When you understand the leadership positioning and instant association it’s time to establish your competitive advantage.  To do this you need to get real and determine what your competitors are doing in the same market place and what their competitive strengths and weaknesses are.

Step 1: Identify your Main Competitors and compile questions when undertaking competitor analysis.

How do you stack up against your competition?  You must first know of and understand your main competitors? Secondly, how effective are your competitors in the market place and what is your competitive standing in your target markets?  Once you can answer these three things about your main competitors, you can then determine how to compete better.

1. Who are your competitors?  List five to ten who do the best job of attracting the customers you want to attract.
2. What threats do your competitors pose?
3. What are the profiles of your competitors?
4. What are the objectives of your competitors?
5. What strategies are your competitors pursuing and how successful are these strategies?
6. What are the strengths and weaknesses of your competitors?
7. How do their prices compare to yours?
8. How are they doing overall in the market share?
9. How do you plan to compete with your competitors?
10. Do your competitors offer better quality products and/or services?
11. How are you uniquely suited to compete with your competitors?
12. What customer needs and preferences are you competing to meet?
13. What are the similarities and differences between your competitors’ products and/or services and yours?
14. How are your competitors likely to respond to any changes in the way you do business?

You can probably think of many more pieces of information about your competitors that would be useful. However, an important challenge in competitor analysis is working out how to obtain competitor information that is reliable, up-to-date and available legally!

Step 2: Evaluate your competitors’ positioning as well as their major strengths and weaknesses.

Put this on a grid form and evaluate on a consistent basis, whatever that may be for your company. If you have an annual strategic plan, then do this annually. If you are analyzing data quarterly, then evaluate quarterly.

Step 3: Determine your own competitive effectiveness and decide where you rank among your competitors listed in Step 1.

When you evaluate your own business, be brutally honest about your weaknesses and be sure your strengths are perceived as strengths by the marketplace.  You may be surprised how much more insightful your evaluation of your business will fall after you do an inside reality check on your business.

To be a successful company, your inside reality MUST match the outside perception of your potential customers.

Competitive Analysis is an important part of your overall strategic planning process.   Why should you bother to analyze competitors?  Some businesses think it is best to ignore the competition and get on with their own plans of running their company. Other companies become obsessed with tracking the actions of competitors (often using underhand or illegal methods). Also many businesses are happy simply to track the competition, copying their moves and reacting to changes.

Competitor analysis has several important roles in your overall strategic planning:
1. Helps Owners and managers understand their competitive advantages & disadvantages relative to competitors.
2. Helps generate a true understanding of competitors’ past, present (and most importantly) future strategies.
3. Provides an informed basis to develop competitive strategies to achieve competitive advantage for future growth.
4. Helps forecast the returns that may be made from future investments (i.e. how will competitors respond to a new product or pricing strategy?

When I first went into business, it was important to me as an Entrepreneur who founded EXHIB-IT! Tradeshow Marketing Experts and as the CEO, to differentiate our business from the competition.  In the beginning it was easy, but as years have passed and we have developed a brand identity and won many national awards, I have watched competitors go after the same awards, say the same things and copy our innovation.  A very dear business friend of mine once said, “It is difficult to stay the Innovator as the companies that are not or are copying have a competitive edge.”  It took me a long time to realize what this meant.  What he was saying was that being the innovator is great in the mindset of our potential clients, but our competition can sit back and watch how we innovate and see what works and what does not and then copy what we do without taking the risk.  Be that as it may, I still will always look to be the innovator, even though being a risk taker can be stressful at times.

My next blog will focus on the last component listed in my original blog titled What is Marketing Strategy and Why is it Important? Which is Identify Your Key Marketing Indicators and Track your Marketing Strategy.