How do you use competitive analysis in your strategic plan?

1 Define your market and competitors

The first step in competitive analysis is to define your market and your competitors. Your market is the group of customers or potential customers who have a similar need or problem that your product or service can solve, while your competitors are the other businesses or alternatives that offer a similar or substitute solution. To define your market and competitors, you must answer questions such as who are your target customers and what are their characteristics, preferences, and behaviors? What are the main segments or niches within your market and how do they differ? What are the key drivers and trends that affect your market and how do they impact your business? Who are your direct and indirect competitors and how do they position themselves in the market? Additionally, what are the strengths and weaknesses of your competitors and how do they compare to yours?

3 Evaluate your opportunities and threats

The third step in competitive analysis is to evaluate your opportunities and threats, or the external factors that can affect your business positively or negatively. Opportunities are the favorable conditions or events that can create or expand your market, increase your demand, or improve your efficiency, while threats are the unfavorable conditions or events that can reduce or limit your market, decrease your demand, or increase your costs. To evaluate these factors, you need to consider questions such as: what are the current or emerging needs of customers that you can address better than competitors? Are there any new markets or segments that you can enter into? What technological, social, economic, political, or environmental changes could create new opportunities or challenges for your business? What actions could competitors take that would affect your market share, profitability, or reputation? And what risks and uncertainties could disrupt or threaten your business?

4 Develop your strategic goals and actions

The final step in competitive analysis is to develop your strategic goals and actions, or the specific objectives and plans that you will pursue to achieve your vision and mission. Your strategic goals and actions should be based on your competitive analysis, taking into account your competitive advantage, opportunities, and threats. To develop these goals and actions, you should ask yourself questions such as what are the long-term and short-term goals that you want to achieve in your market and with your customers? What key performance indicators or metrics will you use to track and evaluate your progress? What strategies or approaches will you use to overcome challenges? What resources or capabilities do you need to implement your strategies? And what milestones or deadlines will you set for executing your plan and measuring outcomes?

Competitive analysis is a powerful tool for crafting a successful strategic plan. By leveraging it, you can gain a better understanding of the market and competitors, identify and utilize your competitive advantage, evaluate opportunities and threats, and formulate and execute your strategic goals and actions. Ultimately, competitive analysis can help give you an edge in the industry and reach your business objectives.