Competitive analysis is something that’s often the farthest in the minds of small merchants. In fact, many of them don’t even have an idea what it is. In a nutshell, it’s having knowledge of the firm’s business strategy and how it matches up to the competition.
For small businesses, creating a competitive analysis need not be time-consuming or overly elaborate. Identifying basic things about the competition can help a small firm focus on their product/service planning, marketing, and sales in areas that can give the company an edge over the competition.
The following are some of the basic questions that small merchants need to ask in formulating a competitive analysis for their respective firms:
Competitive analysis question 1: Who’s the competitor?
This should be easy to answer for most business owners. In identifying competition, business owners should not only focus on direct competitors but also their indirect competitors. For example, a laptop maker should list tablet manufacturers as indirect competitors because these firms are going after the same type of customer.
Question 2: Which of the company’s products/service are different from those of the competitors?
List down all the products and services of the firm and then ask- in what way are these different from those offered by the competition? Does the competition offer something that the firm doesn’t? Business owners should also recognize customer satisfaction or dissatisfaction by checking their social media sites. Or find out if the competition has been getting rave reviews online.
Question 3: What are the threats posed by the competition to the business?
This entails identification of the strengths and weaknesses of the competition. After doing so, the business owner can then compare these to his/her own firm’s strengths and weaknesses. This is important as the business owner will learn about things that can affect the operations of the firm.