A competitive analysis is a strategic approach incorporated to evaluate outside competitors. The analysis aims to distinguish weaknesses and strengths that an organization’s competitors may have, and take that information to improve efforts within the organization. A successful analysis will first acquire crucial information from competitors and then use the information to predict how the competitors will act under various circumstances.
A comprehensive exploration and analysis of your competitors is one of the most important elements of a comprehensive market analysis. A competitive analysis empowers organizations to evaluate its competitors’ strengths and weaknesses in its marketplace and apply strategies to enhance its competitive advantage.
To accomplish and retain a competitive advantage in reaching and selling to a target market, firms need comprehensive knowledge of its competition. An in-depth competitive analysis will provide companies:
- An awareness of how its current and potential customers rate competitors.
- A favorable recognitions of its competitions’ strengths and weaknesses.
- A system to develop effective competitive strategies in its target market.
A competitive analysis can also be utilized when seeking entry into a new market. By performing a competitive analysis for an unknown environment, organizations can model new businesses that have many features that competitors may offer, as well as unique ones that may steer customers away from their usual company.