Competitive analysis: why it's important and how to do it

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Can you know how well your business is doing if you don't know how well your competitors are doing ?

Identifying the competitive ecosystem of a specific industry allows you to know if your business idea is sustainable. The information you obtain during the competitive analysis will also help you to know how to position yourself in the market.

To start a competitive analysis you have to answer four basic questions:

Where does my target audience consume similar products/services?
Is there a place for my product in this industry?
What competitive advantages does my product/service offer?
How should my product or service be positioned in the market?
We are going to give you the keys to answer each of these denmark whatsapp lead questions below . As they say that a picture is worth a thousand words, below you have the summary of what we will see in this great article.

We begin by analyzing the consumption habits of our target audience.
We continue with the existing offer, our competitors.
And then we decipher the famous SWOT analysis of both our product and that of our competitors. 4 keys to answer 4 questions that every business must ask itself, both at the beginning and once consolidated, because what is true today does not have to be true tomorrow.






Where does my target audience consume similar products/services?
We have to put ourselves in the shoes of our potential customers who have the problem that our product solves. Or the desire. Or the need . Who is interested in what we offer? We have to dedicate the initial analysis to them; is it a homogeneous or heterogeneous group? Do they have similar social and economic conditions? How much are they willing to pay?



Is there a place for my product in this industry?
Once the demand has been analysed, it is time to analyse the supply. Is there a place for my product or service in this ecosystem? Are there already many options? Are they consolidated? From the answers to these questions, you will quickly know if there is a business opportunity, large or small.

What competitive advantages do I offer?
This is where we start applying SWOT – in this case, internally. We start with the strengths and opportunities derived from our previous analysis where we have gotten to know our potential customers better.

Knowing our strengths and opportunities certainly gives us a broader view, but the ultimate vision will be given to us by our weaknesses and threats. It is not what makes us stronger that will determine the destiny of our company, but what makes us weaker. And we must devote all our analytical capacity to this mission. What things can sink the ship? Because there is no point in having a route to success if it cannot be developed due to an internal or external weakness or threat.

Therefore, in order to determine competitive advantages, it is necessary to analyze, with greater precision if possible, the weaknesses and threats that compromise them.

As Einstein said, sometimes the problem is us and/or our business practices, so the solution is to stop using the same methods or resources. But without an analysis, we will not be able to know.





How should my product be positioned in the market?
Your competitors are not going to offer you any information because you can use it against them. So you will have to use your own tools, business intelligence analysis and the classic SWOT to get to know your competitor better.

In order to do a proper SWOT you have to act as a spy and pretend to be one of their clients.

Strength
The best way to find out your opponent's strengths is to pose as an innocent potential customer and use their services or buy their product. Don't do it just with one competitor, try to do it with all the ones that stand out in your industry so you can compare. And don't do it just at the beginning of your business adventure! Do it once in a while to find out how your competitors are developing their product. Look closely at every detail of their operation, customer service. In this first aspect of the SWOT analysis we will focus on the strengths, so write down each one of them.

Opportunities
Since we are analyzing our competitors, their opportunities are of little interest to us, if at all. In this case, what we are going to analyze are precisely our opportunities, not theirs. Once we have seen the strengths of our competitors, we can see much more clearly what our opportunities are - and also threats, but we will get to that later. In what areas does your competitor fail or is rather mediocre? This is where you need to tighten and intensify your business development. Write down all the opportunities you detect so that you can keep them in mind in your business strategy.

Let's take an example: QR codes are increasingly used in a wide range of industries, from retail to hospitality. If you know that more and more consumers are requesting QR codes and there is little competition, why not create a company to make QR codes on different surfaces? This is precisely what the company has doneQR on Wood.

Apply this same logic to any aspect of your industry that is evolving or being introduced – if you can’t think of any ideas, you can look to Artificial Intelligence, which is sure to have great opportunities!

Weaknesses
Here we come back to our competitors again! When we were posing as innocent customers of theirs, we were looking for their strengths, but we also need to look for their weaknesses. Write them down anyway so you know where your opponent is lacking.

Threats
If your competitor's weaknesses provide opportunities, your threats come from their strengths. Be careful! The threats we are analyzing here are external ones, those that come from outside, mainly from your competitor. But there are also internal threats, and these are the most lethal for your company! But for now, this part of the SWOT, the last one represented by the "A", does not represent internal threats, but external ones, derived from the competitive analysis we are doing.

Now that you know the what, the why and the how, invest time in your company's competitive analysis! It's an investment that will bring you a great return.