Before writing the competitive analysis, first identify both direct and indirect competitors. You can locate listings of local businesses, search the Internet for online competition, and seek out mail order businesses that might offer competition. However, the best way to create a strong competitive analysis is to visit your competitors, study their prices, understand their customer base, and uncover the services they offer.
Talk to other customers and determine from friends and neighbors their likes and dislikes about these competitors. Engage vendors and seek out information in business journals. Explore online -- be a test customer and order a product to get a sense of the company's customer service, examine return policies, and determine the company's protocol when problems occur.
Gathering a solid base of information is the first step to creating a strong competitive analysis. The next step is analyzing the information and using it to your advantage. List the strengths and weaknesses of each competitor. Then look for areas where you cannot compete and areas where you can provide something that they cannot. For example, an online clothing retailer can offer a much larger selection than an in-store retailer with limited space because they do not carry a full inventory. However, in-store customers can try clothes on, and by offering the latest in luxurious dressing rooms or a monthly fashion show where customers can see the latest clothes up close and personal, you can differentiate yourself from the online retailer.
To make your competitive analysis stand out, transfer the weaknesses of your competitors into potential strengths for your business. Narrow your list to those that will give you the competitive edge. They must be:
Designed to meet a specific need or solve a problem
Appealing to a select segment of the market
Paint a vivid picture of your strategy to gain a competitive edge. Be creative. Don't be afraid to think outside the box. If you've done your homework, your competitive edge will give your business a solid foundation in the market.
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