Analyzing your competitors

When running a business, it is obvious why it is necessary to consider your customers. Also, we all think of employees, suppliers, or shareholders while making decisions. However, many companies (more frequently, small businesses) forget to consider the competition, which can be a fatal mistake. But how do you take competition into account, and what exactly is the point?

First of all, it is essential to remember that not all competitors affect us similarly. Depending on how they affect us, we can distinguish three different types.

Types of competitors

Direct competitors

They offer the same or a very similar type of product. For example, if we were the owners of a cinema, the direct competitors would be other cinemas in the area. For customers, they are interchangeable so they will choose one or the other depending on quality, price, accessibility, etc.

Substitute competitors

These offer a similar product or service but have a different type of business. For example, a person who wants to go to the cinema would probably not be satisfied watching the same film on a streaming platform. However, if that person is only interested in the movie, they will probably not care whether they watch it in the cinema or their living room.

Available spend competitors

Finally, available-spend competitors have entirely different products or services, but customers come to them for similar reasons. Friends who do not know what to do may go to the cinema, but they could also go bowling or to the theatre. A couple planning a weekend outing might go to the cinema, but they could also go to an aquarium or hiking.

How to deal with your competitors

You must ask yourself the following question: Why do customers come to your business? Why do they choose your business from the available offer? Also, more importantly, why don’t they?

At first, it may seem easy to deal with direct competitors. They are easy to identify, and it is enough to offer a quality service at a competitive price, right? However, the truth is that it is not that simple. It is more important to differentiate yourself from others, and for that, you have to know them. What kind of customers goes to your competitors? What is their market share? Moreover, what are their prices?

It is vital to have all this information when considering a strategy. Otherwise, we may waste resources on poorly targeted advertising campaigns or try to compete by lowering prices when that was not the problem in the first place.

It is essential to include our indirect competitors in this analysis as well. It is often easy to overlook them and not realize their effect on us until the adverse effects are evident. We are usually focused on our immediate environment and cannot see the bigger picture. For this reason, it may be advisable to seek professional help with the tools and perspective that we lack. 

Finally

Analyzing the competition can give you information about the market, help you notice new opportunities, and perceive weaknesses that would otherwise go unnoticed. Therefore, it is always advisable to carry out this type of analysis regularly to ensure the good health of our business. Contact us to learn more about the possibilities.