Just because you’re paranoid doesn’t mean they aren’t out to get you.

Competition is an integral part of the marketplace — it fuels innovation, controls pricing, and creates better products. What’s not to love, right?

Not so fast, Jedi Knights — competition also has a dark side.

Competition can sink a business — particularly if you aren’t prepared for it. Just because the “force” has been with you thus far, don’t automatically assume that will always be the case. Somewhere, in a galaxy far, far away, a would-be nemesis could be plotting your demise right now.

Whether yours is a small, home-based business or an international corporation, it is necessary to perform a competitive analysis to gain a better understanding of your competitors. This, in turn, will help you formulate more effective strategies to strengthen your position among your customer base, as well as defend and increase your market share.

While I’m certainly no Yoda, below you’ll find a few of my recommendations to aid you in conducting your own competitive analysis.

Know Your Customer
It all starts with the customer. Identifying your ideal customer, their buying habits, and purchase influences should have been paramount in your initial business planning. When you set out to conduct your competitive analysis, be sure to refer to this information, and make any necessary updates as needed.

Create a Customer Profile

• What triggers his decision to buy a certain product or service?
• Where will he go to search for a product or service provider?
• How does he search for the product he needs?
• What features does he look for?
• How does he choose the vendor?
• What is important to your customer – pricing, reputation, image, branding, or service?
• How is he influenced by word-of-mouth?
• What will keep him loyal or make him change brands?

Knowing these things will not only help you develop products and services that will meet the requirements and preferences of your customer but will also give you a very good idea of the who, what, how, and why behind your potential customer patronizing the other vendors and not you.

Know Your Competitors
Now, try to identify your competitors. Be specific as to their names, locations, their sizes, and as much as possible, their market share. Describe their product quality, brand name(s), image and reputation, pricing structure, marketing strategy, available technology, etc. It helps if you create a tabular presentation of the information to facilitate comparison and analysis of the competition. Make sure to include any perceived strengths and weaknesses of each competitor (lack of web presence, limited service area, etc.).

The objective of this exercise is to discover more about the nature of competition and assess how your product or service fares against your competitors’. You may decide to lower your price, or offer extended service plans. Perhaps you could provide online video training that customers could access after purchase. You may simply elect to step up your advertising campaign in order to gain greater visibility. Regardless of what path you choose, determine how your competitors affect your business, identify any potential threats, as well as opportunities.

Resources for Competitor Information

• Their company website (about page, press room, etc.)
• Industry associations they belong to
• Publications they have been featured in
• Media coverage
• Marketing materials
• Generalized search (complaints filed with BBB, etc.)

Benefits of Doing a Competitive Analysis
Whether you are planning an upcoming ad campaign or orchestrating a rebellion, knowing your competition is critical to the ultimate success of your strategy. This exercise will also help you anticipate how your competitors will respond to your action, or predict any initiatives they may take. In fact, you may discover there are elements of your competitors’ business tactics that you can improve upon, and adopt as your own.

Competition has much to offer the market in terms of driving quality, affordability and innovation. For business owners both large and small, a bit of research and a modest time investment can help avert potential threats, while leveraging opportunities to gain market share.

Regardless of what corner of the galaxy you are doing business in — that’s always a good thing.

Was this post helpful to you?