Before you open the doors of your business, you need to perform a competitor analysis. Even if you have been in business for a period of time, you still need to regularly update your competitor research. Why is analysis of competitors so important? Here are a few reasons.
- Consumer awareness – Do customers know about your business or are they more inclined to visit your competition?
- Product quality – How does your product or service stack up next to the competitor?
- Product availability – Is your product easily available to customers or does your competition beat you to the punch?
- Customer and technical service – How well does your competition handle customer and technical service compared to your business?
Even this simplest of information can provide a basic analysis of competitors and give you a basis for formulating a marketing and business strategy.
Here are tips to help you get started on your competitor analysis:
Questions to Ask
What should you know before you begin your competitor research? Here are some questions to ask so you know what information you need:
- Who are my competitors?
- What are the objectives of my competitors?
- What are my competitors’ capabilities?
- How are they likely to respond to my strategies?
Although this is a partial list of important questions, this information can help you determine who you should be looking at, how they do business, what strengths set them apart, and how your strategy may affect their response.
Obtain Observable Data
You can easily obtain competitor research data with simple observation. Visit websites and brick-and-mortar stores. Find out their prices, product lines, and availability. Read ads in the newspaper.
For instance, say you operate a café and want to know how your competitors compare. You could simply visit another restaurant and observe their menu and prices and how their staff treats customers. You can easily visit a retail store as well to obtain observable data. This data can give you a good basis for competitive analysis.
Dig a Little Deeper
Obtaining “opportunistic” data can be extremely helpful, but you should not follow illegal or unethical means to obtain it. Try doing a little research on your list of competitors on search engines. This can often reveal customer issues that you can capitalize upon, or even articles written about your competition. You may even be able to obtain investor information if it is a publicly traded company, including previous financial reports.
You can also obtain anecdotal information from third parties. You could recruit former employees (not existing ones) and obtain information based on when they were employed, particularly management structure. Talk to suppliers or distributors about your competition and see if they are willing to share any information.
All the information you collect on your competitor research can help you improve your business by forming new strategies. Find out if you need to lower (or raise) your prices. Perhaps you can offer better products by adding service features. Competitor analysis will not only help you improve your business, but keep you in business as well.