3 Things Startups Need To Know About Competitor Analysis
No business operates alone in a market. Operating alone means that you’re some kind of anomaly and that you invent a new market, which is equal to a miracle. The market is the market, and the market alone will decide whether you’re better or worse than your competitors. As a startup, you want to know who else is providing the service that you plan to offer in the market. There is a lot more than meets the eye that startups need to know about competitor analysis.
With competition analysis, you can predict what will be your competitor’s reaction when you decide to enter the market. You will also predict how your customers will perceive your product compared to the competitors. You can utilize your competitors’ weaknesses to gain more customers for your startup. You’ll find out what worked for them to help you think more innovatively while modeling your new strategy. Knowing as much as you can for your competition will be crucial to the success of your business.
You’re not alone in the market
When you’ll want to research your competitors, the first thing you should do is recognizing who they are. What sorts of products or services do they offer and in which segments of the market they sell these services? In addition, as a startup, you must be aware of the hurdles that can obstruct your market entry. Each of your competitors has its share in the market. And your target market allows few competitors at a time. As a startup, your job is to determine the best period for entering the market and the time period that it takes for your business to prove itself in the market. That’s how you’ll know the size of profit that your startup will get before and after a competitor enters the market.
Competitor’s strengths and weaknesses
The next thing that a startup must do is recognizing competitors’ strengths and weaknesses. Having that data allows you to attack their strengths with a better offer on the market. And you’ll know how to avoid the weaknesses that they have in their business operations. If you’re entering a relatively new market that doesn’t have any competition, then you’re in pole position in front of your potential competitors. The strategy is of major importance here if you want your startup to expand in the new market.
You need to analyze what actions your business should undertake to create barriers of entry for your eventual competitors. Some of these barriers involve high cost of investment, competitively priced market, business setup period and technology, and innovation. There is also a lack of staff quality, consumer’s resistance, patents, trademarks, & market and industry reputation.
Analyzing and understanding your competition
The entire management of your startup should be aware of the rival’s strengths and weaknesses. You need to find out their costs structure, management, and organizational systems, mission and objectives, size, production methods, and sales performance.
Your competitor’s analysis should incorporate the pricing history of the competitor’s products and the changes that caused a modification in pricing strategies. Also, when do your competitors perform their promotional activities? It’s all about timing and its effect, and the timing alters your competitor’s perception of your target audience.
We suppose that your competitors also have a concept behind their product promotional campaigns. This includes product packaging, sales promotions, and PR events too. You need to collect everything that there is to know about their advertisement campaigns and analyze how to improve it.
When conducting your startup’s competitor analysis and comparison, you need to find out their products and the services that they offer, as well as the market segment they operate in. It is crucial for your startup to be able to assess competitors’ strengths and weaknesses and compare them with yours. By doing this, you can learn how important your target market actually is to your competitors.
To know about competitor analysis means analyzing your competitors’ strengths and weaknesses as a crucial step for creating your startup’s advantage on the market. Finding the reason why a competitor is struggling in the market will prevent your startup from making the same mistake. On the other hand, finding your competitor’s strong side will help you understand what it takes to be successful in the market. And most importantly, why there’s a space for one more venture to enter the market.
Still, don’t know how to start with competitor analysis? Check out our 6-step approach for more insights.
Thank you for your attention. If you are an entrepreneur that wants to start a business or own a company that wants to expand, wants to successfully identify trends and competitors and better understand his clients but still not sure where to begin, BizzBee is here to guide you through the steps that will help you differentiate from your competition. Our expertise is in working with Entrepreneurs and Start-ups and we can guide you throughout the entire process.
This article was originally published on BizzBee Blog.