4 steps to identify analogous competition and strengthen your business. This process will allow you to proactively discover ways to create new value for your customers when needed.
In the world of business, we all know that understanding the competitive landscape is critical to success. However, companies often make the mistake of defining their competition by their direct competitors in the same industry and fail to account for substitute products or services. This can lead to a failure to anticipate and respond to changes in the market. Let's define substitutes, go over the benefits, and then we'll move on to 4 steps that will help you refine your competition.
Substitutes are products or services that are not identical to your offering but can still fulfill the same need or solve the same problem. For example, if you are a coffee shop, substitutes might include tea shops, juice bars, or even energy drink companies.
The benefits of including substitutes will allow you to gain a comprehensive understanding of the market and identify analogous threats and opportunities. Using the same example, if a new energy drink company enters the market, they may not be a direct competitor to your coffee shop, but they could still attract customers who would have otherwise visited your store. By recognizing this, you can adjust your marketing and product offerings to maintain your competitive edge.
Here are 4 steps to help you reframe your competition to include substitutes:
1) Identify your customers' needs: Start by understanding:
- The needs your customers are trying to fulfill when they choose your product or service.
- What problems are they trying to solve?
- What are their motivations for choosing you over other options?
2) Map out your competitive landscape:
- Identify your direct competitors, as well as any substitutes that could fulfill the same need.
- Look beyond your industry and consider products and services that may not seem related.
3) Analyze your competition:
- Once you have identified your competition, analyze their strengths and weaknesses.
- Consider factors such as pricing, product offerings, marketing strategies, and customer service. This will help you understand how you compare.
- Identify areas where you can differentiate yourself.
4) Adjust your strategy:
- Armed with a complete understanding of your competition, you can adjust your strategy accordingly.
- Consider factors such as pricing, product offerings, marketing messages, and customer experience.
- Think about how you can differentiate yourself from your competition and provide unique value to your customers.
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