Ever heard the saying, "Keep your friends close and your enemies closer"? In business, knowing your competition well is as important, arguably even more so important than knowing your own product. This is a strategic move that requires a lot of research, good knowledge in objective writing, and an understanding of what you want to achieve. It is difficult to pull off but highly rewarding when done right as it creates a profile of who you are facing and how you can stand up to them. So how do you write an effective analysis of your company's competition? Here are a few useful tips:
1. Understand the Market Well
For a competitive analysis to work, you first need to understand what the environment is like. Learn about the market your product is in—customer preferences, price variations, the framework and model of most products on the field, the growth of the market, and see how your company currently stacks up to the market's demands. The market does not only consist of who the customers are but also what they need, how they might benefit from your services, what could push them to look for alternatives, and how they can be enticed to purchase goods and services. Once you've established the arena, now you can begin scouting the competition.
2. Know Thy Enemies
Create a list of all possible competitors for your business. Try to have criteria for this such as "Does this company have similar products to me?" "Do they appeal to the same market as me?" "Are they in direct or indirect competition with me?" All possible contenders must be identified, even new ones, as this creates a profile for you to use in the next few steps. When you have that list, narrow it down to your chief competitors or competitors who can either stand toe to toe with you or possibly surpass you. Not only will it give you a focus on your research, but it will allow you to make an assessment of their strategic actions and their success.
3. Understand Their Product Well…
Now that you have a list of competitors, it's time to assess their products. Do research on what the product is, how similar is it to your product, how it's made, what are possible services that come with the product etc. When we say product, we don't just mean what you see on supermarket isles; products and services can range from food items to hotel and restaurant brands, to even digital marketing services. There are many ways to find information on the products of the competitor such as scouting them out at your local market or through satisfaction surveys, or even online like on their own websites. The key, however, is sifting out the important and relevant information from mere opinions.
4. …And Assess How They Market Their Product
It is also important to figure out how they sell or advertise their product: TV or radio commercials? Do they have specific customers they sell to or are their products available to purchase for the general market? What is their possible marketing plan? Who is the target consumer? Are there any specific services they provide? These are the things you need to know about the competitor's marketing strategy.
5. Learn Their Strengths and Weaknesses
As much as possible, in this section, keep your opinions away from this. Having a bias toward your product may hinder your judgment and will not yield good results. To be objective in this case, try not to compare your product to theirs (yet); instead, simply list down what makes their product great and what they lack in. You can once again turn to surveys or mere observation, but as much as possible, make sure that you are getting your data from reliable sources as knowing what the competitor brings to the table will be key in gaining the upper hand.
6. Compare and Contrast
Now that you have an idea of what their products are, how they market it, and what are its advantages and disadvantages, you can now compare and contrast your product to theirs. Take note of every detail that is relevant—how are your products similar or different, what are their marketing strategies and how are they similar or different to yours, do you advertise to the same customers or not, what advantages do they have over you and you over them, etc. You have to be prepared to accept the fact that the competitor may have advantages against you and that's okay because the purpose of a competitor analysis is to learn about what you do better than your competitors, what they do better than you, and how you can improve.
With all the information you have, sum up your presentation of data by putting together a concise statement that portrays the model and growth of your product compared to your competitors, the market you are all competing for, and objective comparisons of your strengths and weaknesses that give you an insight on what areas you're doing well, what needs improvement, and, most importantly, how you can outperform your competitors.