Something people seem to overlook is their business' competition. It's easy to get caught up in your own business, let alone try to figure out what's going on with your competition. The importance of knowing where your competition stands effects so many aspects of business. You want to know exactly what you're up against and how to gain your share of the market.
How do you get the information? You talk to people and ask questions. You physically go to see your competition. You take a look at their website and other pages to see how they represent themselves.
Know your market
Every market has a different personality. In order to really understand your market, you have to not only participate in it, you have to understand buyer's behaviors in your market. Why and when do people buy? Is it price, is it service, is it selection? All important questions that you need to know in order to succeed in that market.
Know your strengths/weaknesses
Once you know the competition's weaknesses, you'll be able to find your strengths. Also, a great way to find your strengths is by talking to your existing customers. They will tell you why they do business with you. They want to. And they like to give feedback.
You also need to know your weaknesses, because you'll want to try to eliminate those altogether. Those are good though, because they give you goals and things for your to do list.
Here is an example of using your strengths (true story) . There is a new company offering IT services. Their competition is a big box store that has a similar service. The big box charges twice as much as the new company. The big box store has the dollars to market the service better than the new IT business, however, they are charging retail prices. The new business will use this to their advantage. With advertising that starts with "Don't pay retail for IT." They are able to offer better service with more offerings for a much smaller price. That is the big store's weakness, price.
Basically, you are spotting a weakness and using it to your benefit by highlighting your strength. Other aspects that have just as much importance are quality merchandise, better service, selection, even turnaround times.