Important Factors to Consider in Competitive Analysis
To complete a comprehensive competitive analysis, you must know the competitive landscape. You must know who your competitors are. Prepare an overview of your competitors, their strengths and weaknesses. Position each competitor’s product against your products. Understand the customer needs and preferences that are you competing to meet.
When you consider your competitors, determine what are the similarities and differences between their products and yours. You must also consider how their prices compare to yours and how well they are doing. You must have a specific plan to compete. For example, you can offer better quality services, lower prices, more support, or easier access to services. You must address the following basic issues:
o Define your target market.
o Determine the size of the target market.
o Drill down to your specific segment within the target market.
o Define the size and the revenue opportunity that your segment represents.
o Determine how fast the overall market and your specific segment are growing.
o Learn what factors are most important to your customers such as price, technology, ease of use, or new uses.
o You must know the most important characteristics in your industry. Is is driven by high or low volume? Is it capital or labor intensive? Is it seasonal?
o Identify and profile your targeted customers by their consumer budgets and by how they make decisions to buy a product.
o Identify your direct and indirect competitors and understand their impact on you.
o Identify the features that differentiate your product from the competitors’.
In order to address the basic issues, you must know where to find competitive and industry information. Information is available from the Federal Commerce Department online or in the library. You can review Edgar Online and business websites to obtain required financial filings. Look for an industry trade association and industry publications. Go to Hoovers Online or Bacon’s to look for business publications in your industry. You can also check online for http://www.usdata.com or for North American Industry Classifications http://www.naics.com.
After all basic issues have been addressed and your competitive research is completed, you should be able to describe all of your competitors and their strengths and weaknesses. You should be able to clearly articulate what is different about your product and why customers will choose your product rather than the competitors’. You should also be able to describe your target market and target customer and what will motivate them to purchase your product. Finally, your should be able to explain how you will gain and keep a sustainable competitive advantage.
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About the author:
Jo Ann Joy is the CEO and owner of Indigo Business Solutions, a legal and business consulting firm that is a one stop shop for businesses. We provide legal and business services and all professional services to businesses, and they will not be “referred out” to other professionals.
Jo Ann has a law degree, an MBA, and an Economics degree. She is a strategic business attorney who works closely with businesses to improve their performance and their chance of success. Her background includes commercial, corporate, contracts, real estate, accounting, financial planning, mortgages, marketing, product development, banking, and business planning and strategies. She ran a successful business for 10 years and writes and gives presentations on many different legal, tax, and business subjects.
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