Competition in Business - Competitive Analysis in Your Marketing Plan

Competition in business can be a major stumbling block to growth and success. To develop a strong competitive strategy, it is necessary to conduct a competitive analysis.

Understanding your competition in business is important: whether you are starting a new business, operating an existing business, entering new markets, or launching new products and services.

As a small business owner, you need to develop a comprehensive strategy to deal with your competition (for example, you might want to include a pricing strategy; or perhaps, an alternative competitive strategy to cutting price; or a value chain analysis to assess your competition, and so on) and to operate in highly competitive markets. Even if you are the market leader today, the threat of losing that position tomorrow, or into the future, is very real if you do not have a solid plan in place.

Writing a marketing plan includes doing a competitive analysis section. You need to assess your competition in business and try to predict what your competition might do in the case that you add new services, lower your price, raise your price, move closer to their markets, hire some of their staff, and more.

To analyze your competition, you must find out as much as you can about them: (do this for the top 3 to 10 competitors – you can analyze fewer if they hold big market shares; or analyze up to 10 if the market is buying from many).

Create your competitive analysis by gathering the following information:

• Who are your competitors? Top 3 to 10 (representing up to 80% of market share). List them by company name, business owner, address, etc.
• Who are your indirect competitors that don’t necessarily sell the same products or services but their sales can affect your sales (e.g. if you sell motorcycles, bicycles and cars can be your competition)?
• What share of the market does each competitor hold? Get as close as possible.Is their position stronger or weaker in the market this year, compared to last year, compared to 3 to 5 years ago?
• What do you believe to be their strengths, weaknesses, opportunities and threats (SWOT)? What marketing tactics can you use to minimize their strengths and opportunities and maximize their weaknesses and threats?
• What are they doing in the marketing mix side: how are they handling marketing mix product, price, marketing mix promotion, and place or distribution (the forgotten mix in the 4 Ps of Marketing )? How effective are they with this program (rank them)?
• What’s their advertising frequency? Can you estimate their advertising/promotions budget? How do they advertise – television, radio, newspaper, trade magazines, direct mail, point of purchase?
• Do they have a website?
• If their price advertised; is it higher, lower or about the same?
• What are their product/service features, advantages, and benefits (their product positioning, product differentiation, or product life cycle)?
• Compare their marketing mix approach to yours. What are their strengths and weaknesses?
• What is unique about your product or service compared to theirs? What is unique about your business compared to theirs?
• What about your customer service: is it better, worse or the same as your competition?
• Do you share customers? Or are your customers 100% yours?
• For indirect or new competitors: what is their barrier to entry into your direct market?
• Is physical location important in your market? Who has the ‘best’ location?
• Is brand recognition important in your market? Who has the ‘best’ brand?

Sources of competitor information:

• Website (if they have one); internet searches to see if the name(s) comes up;
• Annual Report (if they are a public company) - compare profitability of their business (and other comparable business performance measures) to yours;
• Their promotion and advertising program – try to get copies;
• Shared customers;
• Your sales staff – often they know a lot about the competition in business that they face;
• Your suppliers – often they supply your competitors; if they don’t they may more freely share information about them;
• Trade shows – you can pick up promotional material from their booth, ask others about them;
• Trade associations – you can meet them directly, or find out more about them;
• Trade magazines – check out the back issues for announcements or news on your competition;
• Other media – newspapers, magazines, books, television, radio;
• If they have a physical storefront open to the public, go in. (Yes, that makes many people squirm but you’re not doing anything illegal.) Check out their displays, see how they handle customers, how does their physical space look – clean, tidy and well organized?

Once you’ve completed a thorough competitive analysis for your marketing plan, keep it up-to-date.

Understanding your competition in business means reviewing your gathered data on your competitors try to determine what their business strategies and growth objectives are; do your competitive intelligence work regularly. Continually assess progress they might make, against your own business progress. Assess the size of the market and try to determine if it will support the competition – if not, someone will go out of business. Make sure that it’s not you.

Return from Competition in Business to Marketing.

Or Return From Competition in Business to More For Small Business.