A competitor analysis provides the knowledge to make informed decisions on what aspects of a business gives a competitive edge. Business’ today thrive when they discover, develop and deliver business strategies encompassing their stakeholder’s needs, wants and expectations. Stakeholders include customers, staff, shareholders, and all other parties with a vested interest, as well as the general community.
In order to develop these sound business strategies, reliable, relevant and timely information must be gathered and analysed. The underlying purpose of competitor analysis is to make sense of the large quantity of data available about the macro-operating environment, competitive environment and market places.
Most businesses undergo a series of stages in order to gather the data that will help make informed business decisions. These include:
- Determining the internal readiness to perform the business task
- Determining the information needs and ways in which to approach them
- Determining the legal and ethical ways to seek out and collect information
- Collation of all available information
- Communicating meaningful information to the right people at the right time
- Debriefing the key decision makes
Competitor analysis works on the premise that every time a consumer makes the decision to buy, a competitive assessment is undertaken. They evaluate the product/service against attributes they see as important, for example it may be price, colour, quantity, availability, accessibility, the sales approach, and so on.
Competitor analysis is a crucial step to your company marketing plan. With this evaluation a determination can be made on what attributes are focused on to attract a target market. The purpose of a competitor analysis is to ensure your organisation can plan for the new competitive landscape, armed with competitor intelligence regarding:
- Who are the main competitors?
- What products/services do they offer?
- Where are the gaps in service provision?
- What are the strengths/weaknesses of competitors?
- What are the main opportunities/threats?
- How will competitors change/react to the new legislative environment?
newfocus recommends the following strategic guide that outlines and starting point for consideration when assessing a marketplace:
- determine the purpose, direction and policies to result from this analysis
- conduct stakeholder consultation
- conduct an information audit
- perform a distribution coverage and channel analysis
- perform a SWOT analysis
- determine the competitive advantage
- create a strategy to squash the competition