Competitive Analysis

What is Competitive Analysis?

Competitive analysis is the analysis of the competitors of your business in terms of marketing and strategic management. The purpose of competitive analysis is to assess the strengths and weaknesses of your business' current and future competitors.

There are many competitive marketing analysis tools. Competitive analysis is sometimes referred to as competitive business analysis or competitive marketing analysis because competitive analysis is an analysis for businesses and most often include the analysis of the marketing strategies. Competitive analysis can be done on any scale and on any business industries. Competitive analysis of restaurants, for example, is often done when a new restaurant is about to open up in a new area.

Competition analysis /  competitor analysis / competitive analysis

Don't think you can skip this competitive analysis step because no one does exactly what you do. If your business plan does not have a competitive analysis section or if you don't identify your competition or competitors in your business plan, your bank or investors may come to the conclusion that there is no market for what you are proposing. Having no competitors does not mean you don't have to perform competitive analysis. Also, don't ever use rumor or hearsay about competition in the competitive analysis section of your business plan. When writing a business plan, you need to stick with facts, especially when it comes to doing competitive analysis.

How to write a good business plan with a competitive analysis?

How to write a business plan tip: Good business plans have many important facts about the competition of the business. However, you don't need to go overboard and have pages and pages of how your competitors do their businesses in your competitive analysis section.

How many types of competitors are there?

There may be two types of competition in your industry: competitors who are the national players and those small businesses in your area with whom you will compete directly. You need data on all of your competition to do a comprehensive competitive analysis.

Help with how to do Competition Analysis

The following questions are designed to help you with competition analysis. If you cannot answer all of these questions, you need to do more research on your competition.

• Do a few large companies or many small ones dominate your industry?
• How important is brand recognition?
• Who are the big industry players (if any)
• Who are your core local direct competition? Are their sales increasing, flat, or decreasing?
• What characterized these competitors? What do you know about them and their advertising?
• How are t heir operations similar/ dissimilar to yours?
• Identify your competition's products features and benefits.
  Identify
• their strengths and weaknesses.

Tips on how to write a business plan

• Keep ongoing files on each of your competition. File every advertising piece of other information you get on your competitors. You will refer to it often as your business grows and you need to reevaluate your position compared to that of your competitors.
• Describe national players first and then local players. You only need to list top competition, not every single competitors.