Even if you think you’re the first to have a business idea, there are likely other options in the marketplace. There is always someone out there offering something competitive to your product or service.
To establish your product or service as a leader in the industry, it is imperative for your business to recognize all potential competitors. Once you identify the major players in the industry, analyze how your business can stand out amongst the competition. The first step to figuring this out is to perform a competitive business analysis.
How to Create a Competitive Business Analysis
Assessing your competition can be the first step in realizing the potential of your business. Many businesses are started with an idea that comes from observing something in a marketplace. An idea can come from observing a problem a person is having and figuring out a way to solve the problem. This is a common situation for new businesses.
Other times, business ideas come from observing what others in a business are doing and then figuring out a way to do it better. A good example of this method is Steve Jobs. In his biography, Steve Jobs often described existing marketplaces as being sub par and made it his mission to figure out a better way to do things. This drive resulted in products such as the personal computer and the iPod. Understanding the competition is key to any successful business and can be necessary for a startup to reach its full potential.
Identifying The Competition
Figuring out who the competition is can be difficult. Identifying competitors is difficult for two reasons:
First, it can be hard to find information on every competitor in any given industry. It’s likely that you can identify the top one or maybe two competitors, but unless you’re really tuned into the industry you will probably miss out on some obvious players in the space.
Second, we tend to overlook the competition when working on our own businesses. We are all afraid of failure and it’s worrisome to actually admit that competition exists. We would rather assume we have the best product and worry about nothing, but what we’re working on. This can be a dangerous mindset to have and it’s necessary to understand that it happens to everyone and move on to taking action.
Consider all the keywords relating to your business idea. Think about how you and the target customer would search for your business online. Then go to your search engine of choice and perform these searches. Take note of all the sites that appear in the results. This is your competition in the online space.
There are probably one or two big players and a few smaller options. Be sure to perform a wide variety of searches because you want to be sure you capture even the competitors that serve specific niches within your industry.
Next, go offline and figure out where a business would likely list their business. Consider looking in the Yellow Pages, the local hardware store bulletin board, or even in the local paper.
Try identifying your potential target customer and ask them in person. Ask them where they would go to solve the problem your business will be serving. People are your best source of information. Conduct customer development and figure out their pain points that you can solve. You can learn a lot about your competitors and their brands just by talking to your customers.
Gathering Information and Key Value Points
Once you have a list of the competitors, it’s time to start digging for information. We just mentioned that your actual customer is a great source of information. Ask your target customers if they can tell you everything they perceive about certain businesses. Be sure to have the customer explain the entire buying process and what makes them satisfied (or dissatisfied) with your competitors.
You can start by saying you’re just looking for ways to improve their lives. People are always looking to save time and make life easier. They should be willing to share their struggles with you if you’re showing interest in helping them.
Beyond face-to-face discussions you can find plenty of competitive research online. We’ve already covered doing the search engine search. You want to take note of every touch point online. See what is happening on Google. Take down information on what competitors rank for certain keywords. The competition that ranks higher for the best keywords likely is doing the best job at servicing the target customer audience.
Do searches for news articles and blog posts on the competition. Look for anything and everything you can find about the competition including statistics and viewpoints from customers. Look for complaints. Look for success stories. You are looking for any piece of data that tells the story about the competition.
Analyzing The Data and Creating a Strategy
When you have all the data compiled you’ll want to create a summary and strategy. You’ll need to go through all the data you found, but after that point you’ll want to create summaries. This makes it easier to make decisions and to develop strategy for your business.
As you look through all the areas of each business you should start to see specific items that make each business unique. These are the key points you want to focus on when assessing the competitive market. Knowing what makes others successful will allow you to position your business for success.
As you go through the data on each competitor you should start to see some gaps. There are gaps in almost any industry. You might also remember the conversations you had with your target customers. They might not realize it, but they likely mentioned a few pain points that were not being addressed.
Combine these customer pain points with the gaps in the competitive offering and start assessing your own capabilities. If you can find the areas of need and figure out a way to fill the void you will find success in an existing industry.
Steve Jobs was the best at figuring out what customers needed before they even realized it. This comes through assessing existing markets and figuring out the things people need when they don’t even realize that there is a better option available. It’s up to you to figure out where the void is in the market and to fill it with your business offering.
A competitive business analysis is difficult. Some people shy away from it because they’re afraid of what they might find. Don't be! Those that succeed often understand the competition and know where the voids are in the existing space.
The void is where the most successful companies are formed. Look for the voids in your marketplace of interest. Go through the process of creating a competitor analysis by:
- Identifying the Competition
- Gathering Information
- Analyzing and Creating Strategy
With this process you should be able to better position your business for success. When you have an understanding of the competitive environment you’ll be better prepared to serve the customer and fill the voids in their lives.
They might not even realize there are better options available. It’s your job to show them what they need. What kind of competitive analysis have you done in the past? Was it strictly online or offline? Or a blend of both?