Four Main Advantages of Competitive Analysis Sample Essay

Advantages of Competitive Analysis

Evaluation of both internal and external factors affecting a business is essential in strategic planning and management. Many businesses today include competitive analysis in their external factors when trying to launch a new business or improving an already existent business. Unlike in the past when competitive analysis was carried out using a laissez faire approach, today’s strategic planners carry out intensive and extensive research and analysis on both existing and potential competitors. There are several reasons why competitive analysis has gained popularity.

Identification of market gaps

When carrying out competitive analysis, strategic planners often focus on clients of their competitors. Through this analysis it is easy to identify the untapped areas where business competitors are yet to venture. A business can use this to strategize and centre its plans on the clients who have not yet been taken. This can come in many forms including clients who are in interior locations or even clients who can only afford cheap products.

Additionally, clients who feel underserved can also be identified during competitive analysis. Some strategic planner carry out surveys to gauge client satisfaction and this can help to identify dissatisfied clients and cater to their needs.

Identification of market trends

Every strategic planner is well aware that no market is constant and trends keep on evolving. Through a competitive analysis businesses can identify the trending market designs, products and services.

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Strategic planners can identify the broad trends that have flooded a particular market. These can later be used to design products or services that have a unique touch that has not yet been addressed by competitors in the market. Additionally, market trends can help a business to identify the gaps and mistakes it has made in offering its services or designing products. This can be changed and help the company to attract new clients and retain old ones.

Offers guidelines on product development

In certain industries such as the technological industry, product innovativeness is very competitive and determines a company’s market share. Such industries are extremely competitive and require great levels of creativity.

By carrying out competitive analysis a business can be able to identify the new innovations and strategies a business is using. This can help entrepreneurs to develop better pricing strategies and high quality products that can compete even better in the market. Some Chinese companies have even gone as far as carrying out reverse engineering in designing their products and this has helped them to produce top quality products at cheaper prices hence gain large market shares.

Helps in marketing strategies

Advertisement is essential and every business has to reach out to clients through advertising campaigns. By analyzing the budgets and techniques of competitors’ advertisements, a company can be able to design cost effective and creative advertisement campaigns. This can be done by identifying the loopholes and problematic areas in the advertisements of competitors and capitalizing on these by making better adverts.

Ultimately, despite its importance and role in helping businesses gain a competitive advantage and larger market share, competitive analysis must be carried out within the required legal frameworks. Strategic planners should not use illegal means to obtain information and infringe on the privacy of their competitors as this can bring their companies more harm than good.

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