Knowing your competition is as important as knowing your customers.
Just because you don’t know them, doesn’t mean they don’t know you. If you don’t understand your competitors they will eventually outsmart you.
This article provides a competitive market definition and how to use it to your advantage.
Competitive Market Definition
A competitive market, in a nutshell, is a market with similar businesses operating in it that create competition for each other. This can be broken down into two categories:
Your direct competitors are the businesses that deliver the same products in a similar way to the same customers as you.
For example, shoe shops in the same shopping complex are direct competitors. Their point of difference is mostly limited to price, service and quality.
These competitors provide the same product but deliver it differently. This could be online marketing services competing with online marketing courses.
In this case, the focus is on whether customers should learn to do their own marketing or outsource the service. The end result is a marketing service, the means of achieving it are different.
How it Affects Business
Initially, it might seem like having a lot of competition is bad for your business, but there are pros and cons to being in a competitive market.
Competition is the driving force behind innovation. It pushes a team to think creatively about solutions and improvements to products and business processes.
While there is the pressure to keep ahead of your competition, you can also use them to your advantage.
How to Leverage Your Competition
Think of your competitors as a test dummy for your own business. Analyse what they do, whether it works, how they achieved it and what problems they have faced.
You can also use your competitors to understand your own target audience. If your competition has a larger market share you can examine what resonates with their audience to create your own customer personas.
This can be particularly helpful when creating a content marketing strategy. Your competitor’s social media is a public and transparent platform that you can audit to decide what type of content works best for your customers.
How To Do a Competitive Analysis
Competition is one of the biggest threats a business faces. Competitor research is crucial if you want to survive and learn from your competition.
A competitive analysis is when you apply the same amount of thought and strategy to your competitors as you have to your own business.
Know Who They Are
Your competitors are the businesses that have the potential to win over your customers. The easiest way to find them is to search online.
It’s important to count the small competitors as well as the big ones and keep an eye out for market disruption.
Do a Competitor SWOT and PEST Analysis
Just the same as you have done for your own business, conducting a SWOT and PEST analysis will help you anticipate how your competition will respond to external changes.
Using this information to predict your competition’s next move sets you up to combat that move in a way that places you ahead of them.
Apply Your Findings
The most important step in this process is to apply your findings to your business. Take what has worked for your competition and apply it to your own strategy.
Be prepared for how your competitor will respond and how you can counter their response to work in your favour.
You can find more information about the competitive market definition in the rest of our blog.