Competition from established businesses and brands seems intimidating for a new business owner. Evaluating competitors is an essential step even before setting the business to ward off failure later.
Every business owner would know their markets, the customer wants and needs and a general idea if the competitor as well. But for you to become a successful owner of a business, its best to identify the competitor, and do a SWOT analysis on the competitor to know where you stand against the business competitors.
We have learned about a thing or two about evaluating our competitors in the previously published blogs. Here, in this blog, let us look into what goes into identifying business competitors.
Zeroing in on the direct competitors is crucial before finalizing the decision about the business category and market segment you want to compete in. It helps a great deal in the success of a new or existing business as it reduces risk, time, required resources and expense.
Think your business competitors as a series of concentric circles like in a bulls-eye target. Right in the center is your direct competition and moving outward from the center, the competition grows progressively less direct.
- The first ring, also the center of target: Consider this as the specific businesses in your geographic area that offer a product or service that’s interchangeable with yours in the consumer’s eyes.
- The second ring: Competitors offering similar products in a different business category or who are more geographically remote. None of these competitors provides the same mix of products and services as you, but they may be picking off the most lucrative parts of your business.
- The third ring: Competitors who compete for the same-occasion dollars.
The above-mentioned analysis is to point out from a buyer’s point of view, there are many alternatives for him to not purchase from you. Now, that is established, you have to make sure that your business provides advantages over the competitors. The bulls-eye target rings can be advantageous as you can collect a plethora of details of your competitor’s business.
You could gather the information from studying their ads, brochures, promotional materials. Drive past their location, speak to the competitor’s customers and these are the things that you can capitalize on.
Collect Secondary Data
Gathering secondary data from other contacts among suppliers and customers can give you a wealth of information about competitors’ strengths and weaknesses. There area few basic information every business or brand should know about their competitors and they are:
- Competitor’s market share, as compared to your own
- Target buyers’ perception and judgment of your competitors’ products and services
- The financial strength of your competitor, which affects their ability to spend money on advertising and promotions, among other things
- Competitor’s ability and speed of innovation for new products and services
Gauge your Business Competitors
Assumption of competitors’ future activity depends on your knowing and understanding of their objectives, strength in the marketplace and resources. This piece of valuable information helps your company to :
- Annual forecast for sales, spending, and profits
- Promotion and advertising programs
- Introduction, support, and success of new products and services
- Market, product or service category, and sub-category trends
- Direction for your business’s future growth
Gathering competitive intelligence can be the difference between realizing your company’s annual plan and losing business that may never be recouped.