Competitive Analysis: Step-by-Step
Guide Last Updated: February 18, 2014
What is a Competitive Analysis?
A competitive analysis compares your company to others in your industry. It is a useful for determining your competitive advantage, and realistically assessing your company's limitations. The goal of a competitive analysis is to demonstrate how well you know the market, in order to convince your audience that your business will succeed over others. Be sure to provide statistical details, and cite your sources.
Here is a Step-By-Step Breakdown:
STEP 1: List all of your competitors. Explain what they do, where they do it, and how they do it. Think of your competitors broadly, including those that offer similar products or services, as well as substitutable products or services. It is critical that you research your direct and indirect competitors in detail. Create a spreadsheet and include sales, market share, pricing, profitability, debt, management effectiveness, technological development, productivity levels, growth capacity and marketing tactics.
STEP 2: Now that you have detailed information on your competitors, explain your competitive edge and business strengths. Highlight what you can do that other businesses can't do. Describe your market niche.
STEP 3: Clarify your role in the market and how your business will offer a specific market niche.
STEP 4: Prove there is a market for your service or product. Make sure you show the size of your target market. This is where you show how well you have researched your market and presented the proof. Remember to cite all of your sources.
STEP 5: List your strengths and your achievements. Then list your weaknesses and explain how you will overcome these weaknesses.
STEP 6: Describe your company in detail, including history and present situation. Include information on business structure, ownership, and location of headquarters and branches. Explain the benefits of your location and your plans for the future. Outline all key players and what they do in your company.
Sources For More Information:
SME Direct: Competitive Intelligence from Industry Canada
Written specifically for small-to-medium business owners, this free publication is a primer on competitive intelligence. Learn how it's different from simply gathering information about your competitors, and get expert advice on using e-business tools to build competitive intelligence into the day-to-day and long-term operations of your business.
- Duermyer, Randy (n.d.). About.com. Small Business Plans - Writing the Market Analysis Section. Retrieved from http://homebusiness.about.com/od/businessplans/a/small-biz-plan.htm.
- eHow (2008). How to Write a Competitor Analysis. Retrieved from http://www.ehow.com/how_2103892_write-competitor-analysis.html.