In every business pursuit, there are certain parameters that every business person needs to understand in order to remain competitive. Firstly, you must have an in-depth understanding of the operating environment of the business- the business cycle, and the various forces at play in the market place that can work for or against the business that you are in.
Secondly, there is also the need to comprehend the simple fact that there are other players doing the same or similar business in the same market environment. Therefore it should be very clear in your mind who specifically are your direct and indirect competitors. Study them carefully to know their product offering and the target audience. You should then endeavor to define who your customers are, how are the demographics, what can you offer and how? All these plus more are questions that need answers.
Thirdly and most important, is the fact that you need to develop certain business tools that enables you to play your cards outside the confines of the other players. That is what gives you competitive advantage. The combination of various tools whether tangible or intangle is what sets you apart from everyone else. This is your unique selling preposition. This is what says you are different. It could be your packaging, customer service, after sales service, ambience, professionalism, approach and whole lots of other things.