by Victoria Reynolds
Business takes place in a highly competitive, volatile environment, so it is important to understand the competition. As always, you must continually assess who your nearest direct competitors are. You should also know your indirect competitors – is their business growing, steady, or declining? What can you learn from their operations or advertising? What are their strengths and weaknesses? How does their product or service differ from yours?
What to Address in Your Competitor Analysis
- Names of competitors: List all of your current competitors and research any that might enter the market during the next year.
- Summary of each competitor’s products: This should include location, quality, advertising, staff, distribution methods, promotional strategies, customer service, etc.
- Competitors’ strengths and weaknesses: List their strengths and weaknesses from the customer’s viewpoint. State how you will capitalize on their weaknesses and meet the challenges represented by their strengths.
- Competitors’ strategies and objectives: This information might be easily obtained by getting a copy of their annual report. It might take the analysis of many information sources to understand competitors’ strategies and objectives.
- Strength of the market: Is the market for your product growing sufficiently so there are enough customers for all players?
Tips for Gathering Competitive Information
- Internet: The Internet is a powerful tool for finding information on a variety of topics.
- Personal visits: If possible, visit your competitors’ locations. Observe how employees interact with customers. What do their premises look like? How are their products displayed and priced?
- Talk to customers: Your sales staff is in regular contact with customers and prospects, as is your competition. Learn what your customers and prospects are saying about your competitors.
- Competitors’ ads: Analyze competitors’ ads to learn about their target audience, market position, product features, benefits, prices, etc.
- Speeches or presentations: Attend speeches or presentations made by representatives of your competitors.
- Trade show displays: View your competitor’s display from a potential customer’s point of view. What does their display say about the company? Observing which specific trade shows or industry events competitors attend provides information on their marketing strategy and target market.
- Written sources: Use general business publications, marketing and advertising publications, local newspapers and business journals, industry and trade association publications, industry research and surveys, and computer databases (available at many public libraries).
Even if you’re convinced that your product or service is unique, it’s highly likely that your potential customers can already find it in one form or another. Your job is to assess thoroughly and objectively who your competition is, what they offer and what factors make your product/service superior to theirs (i.e., your competitive advantage). And finally, once you now the “who”, “what”, “why” and “how” of your competition, the key to success is convincing potential customers that they should come to you instead.
*SBA’s participation in this blog does not constitute an endorsement of the William E. Simon Graduate School of Business Administration or any other person or entity. SBA’s programs and services are provided to the public on a non-discriminatory basis.
