Analysing your competition can help you supercharge your own business by finding weaknesses in your competitors and offering your target market a better offer.
Proving there is a need and a profitable and sustainable market for your product/service is the first step in building a successful business. However, just because a market exists, it doesn’t mean they will buy from you. Every business has a competitor or an alternative. Your competition is this the biggest threat top your business that you cannot control. To succeed you have to research your competition, both direct and indirect, and develop a strategy that will get people to buy from you instead of them.
There are 3 main ways to develop a strategy to develop the competitive edge.
1. Cost Leadership
Becoming the lowest price supplier or retailer in the market will give your business a competitive advantage.
You need to decide whether your business provides a “no frills” product/service by stripping out additional extras, or you deliver the same as your competition but at a cheaper price.
Remaining the cost leader is difficult as your competition will try and lower prices to compete, there is little point in reducing your prices so low you won’t make a profit. When pursuing a cost leadership strategy you need to be careful as it can lead to a reduction of quality, this may affect your reputation and sales.
You can stand out from your competition by approaching the market in a different way than your competition. Your differentiation strategy can be offering more convenience, higher-quality customer service, better customization of the product/service or a better warranty. The most important thing is you must differentiate yourself from the competition by giving the customer something they value. When a customer values a product/service, they are willing to pay a premium to obtain it.
Before adopting this strategy, market research is required to find out what your target market values.
Sometimes the best product is not always the leader. It is usually the business that understands the market the best that becomes the leader.
A focus is competing on the basis of being a specialist in a particular market, providing a narrow range of products/services.
This strategy can be extremely profitable for a small business if they can effectively market their business as larger companies tend to ignore niche markets.
To assess what is the best strategy for your business, you need to take into consideration:
- What the market wants,
- Which looks most attractive for your business
- Gaps in the market.
- Which strategy fits in with your business strategy.
The best way to choose your differentiation strategy is by analysis the competition and looking for gaps in what they are offering. Use the information from your gap analysis to decide which of these strategies you wish to pursue.
Make Your Business A Success
The key to a successful business can be found in our Business Success Formula. If you structure your business using the Business Success Formula as your blueprint you will decrease your chance of failure significantly.
We assess your business and implement our business success formula in our business assessment service The Business 360. It provides you with all the information to 10x your business in a matter of weeks. You can check it out here.