Small businesses are highly competitive; this is according to a poll done on how small business owners feel by the National Federation of Independent Business (NFIB). The statistics showed that 53% of the respondents found small businesses to be highly competitive, while 23% found it as merely competitive. This means that there is a lot to do to ensure that the business has enough stamina to survive the rough hurdles. You, therefore, need all the information to create such a resilient environment for your business to flourish. This involves knowing your competitors through thorough research.
Advantages of competitive analysis
It helps in understanding how businesses grew. It is a well-known fact that history is important as it is the guide to the future. Hence, having a more in-depth and clearer understanding how the competitor’s businesses came to be and how they are doing, gives us a picture of their strategies at present. It also gives a future outlook and what can be best adapted for better results. This is also an important tool when it comes to adjusting your market strategy as you will have all the insights into what your competitors are doing, what you’re lacking and how best to fill in the gaps.
It goes without saying that you will be able to identify the mistakes that your competitors are making and hence it becomes possible for you to avoid them as well as rectify any of your own. You also gain knowledge on what issues to keep a close eye on.
It becomes easier for you to see the kind of changes that you can add going forward. This is in response to your own performance. This can include changing the sale, customer service and marketing strategy, among other factors to increase your competitive advantage. Here, your analysis may also lead you into making bold plans for your business through identification and foresight of other business prospects, for example, expanding.
Identifying and listing your competitors
This should be your first step. We advise that you take your time and list down businesses that provide similar products or services to yours or those that serve the same market as you do. It is also important to check on the size of their businesses. We usually advise that a list of the top three competitors is more effective for the analysis. For example, if you own a bakery shop, you may want to look up other bakeries that have a size similar to yours and are doing quite well.
Come up with a brief overview
Here, what we find most effective is having a brief description of the competitors’ businesses and the reasons why you believe that they are competitors. You would need to analyze how much you know about them, for example, have you tried their products before?
All this information is useful in getting to know the climate of the competitors.
Knowing their target customers
Back to our bakery business, if you’ve always wondered why most of the customers always go to the bakery just before yours, know that you’re asking the right questions. It is paramount to dig deeper and find out what it is that attracts customers to your competitors. Is it by how they advertise? Should you start up a blog like they did? You can do this by going to their website, blogs and other social media pages.
When it comes to marketing, you may want to understand how your competitors frame their messages and how the marketing message appeals to the customers. You can also check to see if there is any kind of target profiling of the customers. Are they low, middle or high-income earners? Next, check on the pricing of the competitor’s products and get to meet their target customers.
Check their pricing
It is important to check how products/services are priced by your competitors in order to guide you in your pricing. You may have overpriced or underpriced some of your own. Check whether or not they offer installment plans or discounts.
Marketing strategy
One of the areas that you need to keep on par with your competitors is in marketing, although you are independently running your business. Even though small businesses do not have enough resources to engage in detailed marketing, you need to be out there in the marketing arena. You need to grow more familiar with the message so it becomes part of you and thus easier to sell to your customers and in turn, more believable. This is what will make your customers choose you!
Among the marketing platforms that you can use are sales, events, websites, blogs, print marketing (billboards, posters and brochures), social media (Facebook, Twitter) as well as newspapers.
What’s their competitive advantage?
This is all about finding out the unique quality of your competitors. This knowledge will assist you to outperform them. According to a survey by the National Federation of Independent Business (NFIB), small business owners provide high quality services and better services in order to increase their competitive advantage. 80% of business owners endorse these two strategies.
Some of the key areas you need to look at include; the business location, a large online presence and audience, the company history, lower prices, compelling marketing that may include imagery that is most memorable as well as a broad range of products and services. On looking at this information, we advise that you do this keeping in mind what kind of competitive advantage you would like to have. What do you like your business to be defined by? Try to find the areas where you would like to do better than your competitors.
Their strengths and weaknesses
Here, you’re basically summarizing all the information that you’ve gathered on your competitors to determine their strengths and weaknesses. It is more effective to list each down on separate columns and check to see if there are certain areas where you can provide better than them. If you also have the same weaknesses as your competitors, you may need to work to reduce them or determine if they can be an opportunity for you to thrive.
Conclusion
On completing this exercise, you will be able to better understand your business, draw up a business plan that reflects the ideas that seek to outdo your competitors and provide value to your potential customers, thus, attracting them. You will also be able to align your marketing strategy in a manner that will provide some competitiveness to your business.
What kind of pitfalls have you found in your business after the exercise? You better check to grab that chance of thriving in that area!
