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How to Conduct a Competitive Analysis

Business owners—listen up!

You may think that your competitors are just there to make life harder for you and hinder you from achieving your business goals. But this is actually far from the truth. Why? Because, in a way, your competitors can make life so much easier for you. They’re a rich source of knowledge if you can study their techniques and strategies. Plus, knowing their limitations and shortcomings can give you an idea of what gaps in the market you can take advantage of.

This process of studying your competitors is called competitive analysis, and it’s a great way to learn exactly what you’re going up against and how best to keep in step with the trends. So today, we’ll be giving you some tips on how to execute a successful competitive analysis so you can beat your opponents at their own game. Ready to win at business? Then keep reading!

Focus On Your Direct Competitors

In order for your competitive analysis to be effective, you need to be certain that you’re studying the right companies. This is to ensure that you’ll have accurate data to compare your own numbers with.

You can do this by splitting your competitors into two distinct categories: direct and indirect.

Your direct competitors are companies that offer the exact same products as yours. They will likely operate in the same area as your own business. Your indirect competitors are companies that are trying to address the same pain points as you but through different products or services.

A lot of companies make the mistake of studying both their direct and indirect competitors. After all, anyone targeting the same pain points and the same audience must be useful, right? But we want to make it very clear: prioritize your direct competitors.

You can keep tabs on your indirect competitors in case they switch things up and enter direct competitor territory, but don’t spend too much time or effort on these businesses. Studying the companies most similar to yours will help you contextualize and double down on your own brand’s unique advantages.

Learn More About Their Products

Another good starting point for your competitive analysis is to find out exactly what it is your competitors are selling. So take a good look at their selection of products and/or services and try to answer the following questions:

“What is their market share?”

“What makes them stand out from everyone else?”

“What problems do their customers usually have?”

Analyzing your competitors’ products will help you make some key improvements on your own. You won’t be able to cover every single pain point or demand in the market, but you can strengthen your hold over a few—which is the logic behind niching down.

Use Multiple Sources

Information can come from everywhere. You just have to be resourceful enough and seize every opportunity to learn!

Secondary sources of information can also make things a lot easier for you because they’re usually publicly available. These sources can include your competitors’ sales brochures, articles taken from newspapers and magazines, reference books, and many more. Most trade associations and databases will also regularly publish reports.

You can also get information through direct observation, by walking into a store yourself and making inquiries like a regular prospect would. Just don’t feel the need to conceal your identity. You’re not a spy, and it’s perfectly acceptable to scope out the competition that way. You can also try getting information through the grapevine—that is, your network of clients, suppliers, and other industry experts.

But what is your secret weapon? It's your staff—particularly, your sales team. Your sales team hears the most objections from your customers when they have doubts about buying your products. Those objections will likely include comparisons to other, similar products, questions about missing or additional features, or even how your products stack up against the market at large! In short, your customers are a gold mine of competitive information.

Wrap It Up

And there you have it! These are just some tips on how to execute a competitive analysis—you’ll learn even more as you go through the process yourself. But hopefully, now you have a better understanding of what a competitive analysis is, and why doing it is the key to scaling your business in the long term.

Thank you so much for reading, and stay tuned for more insightful blogs from TopVA!

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