In business, two things are certain: taxes and competition.
While there’s little you can do about business taxes, you have greater control over the competition your business faces. You can avoid it by launching a business in an undiscovered niche or, in a competitive marketplace, you can beat it by staying a step ahead of your competitors.
But to beat your competitions, you must understand them. You must know their strengths and weaknesses.
Do you know how to do this?
Continue reading to learn how to better understand your competitors in business.
Identify Your Direct Competitors
The first step to understanding your competitors is to identify them.
When you’re in a competitive marketplace, it’s easy to assume every business that operates in your niche or offers a product or service that’s similar to yours is a direct competitor. Don’t make this assumption.
A business is only a direct competitor if it targets the same consumer market as your business. If a business offers a similar product but targets, say, boomers, while your business strictly targets millennials or Gen Z, that’s no a direct competitor.
As such, start by making a list of your direct competitors. A reliable way to know your competitors is to ask your customers. Whoever they consider an alternative to your business is your direct competitor!
What Information Do You Need to Know About Your Competitors?
You don’t need to gather every bit of information about your competitors. This will only waste your time and money, especially if you have many competitors.
So, what kind of information should you know about them?
First, you need a detailed description of their product/service. How does it work? How is it different from yours? As a customer, would you prefer their product over yours?
Next, what’s the cost of their product/service?
How do they distribute or sell it? Is it on their website? Do they have a brick and mortar store? Do they sell it on third-party eCommerce platforms like Amazon?
Other crucial pieces of information to obtain include:
- Their brand values, mission, and vision
- Research and development processes
- Marketing strategies
- Size of staff and recruitment power
- Financial performance (if they’re a public company)
- Customer loyalty and reward programs
Obtaining some of this information can be as simple as browsing through your competitors’ websites or calling them to make inquiries. You could also approach them in trade shows and other industry events.
Confidential information, like trade secrets, will require in-depth research. If you’re unable to collect all the information you need, you might need to hire an experienced researcher.
Putting Competitor Information to Use
From the information you have, determine what your competitors are doing better than you, where they’re beating you, and where they’re worse off than you.
Depending on your industry, you can use this analysis to better your products and processes.
If your business model involves being invited to provide proposals, for example, you can use the information to develop a better proposal response strategy. View this page to learn more about a tool that can help you use your competitive analysis to develop an effective RFP response strategy.
Understand Your Competitors in Business
Market competition is a double-edged sword.
If you can’t beat your competitors, your business could collapse. But if you develop a good understanding of your competitors and use the knowledge to build better products or services, your business will certainly prosper.
With this guide, you now know how to better understand your competitors in business.
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