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What are the most common mistakes companies make when conducting a competitive analysis and how to avoid them?

Alla Phelipeau

When it comes to conducting a competitive analysis, there are several mistakes that companies can make. However, with proper awareness and preparation, these mistakes can be avoided, leading to a more effective competitive analysis. Here are some of the most common mistakes companies make when conducting a competitive analysis and how to avoid them:

Mistake #1: Focusing too much on the competition and not enough on the customer

When conducting a competitive analysis, it's easy to get caught up in the details of your competitors’ products and services. While it's important to monitor your competition, it's equally important to focus on your customers. You need to understand their needs and preferences, and how your product or service can meet them better than your competition. To avoid this mistake, start by analyzing your customer insights and then look at how your competition is positioned relative to your customer needs.

Mistake #2: Not defining the scope of your analysis

Too often, companies jump into a competitive analysis without defining the scope of their analysis. This can lead to superficial or incorrect conclusions. To define the scope of your analysis, start by identifying the competition that's most relevant to your business goals. Then, specify the criteria that you will use to evaluate the competition, such as market share, product features, and pricing. Finally, determine the information sources you will use to gather the data needed for your analysis.

Mistake #3: Relying solely on publicly available data

Publicly available data can be a valuable source of information in a competitive analysis. However, it's important to recognize that such information may be incomplete or out of date. To avoid this mistake, try to gather additional data from other sources, such as customer surveys, interviews with industry experts, and internal company data.

Mistake #4: Neglecting to analyze your own strengths and weaknesses

When conducting a competitive analysis, many companies forget to take into account their own strengths and weaknesses. Without this analysis, it's difficult to see how your product or service stacks up against the competition. To avoid this mistake, conduct a thorough analysis of your company's strengths and weaknesses, and then compare them to those of your competitors.

Mistake #5: Overreliance on a single metric

When conducting a competitive analysis, companies sometimes rely too heavily on a single metric, such as market share or revenue growth. While these metrics are important, they don't tell the whole story. By combining multiple metrics, such as customer satisfaction, employee retention, and product quality, you can get a more complete picture of your competitors' position in the market.

In conclusion, conducting a competitive analysis is an important activity for any business looking to succeed in a competitive market. By avoiding the common mistakes outlined above, you can conduct a more effective and insightful analysis, leading to a better understanding of your competition and your own position in the market.