Competitors refer to those who are in the same business or industry as you. Because they’re operating within the same niche and target market, some of your target customers might go to their business instead of yours. In essence, it can be easy to think that these competitors are a hindrance to your success, but that’s not the only perspective you should consider.
From a healthier and more positive standpoint, your competitors can actually be instrumental in helping your business thrive and succeed. By understanding the competition, you will be able to become aware of the following factors that can drive your business forward:
1. Allows You To Understand The Customer’s Expectations
If your business is new within a particular niche or industry, you might not have any idea of what your customers’ expectations are. One way to figure out what your customers want is by analyzing your competition, particularly businesses that have been in the industry longer than you have.
Here are examples of how you can better understand your customer’s expectations through your competitors:
- By studying what your competitors are offering, you will know which products or services are effectively selling for that particular target market
- Knowing what services your competitors offer can help you come up with a better one that you can market to your clientele
- Being familiar with the price range of your competitors’ products can help you gauge how much you should price your own products and services
2. Keeps You Ahead Of The Competition
Believe it or not, studying the competition can also keep you ahead of it. It’s not only about exploring what the competition is up to at the moment. It’s also about exploring what they may be doing in the future. A thorough study of your competitors can keep you on track with their plans for the future, as well as yours. Taking heed of their steps will allow you to come up with the right strategies that can help you get one step ahead of them.
Here are some other ways you can stay on top of the competition:
- You’ll learn which customers your competitors are going to put more effort in
- You’ll learn how much effort your competitors are going to exert
3. Reduces The Need For Trial And Error
Trial and error in business can sometimes be inevitable as business success often has a lot to do with experimentation in terms of strategizing. But while this is necessary for companies to come up with the best plans and the best solutions, it can also be reduced. You can save on time and money when your business doesn’t frequently undergo this process. This is achieved by studying your business’ competitors.
Here are ways you can reduce the need for trial and error:
- Study which strategies your competition is using that’s working (or not working) for your common audience
- Study the ideas from competing companies, as well as how you can apply and adapt these to your business
- Compare which of your strategies and that of your competitors are working in order to come up with a more effective approach
4. Gives You Better Insight About Your Flaws
It pays to know your flaws so you can have a higher chance of success. When you’re able to analyze the success of your competitors, your eyes might also be opened to the techniques you might be doing wrong. You may be wasting time on strategies that aren’t effective for your niche, or the target market that you’re trying to penetrate. When you know your flaws early on, you have a brand-new level of awareness that can lead to your company’s improvement.
For example:
- Your competitor may have been applying strategies that are better in delivering excellent customer service and establishing customer relationships
- Your competitor’s products and services may be of better quality than yours
When these two problems are addressed, you’re allowing your business to be more productive, as well as competitive.
5. It Helps You Penetrate A More Specific Niche
In a specific target market, there are many subgroups. While you may think that you’re competent in reaching out to everyone in your current market, this might not be the case. Especially for starters, your business should be able to identify a specific niche or subgroup of individuals to penetrate. You can get this kind of insight by studying how your competitors do the same.
Here are examples of how you can find a specific niche through understanding your competition:
- Studying repeat and first-time customers
- Identifying frequent and occasional customers
- Analyzing the particular subgroups that your competitor isn’t serving
- Discovering opportunities, needs or problems in specific subgroups that your competitor aren’t able to address or answer
6. It Allows You To Identify Your Specific Unique Selling Points (USPs)
Every business has its unique selling points. But these can be very difficult to identify, especially when the competition starts to get stiff. You may make the mistake of thinking that your manner of selling and penetrating markets should be the same as that of your competitors. If you dig deeper into analyzing the movement and activities of your competitors, you’ll realize that there are little differences here and there. Your unique selling points are what’s going to set you apart from all other businesses within the competition.
7. It Helps You Learn More About Your Customers
Knowledge about your customer’s profile is vital in creating the best marketing plans for your business. It’s not just about knowing your customers per se. It’s about studying specific matters, such as the following:
- Spending habits
- Preferences
- Lifestyles
- Problems
When you know these factors, you can leverage your marketing strategies to address this profile of your customers. The observations that you can gain from the above mentioned are some of those that you can quickly and uniquely find through studying your competitors.
8. It Enables You To Learn By Experience
Getting to know more of your competitors enables you to learn from their failures and successes. It’s like having concrete examples from which you can learn. From the information that you can gather through this, you can significantly improve the overall customer service of your business.
Examples of matters relating to success and failure that you can study on include:
- Learning from the practices and techniques your competitors have employed, which led to their success
- Avoiding the mistakes that your competitors have made
9. Helps You Gain More Customers
When you’re moving around the same target audience with numerous other businesses, it’s expected that the market share is going to be divided. Your goal, therefore, is to ensure that you’ll receive a majority of the market share. Otherwise, you’ll cease to be effective in standing out against the competition. It pays, therefore, to study and talk to the customers of your competitors.
Matters that you can gain insight into include:
- Reasons why certain customers choose to purchase from your competitors
- How your competitors have found their current customers
- Reasons why customers continue to do business with your competitors
10. It Helps Industries Boost Innovation
When there is competition right next to you, all the more your business becomes pressured (or motivated) to innovate. You can either create more efficient processes within your industry or produce better and more competitive products. Or you learn how to use technology, digital marketing, and social media to your advantage. Because you have a direct competitor, you’re consciously aware that you have to double your efforts. This also creates a culture of hard-working individuals in your company.
11. It Improves Customer Loyalty
When you study your competitors, you also learn why and how they’ve made such a loyal following stay with them. First, it begins with understanding the level of loyalty that particular customers have for your competitor. Of course, not all customers are the same in that aspect. Some are die-hard brand supporters while others are more open to trying out new options once in a while.
Through studying customer loyalty, you can come up with two strategies:
- For non-loyal customers, you can penetrate that market by convincing them to start patronizing your products and your business instead
- For the die-hard loyal customers of your competitors, you can study why and how they’re so unwilling to change
Through this, you can learn concrete examples that you can apply to your own business: how your competitor does it, and if you can do it better, which can help you build a loyal following as well.
Conclusion In a nutshell, understanding your competition helps your own business find its competitive advantage. It enables you to distinguish your edge against all the other companies surrounding you that may also be selling the same products and services. As businesses strive to improve, a part of the strategies for improvement should also include studying and understanding the profile of their competing companies. It’s like learning by example. Understanding your competition means that you’re learning from both their successes and their failures, then doing what you can to follow an ever better lead for success.