Competitive analysis is pivotal in ascertaining an organization’s strategies and impacts to control the ways firms implement diverse actions and reactions in their corresponding sectors. An organization performs a competitive analysis to assess its prominence and ranking among the competitors.
The principal functions of a competitive analysis lie in discerning the fundamental strengths and weaknesses of the competitors within your specific market segment, developing strategies to render you a definite upper hand vis-à-vis your competitors, building necessary stumbling blocks to circumvent the competitors’ entry into your market and eliminating your potential weaknesses through incorporation of corrective measures within the product development cycle.
Steps to Accomplish Competitive Analysis in Business
A typical competitive analysis hinges on a preliminary identification of the existing and prospective competition. There are basically two different ways you can distinguish your competitors.
The first method involves examining the market scenario from a customer’s perspective and collating your competitors into groups based on the extent to which they influence the customer’s buying behavior.
The second method classifies the competitors into groups depending on their sundry competitive strategies and factors that galvanize their performance.
Once you have finalized the grouping of your competitors, you can initiate an analysis on their inherent strategies and pinpoint their vulnerable areas. This can be accomplished by scrutinizing the advantages and shortcomings of your competitors. The key skills and assets and their presence or absence are the decisive elements to gauge a competitor’s strengths and weaknesses respectively.
Focusing your efforts on the below mentioned four pertinent areas will enable you to have a better understanding of the constituents of industry-specific key assets and skills.
- Primary business success/failure factors
- Chief customer motivators
- Critical component costs
- Industry mobility roadblocks
Role of Competitive Analysis in Business
In a specific market, a company’s performance is undeniably determined by its core values and expertise. Along these lines, a meticulous analysis of the front running performers should divulge the reasons for their consistently favorable track records. This analysis in concurrence with a thorough study of the unsuccessful companies and the rationale behind their failures should furnish helpful inputs about the skills and assets that are obligatory to garner success in a particular industry or market segment.
An effective business fabricates a marketing strategy by utilizing the competitive analytics and reports. The marketing tactics should be devised with an aim to produce unique skills and assets which the competitors are bereft of. This will result in a distinctive and everlasting competitive advantage for your business.
A competitive strength grid that consolidates the primary skills and assets of the company can be constructed through various methods. The basic approach towards designing the grid entails the enumeration of company skills and assets for analytical purposes. Visit relevant online available resources to further understand the technique of creation of a competitive strength grid.
Classification of Competitive Strategies
Once you have defined your company’s basic skills and assets essential to succeed and sustain in the business and have characterized your perceptible competitive advantage, communicating them in a tactical way is imperative for attracting and defending your market shares. Competitive strategies are usually categorized by the following five domains of expertise:
- Product
- Distribution
- Pricing
- Promotion
- Advertising
Conclusion
Strategies mainly center on setting up the entry point in the product life cycle alongside a sustainable competitive advantage. This implies effectively formulating the crucial elements that will differentiate your products and services from your competitors and strategic groups. Developing a clear-cut competitive advantage will allow you to comprehend the modus operand to not only execute your strategies efficiently but also achieve gainful returns.
