A competitive analysis is when you look at what other people are doing to see how you can do better, like checking out your friends' toys to figure out which one is the coolest.
Why We Do It
Imagine you and your friends all have lemonade stands. You want to know why some of them sell more lemonade than others. So you check out their prices, what kind of lemonade they’re selling, and how they’re advertising it. That's like doing a competitive analysis, you're looking at your friends' strategies so you can make your own stand even better.
What It Helps You Do
When you do a competitive analysis, you figure out what’s working for others and what isn’t. Maybe one friend uses fun cups, and that makes kids want to buy more lemonade. Or maybe another friend is selling lemonade for $1, while you're selling it for $2, now you know where to make changes.
It's like being a detective who looks at other people’s clues so you can solve the mystery of how to be the best lemonade stand ever!
Examples
- A pizza shop does a competitive analysis to see how much other shops charge for their pizzas.
- A small bakery checks out nearby cafes to see what they offer.
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See also
- How Does Pricing strategy an introduction Explained Work?
- Competitive RIVALRY vs. Competitive DYNAMICS?
- How Does The Five Competitive Forces That Shape Strategy Work?
- What are real cost per unit increases?
- What are incompetence of rivals?