Assessing Market Competition

Market potential is also affected by the number of establishments supplying and serving your target customers. This process would determine how saturated the market is in the given area of coverage. The more suppliers and competitors there are within a confined area, the greater the level of saturation. 

On the one hand, it would be best for the entrepreneur to keep out of a market where competition is fierce. On the other hand, some entrepreneurs prefer to enter the biggest, richest, and most competitive markets in order to achieve high visibility and growth potential. However, this is a high-risk proposition unless the entrepreneur is very confident that he or she has a superior product or service that is at par (if not superior) to others in the marketplace. 

In order to assess one’s strengths and weaknesses, there must be a comparison made with the closest competitors. Profiling these competitors will help the entrepreneur gauge their respective strengths and weaknesses and, therefore, enable the entrepreneur to craft a strategy. By doing so, the entrepreneur would be able to get an idea of whether he or she can compete with the existing competitors. If not, the entrepreneur should change strategy by moving to a different location or by shifting to a less competitive target segment in order to avoid competition. Alternatively, the product or service offering can be improved to enhance its competitiveness.