As an individual or a business, understanding who your real competition is can be a game-changer. It might not always be the obvious players in your industry, and sometimes it might not even be a direct competitor. Identifying your competition and analyzing their growth strategies can help you improve your own products or services, among other benefits.
Here are some factors to consider while analyzing your competition:
Direct Competitors: Direct competitors are the primary players in your industry who offer similar products and services. They’ll likely have similar target audiences, pricing, and marketing strategies. To understand your direct competitors, you should start by identifying the most recognized brands in your industry. Take note of their unique selling propositions and their target customers. Monitor their social media pages and website to get an idea of how they’re promoting their products, services, and brand.
Indirect Competitors: Indirect competitors aren’t in your industry but still compete for the same customer base. For example, if you offer a high-end clothing line, a direct competitor will be other high-end brands like Gucci, Prada, Chanel, and Louis Vuitton. Indirect competitors, in this case, could be more affordable or mid-level brands like H&M or Zara. To understand your indirect competition, you should identify the other items that are purchased by your target audience.
New Entrants: New entrants or startups are companies that have recently entered your industry. They might not have a significant market share yet but could become a real threat in the future. Monitoring new players can help you stay ahead of the curve by identifying emerging trends.
Substitutes: Analyzing substitutes can be tricky because they often don’t seem like direct competitors at first glance. For example, if you own a pizza shop, your substitute competitors could be fast food restaurants, Chinese or Mexican takeout, and more. That’s because these restaurants could take away some of your customers when they crave a different taste.
International Competitors: The world is a global village, and nowadays, businesses compete on a global level. For example, if you own a digital marketing agency located in the USA, there might be other digital marketing agencies in other countries that compete with you.
While identifying and analyzing your competition, keep in mind your unique selling proposition (USP). You need to know what sets you apart to understand how you’re different from your competition. Your USP might include factors like the quality of your products, customer service, or pricing. Once you’ve identified these factors, it’s vital to understand how your competitors are positioning themselves.
As mentioned, analyzing your competition can provide numerous benefits. Here are some of them:
Stay Ahead of Emerging Trends: By analyzing new players and international competitors, you can get ahead of emerging trends in your industry. This will give you the ability to introduce new products or services or make adjustments to your current offerings.
Improve Your Products or Services: Studying your competitors' strengths can teach you how to build a better product or improve your services. By looking at their weaknesses, you can also focus on differentiating yourself.
Better Marketing Strategies: Your competitors' marketing strategies can teach you what works and doesn’t work in your industry. You can then tailor your own marketing strategy based on their past successes.
Identify Gaps in the Market: Analyzing your competition can help you identify gaps in the market and develop strategies to fill these gaps. This can be especially valuable if you’re looking to introduce a new product or service.
To conclude, it’s essential to know your competition and understand their strategies and tactics. By doing so, you can adjust your own approach and position yourself for success. Remember, not all competitors are direct, and analyzing indirect and substitute competitors is just as important. Keep your unique selling proposition in mind and focus on what differentiates your products or services from other players in your industry.