In order to remain competitive, you need to know at all times what your competitors are up to. And in order to know that, you need to undertake a competitive analysis and then, having done that, update it from time to time. At least once a year is a good idea.
So what is a competitive analysis? The BDC definition is as good as any: “It is an assessment of your competitors’ products, services and sales tactics, evaluating their strengths and weaknesses relative to your own.”
There is more to conducting a comprehensive competitive analysis than I have space here to cover in full. This means that you have more research and reading to do but, in the meantime, there are four key elements you should concentrate on in researching how to conduct a competitive analysis:
- Identify your competitors. Not just direct competitors but also indirect competitors and substitute competitors that target the same customers as you do.
- Gather all the information you can about your competitors. You want to know about their products, their pricing, how they market and promote, their reputation, their staff, and the relationships they have with suppliers.
- Using the information gathered in (2) above, analyze your competitors’ strengths and weaknesses.
- Based on the analysis in (3) above, determine your competitive advantage. You can then reinforce your advantages and work on your weaknesses.
Your shop can’t compete effectively in ignorance or with only a minimal understanding of your competition. And this is all stuff you can do on your own without spending on consultants or other third parties.