn a lot from new companies and their revolutionary ideas!
Your infobase should cover companies that.
- Compete in a related market or use similar technologies
- Companies targeting your segment with unrelated products (a biscuit against a packet of wafers, for example)
- Companies from other countries and locations giving similar products
- Start-ups headed by former employees etc. of companies working in your sector
Knowing your Market
Market trends change every week. Conducting a competitive analysis gives you a clear look at the market, helping you see the gaps where you could expand, keep an eye on overall trends and determine ways to make your service/product even more unique!
With so many companies making new products, the boundaries between markets have been completely washed away. An energy drink, for example, competes in both the beverage industry and the health food industry. Know where your competitors plan to expand, and keep a close watch on any new entrants from other market sectors! Don’t be caught off guard.
Staying two steps ahead of the competition is what makes winners. A smart person, armed with the right kind of knowledge, could become an invaluable asset to any company. So, destroy ignorance and start paving the path to victory with your weapon, competitive analysis!