When crafting strategic plans, strategic planners tend to consider both internal and external factors that affect the growth of a particular business. As far as the external factors are in question, the competitive environment is one of the factors that these planners will critically look into. By taking sometimes to create a market competition analysis, the players in a given market are able to understand the marketplace conditions in a given industry that they are breaking into. Better said, a business needs a competitor advantage, not just fulfilling the customer's needs, as this is the only sure way of making it in business.
Primarily market competition analysis refers to an evaluation of both strengths and weaknesses of the existing as well as potential competitors. The strategy is one that offers people in businesses a chance to identify threats and opportunities. It is argued that, most businesses do not conduct this kind of analysis methodically enough. What most people in these businesses do not know is that lack of a robust market competitor analysis gives their competitors an edge over them, as they lag behind.
The first step in coming up with an effective analysis is identifying the current as well as the existing competitors. Basically, there are two ways in which one can identify competitors. The first one is looking at the markets from a customer's point of view and group all the competitors by the degree to which they compete for the dollar from the buyers. Alternately, they can group all the competitors according to their various competitive strategies for one to understand the things that motivate them. Once done with grouping them, it's time to analyze their strategies as well as identify the areas that they are most vulnerable. By checking n their weakest point, you have an upper hand in determining what's best for the consumers. As a matter of fact, weak areas denote the absence of essential key assets and skills. These are basically all that a given market needs, to complete it.
Other than helping people in the business world to identify opportunities and threats, market competitor analysis has a wide range of other benefits. One of the most outstanding benefits is the fact that it gives one the chance to spot gaps in the markets for initiatives, services and products. Secondly, it gives on ideas for new technology as well as tactics that can be applied in one's organization to get an edge over one's competitors. Lastly, this type of analysis ensures that one gets assistance in pricing goods and services both strategically and competitively. This way, this kind of analysis helps them to refine their strategic directions. Neverheless, one needs to keep in mind that, just like with other types of analysis, this one too has its fair share of disadvantages.
First and foremost, business people need to keep in mind that market competitor analysis involves commitment of resource. This will with no doubt, have an intrinsic cost to the business. Even worse, an analysis that is flawed may lead to poor decisions. Lastly, people need to know that too much focus on what the activities of the competitors are likely to lead to a business becoming responsive rather than being proactive. This consequential leads to lack of innovation, not to mention that it also leads to lack of unique identity in the existing markets.