Why is competitor analysis so important?

We all know that it’s important to keep tabs on our key competitors. But why? And how should we carry out a competitor analysis?

It’s not because we wish to copy them – they exist in their space and you exist in yours. It’s generally a good idea to stick to what you specialise in (as long as there is a business case for it), and a bad idea to step outside of this, regardless of how much demand there might be in a new area.

What you really need to know is whether or not your ‘positioning’ is the right one for your company and whether or not it is occupied by any of your competitors.

Sometimes competitors are useful to us.

Like the row of estate agents or recruitment companies all operating side by side, competitors can co-exist successfully, with clients/customers benefitting from the cluster effect. Competitors can also be useful for blazing a trail that opens up whole new markets that previously didn’t exist. Most markets have at least 2 major players and a small group of significant others. This is inevitable in the longer term, and it gives us important clues as to which markets are worth entering and at what time.

What is dangerous however is if competitors share the same key claim. The most important thing, therefore, is to understand and develop your positioning. Make your competitors irrelevant and see the benefits.

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