NOTE: This article was originally published on the FounderFuel website, and has been cross-posted with permission.
How will your business compete?
The purpose of performing a competitive analysis is to answer this question and provide you with the tools to blow your competition away. If performed properly, you will establish how you are or can be unique, where your competitive advantage lies, and perhaps most importantly, it will build confidence with your investors. You will better understand the market, more aptly target customers, keep tabs on competition, make more practical decisions and ultimately, over time, track trends and market scenarios.
What follows is five case studies that exemplify the importance of performing a thorough competitive analysis. Following from these case studies is a detailed breakdown of how you can perform one of your own.
CASE STUDY 1: MARVEL WORLDWIDE INC.
The question ‘what makes us human?’ fuelled a ten-year debate between
Marvel Comics and the United States Court of International Trade. Marvel argued that their action figures were toys (‘representations of nonhuman creatures’) rather than dolls (‘representations of humans’). While dolls were being taxed at a rate of 12%, toys were taxed at just 6.8%. Marvel’s research on this distinction would end up saving the company millions of dollars. Competitive analyses, like the one Marvel undoubtedly carried out, have the potential to reveal more than just direct competition. You’ll see why below.