Any business that wants to be successful needs to have a solid understanding of the structure of the competition. This is especially true for companies that are new to the industry or are looking to enter a new market.
Competition analysis identifies and understands the different players in your industry or market. This includes understanding their strengths, weaknesses, and overall strategy.
The first step in conducting a competitive analysis is to identify your competitors. This can be done by searching for them online, talking to industry experts, or attending trade shows or events.
Once you have identified your competitors, your next step is understanding their business models. What are they selling? How are they selling it? What is their pricing strategy?
Understanding your competitors will help you make better business decisions and give you a leg up on the competition.
Which companies are relevant for the competition analysis?
1. Current main competitors
The number is typically in the single digits, and these competitors are typically the most significant companies in the market. But in the end, you decide who counts. Getting advice from a business plan consultant can help you better understand your industry, your target market, and how to position your business for success.
Consider the criteria that are most important to you. Establish these criteria and use them to rank or filter competition. Finally, narrow down the list to only the five most crucial ones. These are then carefully examined.
2. Potential competitors from your industry
Companies with solid local presences (in a region that interests you, too) or rapid growth rates should also be taken into account.
Business automation can help you to stay ahead of the competition. By automating processes and tasks, you can free up time and resources to focus on other areas of your business. Automation can also help you to improve your customer service, making it easier to retain customers and attract new ones.
- Are there any companies that are still small but have incredible growth rates?
- Have you recently lost sales pitches to a particular competitor frequently?
Small businesses are more adaptable than larger organizations and can influence the market with new goods and services. You must pay attention to these.
3. Non-industry companies that may become competitors
Companies enter your industry for a variety of reasons, including:
- A) Market expansion: Organizations who haven’t done business in your region before may see this as a growth market.
One of the most effective ways to reach new markets is through virtual events. Virtual events are a great way to connect with potential customers in an interactive and engaging way. There are several different types of virtual events, each with its advantages.
- B) Production expansion: Businesses may opt to start producing goods in your product category if competing businesses are not entirely using similar machine parks or if the existing production is no longer profitable.
- C) Forward or backward integration: Present suppliers or clients may lengthen their value chain and produce or market their product category independently.
- D) Acquisition of a competitor: A small competitor is bought through an M&A transaction, and the financially strong buyer can strongly influence the market.
- E) Technological advancement: As industries expand in parallel and due to digitization, which makes new business models possible, businesses are more up against competitors they had never considered. For instance, the car sector must constantly watch for competitor IT firms like Google/Alphabet or Apple (= networking) and energy suppliers (= filling stations for electric vehicles).
Technological advancement has led to new ways of visualizing previously unimaginable data. Interactive data visualization is one such example. This technology allows users to explore data in new and innovative ways and has led to breakthroughs in medicine and astrophysics.
What should be examined in the competitor analysis?
The competitive analysis focuses on the advantages and disadvantages of the competition as well as the best practices that your own company can use. Additionally, businesses should examine milestones in their project management to gauge their success and identify areas for improvement.
Strengths/weaknesses of the competition
Three views are used to analyze strengths and flaws from the viewpoints of the corporation, the client, and the competitor:
- What are the advantages and disadvantages of your own business?
- What are the main competitors’ advantages and disadvantages?
- Where do customers see our company’s advantages and disadvantages about the competition?
Best Practices / Benchmarking
- What can we pick from other players or competitors that we can use?
- How are sales structured?
- What structure does the supply chain have?
- Based on the analysis, are there any indications of competitive advantages for competitors that we cannot compensate for?
- Does the competition employ alternate production techniques?
