Why you do competitive analysis

When you run a business you have to be aware that you are going to have competition that offers similar products to the same basic group of consumers. This is a fact of life, but what you do about that fact is up to you. If you want to grow, succeed, and make money, which is likely why you are in business, you have to understand your competition, know their strengths, their weaknesses, and be able to outperform them. You can't outperform them if you do not understand them, and this is where competitive analysis comes into play.

Before you can do a competitive analysis you have to identify who your competitors are. Your competitors are basically any organization (local or otherwise, depending on how you sell your product), that offers the same product or service.It also includes those offering similar products and services. However, you competition is greater than that as well, it also needs to include organizations that could offer the same or similar services in the future, and those who could make your product or service obsolete.

Once you have a clear idea of who your competition is, it is time to do a competitive analysis. In order to do this you are going to collect specific data to help you identify how they think, what their strengths are, what weaknesses they have. You will want to find their vulnerabilities, and what you can do to expose those to your market.

In other words, collect data including financials, product information, leadership information and more and analyze it so that you understand and know your competition inside and out. This may require you to do some reverse engineering of their products, take a look at their public records, their business plan, financials, etc. It can take time, effort, and money to collect the data, but this data will be a crucial part of your marketing plan.

When you learn to identify what makes your competitors successful, you can undermine those things, employ the techniques yourself, and choose a marketing plan that will highlight your strengths and you competitor's weaknesses, thus giving you a larger portion of the market share.
Knowing where you stand in the market and what your marketing plan has done for you, and more importantly the impact your marketing campaigns has had on your competition will help you determine what you need to change, improve on, etc. to be more successful. The more you know the more you can grow, just remember, do not waste your time or effort collecting data you won't put to use. Have very specific ideas of what you want to analyze, and how knowing these things can help your company. For example, determining how your ad campaign improved your revenues, and how that same campaign impacted a competitor is a great goal.

You can't have a competitive edge if you do not know where your competition stands, so do an competitive analysis in order to better understand, and thus be able to outperform your competition.