Introduction
Market and competitor analysis is an important tool for any business to understand the current situation in the market, identify the strengths and weaknesses of competitors, and identify opportunities for their own development. In this article, we will examine why competitive analysis is necessary, when and how often it is carried out, and the methods that can be used to perform it.
Why do we need to analyze the work of competitors?
Analysis of competitors allows:
- Gather information about the niche in generalUnderstanding the overall picture of the market helps identify trends and opportunities for growth.
- Learn about the strengths and weaknesses of competitorsThis allows you to identify the unique advantages of your business and avoid the mistakes of competitors.
- Stay away from competitorsBased on the data obtained, you can develop a strategy that will help your business stand out from the competition.
- Identify Competitor WeaknessesThese weaknesses can be used to improve your business.
When and how often should a competitive analysis be performed?
Competitive analysis is carried out in several cases:
- Before starting a new businessAnalysis helps to form a general idea of the niche and launch prospects.
- Finding ideas for business developmentAnalysis allows you to see new ways of development by studying what competitors are doing.
- To maintain the existing market positionCollecting data on competitors helps you understand where the industry is going and what you can do to improve your situation.
Surface analysis of competitors is usually carried out once every 3 months, a deeper analysis is carried out every 6-12 months.
Analysis of Competitor Activities
There are several methods of analyzing competitors:
- SWOT analysisUsed to identify key competitive and business opportunities, this method helps to maintain an objective approach and involves examining four indicators: strengths, weaknesses, opportunities and threats.
- Porter’s methodIt explores five parameters of a business: the influence of suppliers, the needs of customers, the influence of direct competitors, the risk of new competitors and the likelihood of substitutes.
- SPACE analysisIt is used to assess the current position of the business on four indicators: a full assessment of the financial position of the organization, competitive advantages of the business, an assessment of the business potential and the stability of the industry.
Examples and analysis
Consider an example of market and competitor analysis on the example of an electronics company.
SWOT analysis:
- Strengths: High quality products, wide range, loyal customer base.
- WeaknessesHigh cost of products, lack of unique offers.
- OpportunitiesIncrease in demand for electronics, the development of online sales.
- ThreatsThe emergence of new competitors, changing consumer preferences.
Porter’s method:
- Impact of suppliersThere are few suppliers, which makes it difficult to enter the market.
- Customer needsCustomers prefer high quality and wide range.
- The influence of direct competitorsCompetitors offer similar products at lower prices.
- The risk of new competitorsHigh risk due to ease of entry into the market.
- Probability of the appearance of substitutesThere is a high probability of new technologies.
SPACE analysis:
- Financial situation: Stable, but needs improvement.
- The competitive advantages: High quality products.
- Business capacityHigh, due to the growing demand for electronics.
- Stability of the industryHigh, but subject to change.
Conclusion
Regular analysis of the market and competitors helps you understand market movements and make important decisions for business development. By studying the activities of competitors, you can make decisions about launching new products, changing prices, new advertising campaigns, and much more.
Thus, market and competitor analysis is an integral part of a successful business, allowing not only to understand the current situation, but also to anticipate future changes and opportunities for growth.
