Philip Kotler described the importance of understanding the competition with his quote: “Competitive advantage is a company’s ability to perform in one or more ways that competitors cannot or will not match.” To outperform your competition, you need to understand them. If you haven’t performed a competitive analysis recently, now is the perfect time to get started.
What is a competitive analysis?
A competitive analysis is an in-depth look at the market for your products and services, including a thorough review of the competition’s performance as well as your own. Some of the answers you’ll get from the process include:
- What is the competitive landscape for your products and services?
- How do your products and services compare to that of the competition?
- What is your company’s unique value proposition?
- What elements are essential for an effective competitive strategy?
- How can you attract and retain target customers in new markets?
- What do current and potential customers think about your competition?
- What are effective ways to advertise and promote your company?
- Which products or services are most likely to attract more customers?
How do you perform a competitive analysis?
Performing a competitive analysis involves two significant perspectives. First, you’ll need a thorough understanding of your company, such as:
- What are your vision, mission, and values?
- What are your product offerings? What is the profit margin of each?
- Who are your customers? Why do they buy your products?
- What are your strengths, weaknesses, opportunities, and threats?
Next, you’ll need to define your market area and analyze the competition in the region. The initial challenge can be simply trying to identify who your competition is. After that, it involves a survey-like comparison of products, pricing, strategies, strengths, weaknesses, etc.
The U.S. Small Business Administration offers online resources to help companies conduct market research and build a competitive analysis.
Why should you contract with your marketing agency to perform a competitive analysis?
Conducting a competitive analysis on your own is a very challenging project to take on for many reasons.
- It is difficult to remain objective about your own business. You’ve put blood, sweat, and tears into building your company. It is challenging to see where performance gaps may lie or how to advertise your business better. This is a time when an outsider’s professional feedback is essential.
- Getting accurate and essential information about the competition is challenging. You can ask for a lot of information about the competition, but knowing what’s necessary and superlative can be confusing. Your marketing agency is well versed in determining how to get the right information to make a difference for your business.
- Marketing agencies have a wealth of information at their fingertips. Call your marketing agency before your team members spend countless hours researching, analyzing, and writing the report. They likely already have troves of information about consumer demographics and company profiles.
- You may be reporting this information to a board of directors or business owners. It shouldn’t be surprising that the information gleaned from the process often can be surprising or sometimes even contradictory to long-held beliefs. Having an outside agency compile and present the information can help it be more palatable and understandable to those with an ownership interest in your business.
- The goal should be to develop an effective marketing plan. Once you have all the information, you should use it to build your three to five-year marketing strategy or plan. If your marketing agency conducts the analysis, they already have a head start on helping you develop your plan.
If you’d like to see how a competitive analysis could improve your company’s performance, contact Paradux Media Group today.
At Paradux Media Group, we help our clients with a full range of marketing services, from developing a marketing and branding strategy to implementing email campaigns and managing social media. By becoming a part of our flock, your team of employees can concentrate on what they do best–serving your customers. Give us a call today to learn more about the wide range of marketing services we offer.