A competitive analysis is research, reporting and analysis into your company and product competitors who directly affect your market share. It identifies who you are competing with and how you compare.
Most small and mid-size companies have probably done a competitive analysis but as part of a business plan for a loan document. Most companies don’t have a meaningful competitive analysis.
Like a business plan, a competitive analysis can come in any size or shape. Without a firm grip on scale, scope, span and speed, a competitive analysis ends up taking months and is usually too broad to be valuable.
At the end of the day, you don’t need to know a hundred things about your competition. You need to know the most critical things about them and yourself. A real world competitive analysis is tightly focused on the companies who can hurt or help you the most. By tightening the focus on your competitive analysis, you can get immediate results that affect your bottom line.
You found a market report online that says you are operating in a $4 billion industry. Nice to say but does it really matter? Unless all your competitors are public companies you aren’t going to find solid sales information on them. You can find a lot of speculation about companies. You need the real information that’s makes a different to you now.
Start with your Best Product
What’s your best product? It’s the one that produces the most sales with the most profit. Whether you’re selling one product or 1,000 products, start your competitive analysis with your best product. It’s the product you want to grow the most and is your most competitive. You can analyze other products later. Start with the single most important product.
Where do you sell your best product? Who do you sell it to? Define your market place a tightly as you can. If your product is available on the Internet globally it doesn’t mean your market is global. If you focus on the United States, you probably don’t create sales in all 50 states. Who purchases your product? What companies or people buy it? Develop a tight profile of your best market(s). You aren’t all things to all people. Don’t make it broad. Get very narrow with your target market so its manageable.
Who are the competitors for your best product in your best markets? Who are the top companies always selling against you? Ask your salespeople. These are the competitors they hear about from their leads, prospects and customers. It’s probably no more than 5 competitors and you probably have 1 or 2 main competitors. Keep your competitor list tight. It’s not a big group.
Compare your product features against your competitor list. What’s the same? What’s different? If it’s different is it a strength or weakness for you? What do you have to do to be more competitive? This should be a very tangible list with black and white items.
What are the benefits of your product versus your competitors? Benefits can be esoteric, but you want to narrow down the benefits to be as tangible and real as you can. What’s different about the benefits your competitor is selling? What can you do to be more competitive? Try to be as clear and precise with your benefits compared to your competitors.
Price is a major factor in a competitive analysis. It can sometimes be hard to find competitor pricing. Investigate the marketplace and do your best to find your competitors pricing. Compare the price you sell your product for against your competitor’s price. Are you higher? Lower? How much of a difference is it? How do you explain the difference? What advantage or disadvantage do you have selling at the price you sell at?
Marketing include your distribution, sales, promotion, advertising, and lead generation. How does your marketing for the product compare to your competitors? What are they doing different or better? Use tangible material like the websites and advertising of your competitors. The more advertising and promotion they do the more material you have available. What are your strengths and weaknesses comparatively?
Write Your Report
Write a report for the information you’ve gathered. Include your product, market, competitors, features, benefits, price and marketing. Draw your conclusions. You can include a SWOT analysis if you like. This is Strengths, Weaknesses, Opportunities and Threats. Mainly you are interested in the primary findings per category that can make a difference.
You’re done. Take what you’ve learned and turn it into tangible strategies and tactics.