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Goals of Competitor Analysis: Strategies & Actions

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  • 0:02 What Is Competitor Analysis?
  • 0:52 The Need for…
  • 1:43 Goals of Competitor Analysis
  • 2:41 Strategies for…
  • 4:09 Lesson Summary
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Lesson Transcript
Instructor: Savannah Samoszuk

Savannah has over eight years of hotel management experience and has a master's degree in leadership.

Every company needs to know more about the competition to gain an edge. This lesson will explain competitor analysis, the need for it, and the goals and strategies of analysis.

What Is Competitor Analysis?

Successful companies keep current with their competitors and market. Without hiring someone to spy on your competitors, how do you find out what they're up to? Competitor analysis is a way of comparing your company to your competitors when it comes to strengths, weaknesses, and strategies.

For example, Patty owns a bakery in her town. For a long time she had the only bakery in town. Now she has three competitors, which means she needs to be more competitive than before. She will need to conduct a competitor analysis to find out how her business stacks up to the new bakeries. As we consider Patty's competitor analysis, we will take a look at the need for competitor analysis, the main goals of competitor analysis, and strategies for conducting the analysis.

The Need for Competitor Analysis

Why use competitor analysis? Obviously, you need to know if your company is performing at the same level as your competitors. Patty needs to know if her product and brand are strong enough to keep her customers. What are her strengths compared to her competitors? Also, what weaknesses do the competitors have that can help Patty enhance her competitive advantage?

Companies also want to be ahead of the curve when it comes to new products. Patty can look at the products that she and her competitors are providing and consider if there is another product that customers want. If she is the first bakery to provide it, she will have the competitive edge.

In addition, companies can use competitor analysis to help them make business decisions. Patty may be getting ready to open a second bakery and the information can help her decide whether that is a sound decision.

Goals of Competitor Analysis

Now let's take a look at the goals a company should have when using a competitor analysis. The first goal of competitor analysis should be to determine who your competitors are. It's easy for Patty to determine that the three other bakeries in town are her competitors. However, for companies that operate online and over multiple locations, it can be a challenge to determine who their competitors are.

Next, the competitor analysis should look at the competitors' strategies. What are the objectives of your competitors? Are they similar to your objectives?

Lastly, a competitive analysis should determine the competition's capabilities. As we've discussed, competitive analysis includes looking at the competitions' strengths and weaknesses. This will help to determine your competitors' capabilities. For example, are they capable of stealing some of your customers or dominating the market altogether?

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