For your business to grow, constant learning and adjustments are necessary. What are among the most important things you should be learning for your business to remain competitive?
It will be none other than your competitors. Knowing who they are will help you distinguish your business from theirs and to communicate with your target market.
What should you know about your competitors and why is it important?
Here are 5 reasons why you need to know about your competitors:
1. Helps You Identify the Type of Competitors You Have
Your competitor will be any business that deters a potential customer from choosing you. They often take two primary forms, they could either be your direct competitor or indirect competitor.
Direct competitors refer to businesses that have similar products and services as yours. For instance, if you’re a beauty spa business owner, your direct competitor will be other beauty spa business owners.
Having information about your direct competitors facilitates your ability to remain ahead of them.
Your indirect competitors, on the other hand, refers to businesses that do not provide the same type of service but fulfill the same need alternatively.
For instance, from the spa example, your indirect competitors will be businesses offering facial treatments in their threading centers, nail salons, or hair salons offering hair treatment, etc.
Obtaining information about your indirect competitors helps you draw out more effective ways to be at the forefront of your target market.
All in all, knowing the type of competitors you are having and why are they your competitors is crucial for understanding which marketing strategies and messaging are the most effective for your business.
2. Reveals The Positioning of Their Business [restrict]
As you are already aware, you can offer the same products and services in a number of different ways, through various combinations of circumstances.
People have different combinations of circumstances that they find most important to them. This is why many businesses offering the same products and services exist.
The combination of circumstances under which businesses present their services is regarded as the positioning of a particular business.
So why is it necessary for you to know about your competitors positioning?
Gaining information about your competitor’s positioning enables you to distinguish your business from theirs further helping you to make your business unique.
Moreover, this would allow customers to compare businesses, and understand how the differences between businesses apply to them.
If your business is having a similar positioning as your competitor’s, it is perfectly acceptable. You can still have an advantage over your competitor’s by knowing how they operate within this context.
This way, you will find out about what went well and what did not, helping you to identify the effective measures to be taken for your business.
So how are your competitors positioning themselves? Are they providing a luxury service, or are their services catered to the cost-conscious?
Do they appeal to a particular gender, age group or a niche market? Are their services and products environmentally friendly?
The more you know about your competitors’ positioning, the stronger you can make yours.
3. Gives You Information About Their Pricing
There are many reasons why you should know about your competitor’s pricing.
The first is so that you are able to set your pricing accordingly with your target market, in line with what they are willing to pay.
Second, you will be able to learn about new pricing models that are more appealing to customers from your competitors’ pricing strategies.
Getting to know your competitors’ pricing does not always mean matching or beating theirs.
If your pricing is lower than your competitors, you will have to convince your prospective buyers that your quality is equally as good as theirs.
However, if your pricing is higher than your competitors, you will have to be able to convey the added value that comes at this price. You could still lose your loyal customer to a competitor due to lower pricing. So, make sure you give people a reason to pay more.
The point of knowing your customers’ pricing is to understand where your pricing falls in relation to your competitors in the greater market. It helps you to determine the pricing that is right for your business, as well as to obtain and retain your customers with such pricing.
(For tips on how to provide great customer service, click here).
4. Gain Insight of Your Competitors’ Strengths
What is the ultimate purpose of wanting to beat your competitors? To provide your customers with the best products and services, of course.
And due to this reason, it is very important for you to know about your competitors’ strengths.
What do your competitors’ customers like about them? There are certain things customers really like and expect to have. You may want to offer those too, or perhaps something similar or if possible, better.
You may have your own service or product that you would like to offer your customers, but by including something they would really like, may actually help you win them over.
However, you will not always be able to match or exceed everything your competitors offer to their customers. At this point, it is necessary to note that putting in any more time and effort into this will only hinder the progress of your business.
Your business will not be able to meet every need, and that’s perfectly alright. At least, you know where you would rather be spending your time and effort on.
5. Allows You to Learn from Their Weaknesses
Often times we may not be aware of our strengths, because they come naturally. However, learning the weaknesses of your competitors helps you highlight the strengths of your business.
Conversely, it may sometimes even reveal an area of importance that you had not thought of. You could include this as a new strength for your business.
Additionally, knowing the gaps in your industry created by your competitors provides opportunities for you to fill them. In other cases, it could be a common problem in your industry, community or target market.
Therefore, learning about how your competitors faced those challenges might give you some insight on how to handle them better or to know what is best avoided.
Actionable Takeaway:
Utilise multiples resources to get more information about your competitors. For instance, reading online reviews, talking to your customers, going as a customer yourself, as well as communicating with other businesses.
However, while you are it, never forget to always put your customers first. This is because outdoing your competitors in certain areas may not always mean it is in the best interest of your customers.
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