Many companies know who their competitors are. If don’t, this can quickly be fixed by a Google search or by looking in local business directories. A company with multiple competitors means many businesses will be competing for the attention of customers. If this sounds like your industry, you’ll want to keep reading.
In Part One of this two-part series, we’ll take you through the steps in identifying your edge over your competitors, so you can market your business accordingly.
So, how do you know what your company does better than your competitors? This is where a SWOT analysis comes in.
What is a SWOT analysis?
A SWOT analysis is a business tool used to identify:
SWOT is used by businesses to identify what their own strengths and weaknesses are, as well as auditing their competitors’. It is also used to identify opportunities for growth and potential threats to yours or your competitors’ businesses, helping you to plan accordingly.
Let’s take a look at the elements of a SWOT analysis in more detail:
Your “strengths” can be defined as the things that give your business a competitive advantage. When considering the strengths of your business, your options are not limited to things you sell that your competitors don’t offer – they can include something that you do better.
For example, you may sell jewelry online and offer one-day shipping compared to your competitors who only offer two-day. The convenient location of your business location could be your strength, such as a hotel that’s close to a popular tourist attraction. Your strength could be a product feature or service that none of your competitors offer, for example a personal trainer that offers nutritional advice as well as fitness training, a service that none of the personal trainers in the local area offer.
No business is perfect, companies will always have weaknesses. A good way to identify your own weaknesses is to listen to your customers, the issues they highlight, and the barriers they state in the buying process. Your weaknesses could include anything from higher prices compared to your competitors or poor customer service.
Once you have highlighted your competitors’ weaknesses you can exploit them. To give an example, a competitor may only operate within business hours, Monday to Friday 9am-5pm. By marketing the fact that your business is open weekday evenings until 8pm and all day Saturday and Sunday, you could give yourself a competitive advantage.
There are also things that are beyond your control. These instances could include external influences that impact your business such as economic, legal, political, technological, environmental or social factors. These factors can potentially bring both opportunities and threats to your business.
An opportunity could include expanding your business to a new country as a result of a previous barrier no longer in place – such as an import law or legislation around trading overseas being changed or removed.
Another opportunity could include the Internet. For example, if you are a physical business with competitors who rely on offline marketing methods, getting a website and promoting your business online could be a huge opportunity for you to stay ahead of the competition.
As mentioned, there are many external forces that can affect your business – some of which may be classed as threats. Examples of threats could include a change in exchange rates, making your products less competitive certain countries, or rental increases that impact your fixed costs. If you are selling clothing or accessories, ever-changing tastes in fashion could be a potential threat as well as new competitors to the market, impacting you and your competitors.
When analyzing your competitors’ threats, identify the ones that do not affect you, these are likely to be opportunities that you can take full advantage of.
Now that you have completed a SWOT analysis of your business and your competitors, you can start marketing to the strengths of your business and the weaknesses of your competitors. In addition, you can prep for the various opportunities and weaknesses you’ve identified. Stay tuned for Part Two, where we take you through 5 ways to stay ahead of the competition.