Every business owner should have a complete understanding of the competitive landscape in their market. Competition is defined as any business that provides a similar service or product in the same market, region and industry. A strategic business owner not only knows who his competition is but also understands the best way to position himself ahead of his competition. The following provides a step-by-step process in creating your competitive analysis.
Identify who your competitors are:
One easy way to locate competitors is to look around your market. If you are a retailer, drive around the neighborhood or use Google Maps. If your business in national, check out industry associations and if your business is virtual, use Google and try typing in keywords and see who pops up.
Check out your competition:
Once you have identified who your competition is, now is the time to learn everything that you can about these companies. For example, visit their website and take a look at how they position themselves, what products/services they offer, the key differentiators they promote. Order a product or call the business directly to learn more about the way they operate and the experience they create for your shared customers. If you can shop at their location and test out the environment, their staff, their process and how their organization delivers on their promise. Lastly, take note of their pricing, their offering and their distribution and delivery models to compare to your own business.
Identify competitor's strengths and weaknesses:
You are looking for ways to position yourself from a position of strength so the easiest way is to really assess your competition's strengths and weaknesses and compare against what you are doing. I never recommend negative selling or putting your competitors in a bad light, operate from a place of integrity and know that there is enough business around for everyone and if your brand is strong and your offering true value, you will rise. This exercise helps you in two ways: first in creating your brand positioning and secondly, possibly highlighting an underserved need of your market. For example, one of your competitor's weaknesses could be an opportunity for you to develop a stronger product in that area. Remember to leave an open mind and to think out of the box.
Identify your competitive advantages:
So now that you know who your customers are, have experienced them as a customer and identified where they are strong and where they are weak, now is the time to really emphasize your own strengths. Really focus on what you bring to your target market that is different and I mean truly different, from your competition. This is not easy but once you go through this exercise and are true to what you want to bring to the market, the rest of the process will become natural.
Develop a pricing model:
The last step in the process is to develop a pricing model that represents what you are offering the market and the value you bring to your target buyer. There are many factors that go into designing the appropriate pricing structure so you will need to do some research and evaluate what price levels your market will bear, your cost basis for the development of your product, how much you need to cover overhead and marketing and lastly how much profit you feel is appropriate for what you are offering. Do not immediately think you have to price your products below your competition, people appreciate value so really assess the value in your product and set your price accordingly.
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