No matter how much you think you know about your competition, no matter how much experience you have in your chosen field, without a clear understanding of the market for your business you might as well be driving blind. Big companies spend thousands of dollars to conduct competitive market analysis , but fortunately for those of you on a tight budget, you can do quite a bit of this yourself, without spending much at all.
Competitive market analysis is important at every step of your business’s development. Whether you’re trying to choose a business, write a business plan, or grow your business, research is absolutely vital to making informed decisions. The key things you need to learn about your market and your competition include:
- Who are the major competitors in the market?
- What’s their current share of the market you’ve identified?
- Have there been any significant changes in the market share each competitor has had over the past five to ten years (i.e. who’s moving up and who’s moving down)?
- Which of your competitors address which segments and which of them are strongest in those segments?
- What are your competitors’ strategies for reaching your target market, as well as any segments on which they focus?
Now that you know the types of questions for which you’re seeking answers (and there are many more, but these should get you started), here are some pointers for how to get those answers without spending a fortune:
Check out the competition in person
The simplest place to start is by visiting other businesses in the same line of work as yours. See what works and what doesn’t work. If possible, talk to the staff and the customers. Find out what people like about your competition, and what they’d like to see done better, and take lots of notes! You might just find the perfect business angle or differentiator by learning what your competitors aren’t doing right or what their customers wish they were doing.
Research competition online
The internet opens up a vast resource for competitive market analysis – search for your type of business, your competitors’ names, your product or service, and just about anything else you can think of related to your business. Peruse your competitors’ websites to get a feel for what they are doing and what their prices are. Many of their sites may also have a newsroom section with recent press releases and news stories, which could tip you off to recent trends and developments in your industry.
Access free government research
There’s a great source of research out there that you’ve already paid for, with your tax dollars. Check out government data to learn what’s going on in your industry. Are the growth trends pointing in a positive direction? Is there enough potential for you to make a profit? The United States government maintains copious data on businesses of all types, and your taxes entitle you to a free peek anytime you want. A great place to find links to a variety of such resources is the US Small Business Administration.
Join a trade association
You may already be considering joining your industry’s trade association, and we’ve got one more reason for you to take the plunge: Trade associations generate a lot of data on their own industries. Check with your association to see if they offer access to such data as one of the benefits of paying your annual membership fee.
Ask a librarian for help
Take advantage of your public library, where librarians are trained to point you in the right research direction. You’ll find hard copy reference works loaded with information that can help you identify the latest trends in your particular industry. It’s also well worth a trip to your local university library. While some access may be restricted to current students, many university resources may be open to you on-site, and university libraries frequently stock a wealth of industry research and data that you’d never find at your city library.
Consider purchasing reports from the pros
Once you’ve identified all the information you can obtain for free, you may want to consider paying a few hundred dollars for a more specific research report. Professional companies such as Forrester Research, Gartner Dataquest, Emarketer.com, Hoover’s, and Dun & Bradstreet, can dig up very useful information that meets your specific needs. You can also find reports that are searchable by price (many under $100) at Marketresearch.com.
Our Bottom Line
The more information you have about your industry and competitors, the easier it will be for you to make smart decisions to build your business. Do the legwork yourself and save some cash by:
- Observing the competition in action
- Exhausting free online research options
- Accessing government research
- Obtaining research from your industry’s trade association
- Visiting a local library or university
- Purchasing reports from market research pros
And remember, competitive market analysis will benefit you throughout the life of your business, so these are tips you can use again and again.
Steve Pick is a freelance writer for StartupNation.com