Businesses happen in highly complex and competitive environment. It’s important to understand strengths and weaknesses your current and potential competitors. This makes it very important for startups to understand and analyse their competitors and frame their growth strategies [both offensive and defensive] accordingly. In order to understand your competitors thoroughly, it’s impertinent that you do a systematic analysis and assessment rather than relying on informal knowledge and chunks of data that you might ‘know’.
Things that you need to know about your competitors include,
- List of direct and potential competitors [make a list of 5 each]
- Their strengths and weaknesses
- What are their products/services and their USP
- How does their product differs from your offering
- What are their key operations strategy and how do they advertise
- What’s the state of their business? How has been their growth in past 3 years?
In order to answer these questions, you need to develop separate competitor profile for each one of them. This kind of in-depth information will give you competitive advantage over them. You can deploy strategies through product differentiation, price discrimination, focussed advertising and sales promotions to get successful with your product offering. The competitor’s profile should include information on the,
- Company’s background and structure
- Financial info on their growth
- Complete product information comprising of array of products, rate of new products development, R & D, patents and IPs, brand strength, etc
- Marketing strategies and their market share, alliances and geographic coverage, distribution channels, and their pricing strategies
- Production process and operational strategies
- Key composition in terms of human capital
You will have to get such information from both within the company and outside. Some sources for gathering information could be,
- Look for their website on the internet and study all the information given carefully. Also look on internet if anyone else is talking about them. Google them extensively to find info about their offerings. Check web-logs for reviews.
- Talk to their customers. Conduct a small survey to understand their customer satisfaction and behavior.
- Analyse their advertisements in different media to learn about their target audience, product features, benefits, etc
- Read their promotional materials and annual reports to understand their operational strategies and growth patterns.
Doing a competitive analysis can be a challenging and interesting piece of work. You’ll learn a lot about your industry, and your insights will help you position your product better and make your Startup successful.