How to analyze your competitors
How to analyze your competitors
Analyzing your competitors is no easy task. Nevertheless, it is a must if you are planning to set up a company, launch a new product or service or evaluate your market position.
Analyzing your competitors will help you pinpoint their weaknesses and strengths, and decide how to use such information to gain an advantage over them in the market. But where do we start in the analysis of our competitors?
The key to having a business that thrives in the market lies in your product or service providing added value to that of your competitors.
Don’t you know what makes you stand out from your competitors in your sector? This is the right time to sit down and analyze your competitor companies in order to find out what makes your business different.
Doing your own SWOT analysis
The SWOT analysis (Strengths, Weaknesses, Opportunities and Threats) examines the strengths, weaknesses, opportunities and threats of a product or service.
The first step towards performing a good analysis of your competitors is finding out where your business stands in terms of your competitors in the market.
Don’t be humble, the best approach to that is being as realistic as possible and analyzing your company impartially.
The key to the success of your business lies in standing out among your competitors. That means you need to know them.
Several pieces of advice to perform your own SWOT analysis are listed below:
- Ask yourself what the strengths of your product or service are. Answer the following questions as if you were your own client: What advantages does your company offer? Why should they choose your product or service?
- What makes you different?
- Now let’s move on to analyzing the weaknesses of your company. Try to think as your prospective clients and your own competitors would do, but consider your own point of view as well: Are your competitors better than you, in general? Why?
- What do you think your company is not doing properly?
- How could you improve that? Is your brand as known as it should be in the market?
- Now it’s time to find out about the opportunities offered by your sector, and how you may take advantage of them: Has everything already been done in your market niche?
- Which are the main trends from a local, national and international point of view?
- Are you making the most of any of them?
- May you move ahead of the market and innovate?
Once you have reached this point, you need to check the possible threats that you may eventually have to face in the market. Such threats are always external and not under our control, but we should know about them and take them into account in order to avoid being caught unawares, which would be a competitive disadvantage for us.
What are the hindrances in the market in general, and particularly in your sector? Could constant technology changes affect your business and your product/service?
Once you finish the analysis of your own situation in the market, it’s time for you to start analyzing your competitors.
How to identify our competitors
This is not a task to be done sporadically, something you do before launching your company or product and never do again once the company is already in the market. Regarding the analysis of your competitors as something hermetic to be done only once is a mistake. We need to analyze our competitors constantly.
Kinds of competitors
Those that are firmly stablished in the sector and may easily “steal away” potential clients from us. This group includes our direct competitors: those that offer a product or service quite similar to ours, in the same zone and to the same prospective clients.
Those are the competitors that are different from us in any given aspect, but are included in our market.
You should also take potential competitors into account and include them in the analysis of your competitors. I mean competitors that could enter your market niche any time, and thus become a threat to our business.
Performing a SWOT analysis on our competitors
Now we know our weaknesses, strengths, potential threats coming from the market or our competitors and the opportunities that may arise in our business, it’s time to perform the same SWOT analysis on our competitors.
By doing so, we will be able to check whether their situation in the market is better or worse than ours, thus analyzing all the factors from an objective point of view.
If we do the task in a matrix-like disposition, we may be able to find out where each competitor finds itself, and where we are ourselves. As we said, the best option would be to keep the analysis of our competitors updated.
By keeping an updated matrix, we will constantly be able to see where we are as compared to our competitors.
Have you ever performed a market analysis and an analysis of your competitors?
What is your position in your niche?