Companies that dissect their competitive analysis have a great potential in gaining edge on their target market. If the business is strictly looking at their competition and what they’re doing or not doing, then they have missed the point. Instead, competitive analysis begins with the business’s customers.
While some companies understand this concept and truly know their customers’ requirements, they may only need to focus on their competition. Though for many companies, this is not the case. So as an alternative, many businesses need both: competitive analysis and customer analysis.
For a firm to gain sales and increase market share investigating top competitors is just as important as evaluating your own firm’s strengths and weaknesses. Since competitive data is a vehicle used to earn the business of customers, it would be in a firm’s best interest to learn more about the customers’ needs rather than be top-heavy over the alignment of a competitor.
Consensus: don’t put all your eggs in one basket. Focusing primarily on beating the competition will not crack the capital out of your eggs, since the customer is your golden one, not the competition.
As quoted by Soren Kierkegaard, “life can only be understood backwards; but it must be lived forwards.” Take this into a business perspective. Dig to find and understand what the target customers are trying to achieve with your firm’s offerings and how they perceive its value. Taking this path will lead you to understanding you competitive strengths and weaknesses from the customer’s point of view and essentially leave you in better footing.
Capturing customer needs is the catalyst in establishing competitive advantage and making innovation and growth a predictable business process. Through this, Harvard Business School professor Theodore Levitt’s famous quote can be understood: “People don’t want to buy a quarter-inch drill; they want a quarter-inch hole.”
Levitt’s quote can be dissected into three points:
1. Customer needs and solutions should not be treated equally as they are separate and distinct.
2. What customers want to accomplish will tell us what they need; don’t get caught up in product or service specifications.
3. The best way to capture target customers’ needs is to skillfully interview them.
An exceptionally important task to accomplish after establishing the needs of the customer is to rate the need by importance, as it will help allocate resources. When the customers’ needs are being met appropriately – whether it’s through competitive advantage, delivering experiences customers love, better branding, innovation, etc. – it equates to customer satisfaction and, basically, a better relationship.
Determine your firm’s strengths and weaknesses compared to your rivals. Then, have your customers rate how satisfied they are on each important need to determine your competitive advantage. What better way of knowing your strengths and weaknesses than going directly to the source?
Targeting customers- yours and rivals- can provide you with essential information regarding satisfaction and importance of need. This material can be used to compare how well you are meeting the needs of your customers against your rivals target customers and how you can get ahead of the curve. Additionally, it provides an opportunity to initiate or meet the needs of customers that no company is satisfying, a mere opportunity for growth through innovation.
Customers are king, begin with understanding them.