How do I analyze my business competition? Is competitive benchmarking a part of competitive analysis?
The best way to analyze your business competition is through competitive analysis. The main objective of conducting a competitive analysis is identifying the strengths and weaknesses of your competitors and comparing it with your own. It is a process used to evaluate different aspects of your competitor’s business. But it simply doesn’t end there. It should equip you with the ability to identify trends in the industry and adapt to your competitor’s strategy. Maintaining your lead or outcompeting your competition can be imperative for the success of your business.
A competitive analysis should try to answer the following questions:
1) Who is my competition?
The most critical part of this exercise is choosing the right competitors to analyze. You can be present in markets where identifying your competition becomes easy. Here, you should conduct an analysis for every competitor as only a handful of them exist.
But when you are in a market with many competitors, the competitive analysis becomes difficult. Typically, in a largely fragmented market, majority of the revenue: 70-80% can be accounted for by 15-20% of the competition. It is that 15-20% of the competition you need to analyze. The competitors you select will determine how you will use the perceive the intelligence gained from the exercise.
2) Where should I look for competition data?
To start, secondary sources of data can be used for conducting research. It is a cheaper source of information and can be readily available. Newspapers, magazine articles, databases, annual reports and trade associations can be excellent sources. Apart from this some other metrics include sources of funding, revenue streams, customers, employees, product offering, service offering, geography, pricing, marketing strategies and technology.
3) How do I analyze the data?
Once you have collated the data, analyzing it and turning it into competitive intelligence can be a bit overwhelming. To begin this process, you should try to choose the attributes that can be quantifiable and measured. They should help you understand what you are up against. Defining the competitive offering and listing their strengths and weaknesses is a vital step of this process. Being honest with yourself and identifying these without any bias becomes important. Try asking yourself, how does your product/service compare to your competitors? What are some of the benefits/features that are unique? This gives you a much clearer picture and can be a low hanging fruit, giving you a quick advantage if your competitors have a weak product or strategy. Identify the strategies, objectives and goals of your competition. This will provide you with viable strategy ideas to beat them. Once you have identified the objectives your competition is trying to achieve, you must determine the kind of strategy you want to pursue. This should not be counterproductive and clash with your existing strategy. Some common strategies used include reducing prices, increasing marketing efforts, mergers or acquisitions, strategic partnerships, innovating with new products and service offerings and improving technology.
4) How can I use the competitive intelligence gained from this exercise to better my business?
The aim is to use all of this research to good use. The research should also tell you if you are a market leader, a follower or a new entrant. Once you have positioned yourself against your competition you can start by focusing on the key areas of competitive edge and competitive handicap. Summarize the important opportunities and hurdles facing your firm. Prepare an action plan and develop a strategy to strengthen your position. Categorize the intelligence and see how it fits into your overall strategy. It might also be a good idea to create and document the business cases of all your competitors. The information here should be disseminated and should be put to use whenever needed in an orderly and useful manner.
Competitive analysis is more effective when it is really focused and helps you to make swift business improvements. One way to do a more focused competitive analysis is through competitive benchmarking. It is a process of comparing a company against a number of competitors using a set collection of metrics. It is used as a fact-based comparison of companies’ process performance to ‘Top Performers’, as well as across the industry and across companies. Benchmark reporting is used to identify and prioritize process improvement opportunities. It is also a tool for comparative data analysis method which helps identify areas for potential improvement. It provides a factual foundation for cost reduction efforts regardless of the lever or combination of levers utilized.
It is a method used by companies who want to maintain an edge by knowing where they stand. They determine the best processes, strategies, technology and methodology to achieve your goals via a set of metrics. It takes a deeper dive into how you measure up against competition.
Do you want to know how your competitors are doing business?
Tell us a little about yourself below to gain data for free
Hi What’s your name?
Gotcha! Do you want to monitor any specific competitor or market?
List of Competitors
- Add competitor…
Your Data is on the Way!
Our data scientists team is working for you by collecting data and we’ll come back to you shortly with a pre-assessment and proposal.