Competitor research in strategic management and marketing is an analysis of the characteristics and strengths of existing and potential competitors. This research provides both a proactive and a reactive strategic context to recognize threats and opportunities. A major goal of competition research is to identify key drivers of competition for various industries. While it is true that competition is a fact of life, competition can be effectively managed through careful analysis.
Competitive analysis is important for many reasons. The primary reason for competition research is to increase understanding and confidence in the ability of the company to perform when it faces the challenges posed by competition. It is also important for companies to gain an understanding of the characteristics of competitors so that they can take the appropriate measures to overcome these challenges.
A primary function of competitive analysis is to improve overall performance. There are many ways to improve performance. Competitive analysis allows companies to make informed decisions about how to improve the effectiveness of their business. Many of the most successful companies in history were able to successfully use competition to their advantage.
Another function of competitive analysis is to identify the most viable products for new markets. Many companies spend billions of dollars each year on research and development efforts, but spend very little time or money on market research. By doing a thorough competitor analysis, a company can identify new markets that can generate substantial revenue. Once identified, companies can develop and deploy new marketing campaigns, create new promotional opportunities, and launch new product lines.
Competitor analysis also helps companies understand the effects of new technology on their markets. For example, when a new medium or communication medium emerges, it can have dramatic impacts on the way people communicate with each other and with businesses. New technologies such as the internet, cellular phones, and social networking sites have become a significant force in many industries. It is often difficult for businesses to keep up with the changes associated with new technologies, so competition research helps companies develop a strategy for managing new technologies and marketing new products and services.
In summary, competition research is essential for many different reasons. It is also important for companies to develop a strategic framework that recognizes the key factors that affect their performance, including competition, market opportunities, and internal threats.
Because there are many different forms of competition, competitive analysis provides companies with an overview of the key areas of competition for which they should concentrate their efforts. By studying the competitive landscape, companies can more effectively manage their own company and their competitive environment.
When properly conducted and analyzed, competitor analysis can provide companies with insights into the challenges facing their industry and which areas they should focus on improving. Through competitor research, companies can determine the optimal level of investment in research and development to ensure continued competitive advantage.
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