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Running a business isn’t easy. If it was, then everyone would run their own company rather than work for someone else and spend most of their time following orders. However, if you are willing to work hard and take the required steps, then not only you easily launch a company but you can also run it for a long time without running into major roadblocks. One of the steps is conducting competitive analysis. But the question is- why is competitive analysis important in the first place? The following are some of the reasons why:
1 – It Helps Determine the USP
If you know one thing that differentiates successful companies from failed ones, then it has to be USP that stands for Unique Selling Proposition. The reason why that’s important is that you are surrounded by rival brands, and the only way you can attract your target demographic is by finding your unique identity, i.e. your USP.
When you conduct competitive analysis, then you are able to take a closer look at your own company. You can pinpoint the things that make your products and services special. If needed, then you can rebrand everything as we know that designing a brand look isn’t that hard anymore. There are all kinds of online tools that you can use to create powerful brands. Otherwise, you can do good even with improving what you have already built.
2 – It helps to identify the gaps in your offering
You can learn so much from your rivals that here is no reason to avoid them. Instead, you should study their brand positioning and products. This can help you identify the problems with your own company. You can find what you are lacking that others aren’t such as better pricing, good branding, easy product reach, etc. Taking all this into account, you can take appropriate steps and give a boost to your business.
3 – It identifies market threats
Are you aware of other companies that are giving you tough competition? If you aren’t careful and don’t keep your rivals under check, then they can easily undercut you and improve their market positioning. If you don’t want that to ever happen, then be sure to perform competitive analysis on a regular basis as new companies emerge to the surface every other day. This is also how you can identify and manage business risks to a huge extent.
Now that you know why competitive analysis is important, you can consider the following questions that you need to ask when you perform it for your own business:
1. Which are your biggest rivals that can give you serious competition? There is one unsaid rule in business- keep your friends close, and your enemies closer. In other words, you need to keep a close watch on the market leaders and the underdogs that show potential. If at any point you feel that a company can influence your business, then you can take precautionary steps.
2. What kind of products and services your closest rivals offer? You need to identify the best-selling products and services of your competitors and list them down with the correct prices, features and additional details. This can give you a good idea of your current positioning in the market.
3. How Your products/services are different from others? You should draw comparisons and learn what makes your products different from your rivals’. Are they better or worse?
4. What value are you providing that your competitors aren’t? This point again has to do with the USP. If you find that you aren’t offering any significant value, then maybe you can look into ways for improvements in your products/services.
5. How your competitors are treating their customers? Always remember- customer service is important for a business to succeed. So, you can observe how your competitors are treating their customers- some of the ways they are engaging with their patrons, how they are handling negative feedback, etc.
Competitive analysis is an important part of keeping a business up and running. It’s never a good idea to rest on your laurels as you never know when a rival company overtakes you and steals your customers away. So, be sure to ask the questions above from time to time to stay ahead in the game. Good luck!