Appreciating your competition
We live in a very competitive world. Every for-profit business and non-profit organization face competition. Every individual faces competition. Competitors serve a valuable purpose in building a thriving business or non-profit. They help to modify and improve our services and products by serving as a benchmark. The secret then to surviving and thriving in your industry is to conduct a Competitive Analysis.
A Competitive Analysis analyzes the competitive environment in which a business operates (or wishes to perform). It is a process that examines strengths and weaknesses of competitors, and of your company. You also analyze the demographics and desires of your customers. Your organization creates strategies that can improve its position in the marketplace while developing barriers that prevent others from eroding that position. Established businesses routinely conduct this analysis. But, every type of organization (a for-profit business and a nonprofit organization) should undertake a competitive analysis too.
Competitive Analysis includes the following components:
Examining competition
With whom do you compete? Consider all known competitors. Don’t be too narrow or too broad. There might also be potential market entrants that you haven’t yet thought about, so consider even potential competitors to your market space.
Analyzing competitor strengths and weaknesses
Business owners or leaders of non-profit organizations often overstate the value or uniqueness of the product or service they offer. The features of a service or product play a relatively small part in the entire competitive landscape. From a customer’s perspective, there are numerous things to consider (e.g., price, service, location, etc.). Organizations with sufficient financial reserves, dedicated employees, and other operational benefits often trump unique attributes that arise from a service or product. In examining your competition, it is important to answer two questions. What advantages do your competitors possess compared to you? What are their weaknesses? Understand the reasons for their success and their potential vulnerabilities. What do customers buy from them? What causes their customer turnover?
Analyzing internal strengths and weaknesses
Just as you put your competition under the microscope, you need to do the same for your organization or business. While this can be a difficult exercise, remain vigilant, and objective. No organization, business, or person is perfect. What areas illustrate your strengths? Marketing? Finance? Operations? Sales? Management? Product? What about your weaknesses? Marketing? Finance? Operations? Sales? Management? Product? Knowing these hard, cold facts allows you to develop action plans to continue to bolster your strengths and improve upon your weaknesses.
Examining customer needs and wants
Customers are the lifeblood of any business. Why do customers buy from you? What do they need? Understanding the answers to these questions will allow you to have sustained success.
Overcoming barriers to competition
Every business (or a nonprofit organization) faces barriers to entry in a market or industry. These challenges might be high start-up costs, patents, extensive industry knowledge, regulation, or some other obstacle. The newer the industry, the fewer barriers that exist. You must realistically examine what is required to overcome your industry’s barriers.
Wrapping it all up
Once you’ve examined all of these critical factors, it is time to build strategic plans to improve your position in the market. A good strategic plan considers these issues and more. It examines all of an organization’s critical operations and lays out a realistic path to success. Of course, no plan by itself, or even a thorough competitive analysis, will be responsible for the success – it’s how effective the implementation is that determines the ultimate fate of your business or organization.
