We have all heard the phrase, keep your friends close and
your enemies closer. How true this rings for your business?
Well, it is a matter of whether your business survives or
fail!
We all know that setting up a business means taking a share
of the market and defending it from your competitors. This
is the reality of doing business whether online or offline.
So to become successful, it is important to understand your
direct competitors and indirect competitors.
1. Strength, Weakness, Opportunity, Threats (SWOT) Analysis
To understand your competitors, you can perform a SWOT
analysis. This is a good tool to analyse your competitors
and yourself too. This should be the first step before you
set up your business.
Look at your competitors' product range, features, price
range and quality. Then you take stock of your own product
range, features, price range and quality. By benchmarking
your competitors' products to your own, you can map out
your competitors' as well as your own strength and
weaknesses. This will help you to formulate your strategies
to compete more effectively. If you are weak in an area but
strong in another, put emphasis on your strong points and
don't challenge your competitors in your weak points.
On the flip side of it, your competitors can challenge your
weak areas to gain market share, so you have to make sure
that your strong points are good enough to compensate for
the weak ones.
Take note take your competitors' weaknesses can be new
market opportunities for you. And your weaknesses may be a
threat to your business survival.
2. Distribution channel
Most products available in the market have complements and
substitutes. Eg, a customer walks into a supermarket and
wants to buy ham. However, he could not find ham, so he may
choose to buy Spam instead. As a buyer, we will always find
substitutes for products that we cannot find.
So what does it mean? Well, having an effective
distribution channel that can reach your target customers
at their location will help you greatly in closing your
sale.
3. Future Competitors
Apart from your existing competitors, you have to brace
yourself for new competitors jumping into the market. By
establishing a strong customer relationship and a good
strategy, your business should be able to hold off new
challenges.
In general, new entrants like to compete on pricing, ie
they focus on low price. This strategy can work for you as
a double edged sword. If the new competitor offer low
priced and inferior quality products, then you can
establish your brand as a superior quality product.
However, if they offer superior quality products at a
cheaper price, then you may have to engage in a price war.
All in all, you need to strategise your plan of attack and
defence constantly. In order to formulate successful
strategies, you have to know what are your strengths and
weaknesses as well as your competitors. With these
information you can take advantage of your competitors'
weaknesses by using your strong points while defending your
weakness from competitors' attacks.
As the business environment is in constant fluid, you need
to constantly know your enemy and know thyself as well.
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Hai Liang strive to help novice internet marketers to
succeed in their home based business. To find the best home
based business ideas and opportunities so you can work at
home visit http://www.AutoPassiveProfits.com
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