Introduction to Competitive Analysis
What is Competitive Analysis?
Competitive Analysis is a crucial aspect of business development. Analyzing and understanding who are potential competitors of your business and idea can help you take the right steps to develop a unique value proposition. It is a process in which a business identifies its competitors and engages in analyzing their strengths, weaknesses and future strategies. Understanding your competitors and doing competitive analysis well sets the business at the correct path to develop their go-to-market strategy. If a go-to-market strategy is successful, that significantly increases the chances of business success.
Every business should identify both direct and indirect competitors. It is always important to understand competitors that are easy to identify and also the ones who might not compete with your business at one glance. In order to hold a competitive advantage over your competitors, it is necessary to conduct detailed research about their products, sales, and marketing plans/tactics.
5 Steps for conducting a Competitive Analysis
How to identify a market competitor
First things first – are they realistic? To decide what competitors will be included in your competitive set, you need to outline them by type. There are three major competitor types: direct (realistic and aspirational), indirect, and perceived.
Direct competitors: Companies that sell the same product or service in the same category as you (ex. Chipotle and Qdoba).
Realistic direct competitors: Those on par with you in geographic reach, employees, breadth of services, etc.
Aspirational direct competitors: Leading companies in the space that can inspire marketing opportunities but that you don’t go head-to-head within sales conversations.
Indirect competitors: Key players in your industry that sell the same product or service as you, but it is different enough to act as a substitute (ex. Chipotle and Wendy’s).
Perceived or replacement competitors: Businesses that sell a product or service that is different from yours, both in category and type, but one perceived by your audience as a replacement to spend their money (ex. Chipotle and Hot Pockets).
Perform a SWOT Analysis
As you evaluate each component in your competitor analysis (business, sales, and marketing), get into the habit of performing a simplified SWOT analysis at the same time. This means you will take note of your competitor's strengths, weaknesses, opportunities, and threats.
Some questions to get you started include:
What is your competitor doing well? (Products, content marketing, social
Where does your competitor have the advantage over your brand?
What is the weakest area for your competitor?
Where does your brand have the advantage over your competitor?
What could they do better with?
In what areas would you consider this competitor a threat?
Are there opportunities in the market that your competitor has identified?
You'll be able to compare their weaknesses against your strengths and vice versa. By doing this, you can better position your company, and you'll start to uncover areas for improvement within your own brand.
Example of Competitive Analysis
Competitive Analysis is extremely important for a correct development of business. Doing high quality competitive analysis allows you to understand the market well as well as your competitor and your main advantage over them. This also allows you to get an understanding of how the competition works in the market and make correct decisions for your business.
Arizona Microcredit Initiative (AMI) has consulting and microloan support for yourself and your business. If you have any more questions, you can schedule an appointment today through https://www.azmicrocredit.org/schedule-a-consultation-1 or reach out to us at firstname.lastname@example.org.