December 29th, 2016

Competitor Analysis: is it worth your time?

business team of asian woman black man and white woman analyzing graphs and data

Why competitor analysis isn’t about keeping up with the Joneses.

Should you or shouldn’t you keep tabs on your competition? It’s a question that’s been batted back and forth by a number of business thinkers, with some falling in the camp of “it’s critical to your business success” and others landing on “it’s a potentially misleading waste of your time.”

There’s obviously a balance to strike between these two positions, but it’s a delicate line to draw. When it comes to knowing about what the competition is up to, we find that most companies fall into one of three groups, each with their own mindsets and their own pitfalls. Do any of these describe your business?

1. The Ostrich.

Stress leads to bad choices. And businesses under stress often respond by burying their heads in sand. They don’t know what the competition is up to, and they don’t want to know. Ignorance is bliss, and what they don’t know can’t hurt them—right?

Oh, so very wrong. While these businesses hunker down and hope for the best, they miss opportunities to improve their market foothold and thrive. They’re typically sub-par, and they know that when they measure themselves against their competitors they will fall short. That’s a tough place to be, but you won’t get out of it by living in denial. Competitor analysis can yield some harsh truths, but it can also unearth models to aspire toward.

2. The Chameleon.

Conversely, some businesses are so anxious about their own situation that they spend all their time obsessing over their competitors. For them, competitor analysis is a tool to help them learn to blend in. They don’t want to stand out from the pack—they want to look just like everybody else. And often (disastrously) like one specific somebody else.

This strategy can provide the illusion of safety, but everyone knows that to truly succeed you have to stand out. So long as you remain one of a homogenous pack, all offering indistinguishable products and services, you’ll be entirely forgettable to most of your audience. It’s hard to establish brand loyalty from people who can’t tell you apart from your competition.

But wait, there’s more! The popular or most obvious options aren’t always a good idea, and even when they are, it doesn’t follow they’re a good idea for you. Just because a competitor’s doing it doesn’t mean you should, too.

3. The Lone Wolf.

Finally, there are those who don’t do any competitor analysis because they just don’t care. They plan to go their own way regardless, so why waste the time? They know what they’re doing. Do they need to know about anyone else?

In short: yes. Having a clear understanding of your own brand will take you a long way, but if you proceed in ignorance of your competition you may miss out on some excellent ideas. Or you may find yourself so far outside the mold that your potential clientele don’t know how to interpret your business. Plus, you’ll waste a lot of time reinventing wheels when you could be learning from your competition.

Competitor analysis is about due diligence and positioning.

Knowing what your competition is doing will help you find a position to fill in the marketplace. But it should not dictate your entire business strategy. You will get a lot farther by following your own vision of what you want your business to be than by aping someone else’s.

There’s a lot to learn from your competition. You don’t want to be the last company to pick up on the latest innovation. Use your research to inform your business strategy, and you’ll find the gain you make to be well worth the time you invested.

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