If you want your business to succeed, your products and services must stand out from your competition. To do this, you should first get to know your competition and how they operate. You may not have the budget or want to invest in hiring a professional market research company. Whatever the reason may be, you can learn plenty about your competitors by doing your own research.
1. Identify Your Competitors
Let’s start with the basics. A competitor is an entity vying for the same market segments as your business. Although a company could sell a similar product or service as your company, they may not be competitors. How is this possible? They sell to different customer categories or market segments: one wants to sell to large companies, while the other focuses on small local businesses.
Three Types of Competitors
- Direct competition offers the same products and services to the same client’s category within the same geographical region as you.
- Secondary or indirect competition are companies that market slightly different products and services or go for a different customer base within the same territory.
- Substitute competition are businesses that offer entirely different products and services to customers in the same region as you.
2. Gather and Organize Information About Your Competitors
Once you’ve discovered your main competitors, it’s time to find out as much as you can about them. An excellent way to do this is to follow the list below when organizing the info on your competitors.
- Products and services—look carefully at their products or services and see how they fare against your own. Purchase their products to check the quality and features. How do they compare to yours? How is the quality? Are there improvements they could make?
- Pricing—How much does their product or service cost? Is it attractive to various customer categories? What discounts do they offer? Do you understand, and can you compete with their cost structure?
- Positioning and branding—analyze your competitors’ websites, product descriptions, brochures, and other materials. Follow them on social media, and don’t be afraid to visit them at public conferences or trade shows. What are the markets they are trying to appeal to? What is their unique selling point?
- Market reputation—it is a good idea to go and talk to customers, suppliers, and distributors to find out their opinion. How do they see your competitors?
3. Analyze Your Competitors’ Strengths and Weaknesses
In this step, you will see how you fare against your competitors regarding your performance. Start by listing all your competitors, including their strengths and weaknesses. What makes them popular? What is their visibility? The effectiveness of their staff? Their pricing? Is there something they offer that you can do better? This is where you find out how you can adapt your strategy to counter their strong points and leverage their weak ones.
4. Talk to Your Competitors Directly
It’s not a bad idea to get to know your competition on a more personal level. It might even lead to a mutually beneficial relationship. It’s not unheard of for two companies to compete at times and at other times work together. A competitor might send a client your way if they don’t serve a particular niche. But first, they need to know and trust you. Collaboration is not always the goal of this type of interaction. Talking to your competition can help you gather information on how to differentiate your product or services better.
5. Discover and Use Your Competitive Advantage
Getting knee-deep into the competitive landscape will prove helpful to your overall success. Low prices and promotions may attract customers, but these can be easily copied. The goal here is to try to be different in the delivery of your message and value. It would be best to establish yourself as a unique entity with strong brand recognition in the long run.
Leveraging one of your competition’s weaknesses almost always works. But may not be the most cost-effective approach. Competitive advantage comes from offering something unique and appealing to your target audience. Defining your unique selling point will take you closer to creating the right messaging and brand identity.
You should always pay attention to your competition and adapt your business to respond to their actions. But don’t go too far. Don’t allow concerns about what your competitors are doing control your decision-making too much. Get to know your competition, understand their target market, and honestly compare their products and services to your own. You will be a step closer to becoming a recognizable force in your market.