Competitive analysis is the hunt of the companies in a given market niche that are competing with your company’s products or services for market share. Competitor analysis is an appraisal of strengths and weaknesses in marketing and strategic management potential competitors. The importance of competitor analysis is as follows:
Importance of competitor analysis
- Competitive analysis helps in identifying strengths like patent, strong customer loyalty, brand etc. And by understanding these advantages, the company can sharpen its core strengths. This includes the study of current strategies and competition’s future goals.
- In comparison to its competitors it helps in identifying weaknesses like no bulk discounts, high labor costs, less bargaining with seller. Using this, a company could work on these weak areas and improve.
- Competitive analysis provides a view of the business of how to get an advantage over other companies based on highlighted circumstances.
It helps in developing strategies and attains competitive advantage
- Competitive analysis gives the awareness of threats and managing tasks. Threats mainly arise from the competitors as they start offering new products. The development of a new product is harmful when the competitor’s product is identical to the product offered by the company. Competitive analysis is same as SWOT analysis in which a company looks at its own strengths, weaknesses, opportunities and threats.
- It determines the purchasers; illustrates what they are expecting from the delivery of your products or services to be successful.
- Competitive analysis helps you in understanding where your organization is performing well and where it can improve.
- A competitor analysis is important because it provides whether a competitor is satisfied with the profit and market position and thus how to retain its present strategy.
- Companies should understand competitor objective as it influence one’s own strategic decision. It helps in detailed understanding of the competitor’s past, current and future marketing plans and strategies.
- It helps in better understanding the work of your competitors, customer offers. This helps your company’s strategic planning.
- It gives the information about the functionality and content which they have not considered.
- Competitor analysis is very important in Search Engine Optimization process.
- It also helps in estimating the returns that may be made from future investments.
- Helps in the recognition of competitive advantages and disadvantages relative to competitors.
- It determines the success factors in your industry.
- It helps in understanding competitor’s strategies.