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Entrepreneurship
Direct Competitors: All You Need to Know
2023-04-24
Understanding your direct competitors is an essential part of running a business. Competitor research is necessary when you plan your business, and when you run it.
No matter how big your market is or how unique your business idea may be, there will always be other businesses competing for your customers. The better you understand them and their operations, the more effectively you’ll be able to win over a larger market share. This guide explores some of the fundamentals of researching your direct competitors.
What are Direct Competitors?
A direct competitor is any business that offers the same type of product or service that your business offers. What makes another business a direct competitor is that they compete for the same target customers as you.
Understanding who your direct competitors are is essential for guiding your marketing, sales, and product strategies. The better you know the competition, the more effectively you’ll be able to find ways to draw your target customers away from your competitors and towards your business.
Why is Competitor Research So Important?
Competitor analysis is an essential part of starting and running a business. By researching your competitors, you will be able to determine things like:
- Their unique value propositions
- Their marketing tactics
- How they’re acquiring customers
- What are their strengths and weaknesses are
The better you understand this, the better you can strategically position your business in the market.
Understanding your competitors will help you determine your unique value proposition It can help you create a marketing strategy that plays on your competitors' weaknesses. It can also help you find gaps in the market for new products, features, services, or customer demands.
And when you look at what your direct competitors do well, you can make sure your business does the same to keep up. This can help you find areas if your business to optimize and improve.
Competitor analysis can also help you identify trends in the market that your business can embrace. Whether you’re just putting together your business plan, or if you already run a well-established business, performing competitor analysis is always important.
Researching Your Direct Competitors
There are a couple of different approaches and tactics you can follow when you research your direct competitors. Here are some of the most effective steps to follow.
Organise Your Research
Start by determining what you want to discover from your competitor research and set clear goals around this. For example, you could research competitor pricing or customer acquisition channels.
Create a spreadsheet outlining these areas to help keep your research on track.
Identify Your Competitors
Make a list of all your direct competitors. You can do this intuitively through your understanding of the market, as well as through asking your customers, searching relevant keywords, performing research on social media, and so on.
Create a list of all possible businesses that could be competing for the same customers.
Run a SWOT Analysis
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It’s a useful framework for understanding your competition better.
Create a list of the different SWOT elements for your competitors, as well as for your business. This will give you a better idea of what you can achieve in your market.
Research Their Product
Spend time looking into your competitors’ products and services, looking into what they offer and how they operate. Pay attention to their specific product features, pricing strategy, distribution, and more. Your goal is to see how you can differentiate and improve your product offering.
Research Their Marketing
Research your competitors’ marketing channels and pay attention to how they reach and communicate with their audience. What marketing channels do they use? What types of marketing messages do they put across? Pay attention to campaigns that have generated a lot of engagement, and ones that have not.
This will help you understand how your target audience reacts to marketing messages and how you can find strategic gaps to reach this audience more efficiently.
Consider the Customer Experience
Try to understand the specific customer journey and experience each competitor offers. Look into their customer support, communication channels, and user experience.
See how far you can go into the customer journey yourself without actually making a purchase. Pay attention to each step along the way.
Conclusion
Understanding your direct competitors should be done to help you find ways to compete with them. This can help you discover gaps in the market, opportunities, and competitor weaknesses to address. Get this right, and your business should be able to attract more customers, more easily.