A competitive analysis offers small and middle market business owners more than a cursory examination of their top competitors. This research takes a deep dive into the strengths, weaknesses and marketing strategies of a business's top competitors. Conducting a competitive analysis can be time consuming, but the resulting information can help you refine your target market and promotional strategy, helping to put you ahead of the pack. Here's what you need to know about conducting a competitive analysis for your small or midsized business:
Who Are My Competitors?
Most business owners know immediately who their competitors are, but it may be helpful to take a broader look at the marketplace to identify your three to five competitors for your analysis. Look for those serving the same or similar customer base, especially in your local market. Any business whose products or services can easily be substituted for your own should be considered a competitor.
Limiting a competitive analysis to the top three to five companies keeps the project manageable. You may have more than five competitors, but focusing on the top five better enables you to examine every facet of these businesses and monitor them on an ongoing basis.
How Often Should You Conduct a Competitive Analysis?
Many companies integrate their competitive analysis into their marketing planning for the year. For small business owners, conducting a thorough competitive analysis is a good idea before launching a new business, when creating annual marketing plans and whenever major changes occur in the marketing environment.
What Goes Into a Competitive Analysis?
A competitive analysis helps identify competitors' key features and benefits so that you can plan your marketing strategy to counteract them. It can be helpful to create a spreadsheet or grid on paper to write down your thoughts as you create a competitive analysis based on publicly available information. List the competitors and their websites on the left side of the sheet, then make columns to answer each of the following questions:
- What do they sell?
- What is their market share? (It's OK to guess if that information isn't publicly available.)
- What media do they use to market their services?
- What are their strengths?
- What are their weaknesses?
- What challenges do they pose to your business?
- How can you counteract these challenges?
The information gained from an initial competitive analysis is only the start. Quarterly updates keep the information fresh as you plan each season's advertising and marketing. An easy way to keep tabs on the competition is to follow them on social media and subscribe to their emails, bringing useful information right to your inbox.
Once you have information on your competitors, it's time to plan a marketing strategy that emphasizes your small or middle market company's strengths against the competitors' weaknesses. With good competitive intelligence, your advertising and marketing becomes more effective as you position your company in the marketplace.
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