What is the purpose of a competitive analysis?

The purpose of a competitive analysis is primarily to assess competitors' strengths and weaknesses. By examining what competitors do well and where they may fall short, a business can identify opportunities to differentiate itself in the market. This insight allows a company to develop strategies that can capitalize on competitors' weaknesses, enhance its own offerings, and better meet the needs of its target customers.

Conducting a competitive analysis helps businesses understand the landscape in which they operate, providing critical information on market trends, customer preferences, and potential challenges. It is a fundamental aspect of strategic planning and can significantly influence decision-making regarding product development, marketing strategies, and overall business direction.