Every business owner recognises the importance of knowing their market, and many will keep as close an eye on what their competitors are doing as they will on their own business.
But how exactly do you conduct a proper analysis of the market and the competition? Here are my top tips:
1. SWOT analysis
As well as identifying strengths, weaknesses, opportunities and threats for your own business, you should also consider these for your competition. Pinpointing what they do really well and not so well allows you to work out a strategy for your business to do it even better and gain competitive advantage.
Equally, looking at the opportunities and threats for competing businesses is incredibly useful, as it gives you an idea of the direction they could head in next. You can do most of the research online, but also make use of free facilities such as the British Library’s Business & IP Centre.
2. Don’t just focus on the now
The competitive landscape for your business today might look altogether different in a year, or even six months time. If your competitors are as ambitious as you, there is every chance they could be planning to launch a multitude of new products or diversify into new markets.
Look for clues in patent applications, their marketing strategy, their brand, and how they seem to be communicating with their customers. Does this signify a shift in focus? If it’s not immediately evident now, consider how likely they are to try and steal some of your market based on past behaviour and performance.
3. Direct vs indirect
Think outside of the box. If you produce widgets, it’s not just fellow widget producers you should be watching out for. Every business that could impact upon your profits is a competitor, including companies that sell associated products or services to your own who could be thinking about taking a natural step towards offering exactly the same things as you.
Conducting a really thorough market scan is key here – including mapping out the threat level of each competitor and looking at timescales within which they may try to steal your market share.
4. Determine your niche
Every business needs a unique selling point (USP). Be honest about what yours is, as often the business owner’s perceptions can be very different from those of its customers. Look at the things you genuinely do differently to your competitors and use these as a basis for building a compelling brand proposition.
Your customers need to understand exactly what you can offer them that your competition can’t, and they need to want to buy it from you. Celebrating your USP and making sure it’s highlighted both in customer conversations but also across your marketing channels will be fundamental in making this happen.
5. Competitor inspiration
Big brands borrow ideas from their competitors, and there’s no reason why smaller companies can’t do the same. While completely stealing an idea is definitely not recommended, using it as a basis for your own innovations is a great way to remain competitive and challenge your thinking.
Pick the elements you like best from a competitor product or service and build on them in a way that addresses a clear customer need, works for your business and that ultimately results in a better overall product or proposition.
6. Use the competition to be competitive
Even if you have a brilliant brand and an even better product, if your pricing is wrong, it won’t perform properly. Look at exactly what your competitors are offering and whether their customers think this is reasonable.
It’s not about undercutting them in terms of price, it’s about promising and delivering value, and giving your customers a clear understanding of what they gain from doing business with you. Get professional help if needed – through the market research industry, or even University marketing departments.
Andrew Cross is a coach at GrowthAccelerator.