Competitive Analysis (Part-1)

Competitive analysis is a crucial component of strategic business planning that involves evaluating and understanding the strengths and weaknesses of competitors in the market.

A competitor analysis framework is a structure that business professionals use to research and evaluate their competitors. Knowing your enemy is like winning half the battle. Competitive frameworks gather vital information, such as a competitor’s business strategies, products, offerings, marketing efforts, sales, etc., into an organized visual model.

Benefits of doing competitive analysis

Here are the key benefits of conducting competitive analysis:

Building better marketing strategies: Analysing competitors allows you to position your products or services effectively in the market. By understanding what sets your business apart from others, you can develop strategies to highlight your unique selling propositions (USPs) and create a distinctive brand image. At the same time, these insights could lead to new business opportunities.

Identifying Opportunities and Threats: By examining competitors and understanding the competitive landscape, you can uncover opportunities that may be exploited or threats that need to be mitigated.

Understanding Customers’ Preferences: Competitive analysis helps in understanding what customers value and prefer. By studying the offerings and marketing strategies of competitors, you can gain insights into customer expectations, enabling you to tailor your products, services, and marketing approaches to better meet those preferences.

Benchmarking Performance: Assessing the performance of competitors allows you to benchmark your own business against industry standards. This comparison helps in identifying your strengths and areas that may need improvement. It can serve as a basis for setting realistic goals and performance metrics.

Risk Mitigation: Through competitive analysis, you can anticipate potential challenges and risks in the market. By being aware of what your competitors are doing and how they are adapting to changes, you can proactively adjust your strategies to mitigate risks and stay ahead of market trends.

Identify gaps: Examining businesses within a specific industry can reveal gaps in your own strategy compared to your industry at large, which may spark inspiration for a new business idea, product, or offering.

Create measurable (and achievable) goals: A good competitive analysis framework helps businesses build specific performance goals based on their competitors’ data.

Choosing the right framework or model for competitive analysis

Choosing a framework for competitive analysis requires careful consideration of various factors to ensure that the selected approach aligns with the goals and needs of your business. Here are some criteria to consider when choosing a framework:

Business Objectives: Different frameworks may be more suitable depending on whether you are aiming to increase market share, launch a new product, identify areas for improvement, or assess the overall competitiveness of your business.

Industry Specificity: Some frameworks are better suited for specific industries or market conditions.

Scope of Analysis: The scope will influence the choice of framework, whether you want to focus on a broad industry analysis, a specific market segment, or a particular aspect of the competition.

Data Availability and Accessibility: Some frameworks may require extensive data collection and market research. Consider the feasibility and cost-effectiveness of obtaining the necessary data.

Internal Resources and Expertise: Some competitive analysis frameworks may be more complex and require specialized skills or tools.

Competitor Diversity: Consider the number and nature of your competitors. For a highly competitive market with many players, a more detailed and comprehensive framework might be necessary.

Flexibility and Adaptability: Choose a framework that allows for flexibility and adaptation. Markets and industries evolve, and your competitive analysis should be able to accommodate changes.

Ease of Communication: The framework should generate insights and findings that are clear, concise, and actionable, facilitating decision-making within the organization.

By considering these criteria, you can select a competitive analysis framework that best fits the specific needs and circumstances of your business, helping you make informed strategic decisions.

In the next article, we will be looking at various models or frameworks used for conducting the competitive analysis.