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If you’re thinking about setting up your own business, then doing a competition analysis is one of the most important
things you need to do. You will need to identify your competitors, how they compete and impact on your business and then use
this information to define your competitive advantage.
To start a competition analysis, answer the following questions:
- Who are your competitors?
- Who are your five nearest direct competitors?
- Who are your indirect competitors?
- What
is the level of competition?
- How do your competitors compete on price, extra services, convenience and quality?
- How
are their businesses: steady? Increasing? Decreasing?
- What have you learned from their operations? From their advertising?
- How does their products or services differ from yours?
- What is unique about your product/service and what
is your competitive advantage?
A good way to do this is to do a SWOT analysis of your own business and for each
of your competitors. Identify strengths, weaknesses opportunities and threats, and then identify: - How you can capitalise
on your strengths and your competitor’s weaknesses.
- How you can work on your weaknesses and mitigate against
any threats to your business.
- How you can pursue your opportunities – and chase your competitor’s opportunities!
Start
a file on each of your competitors and collect samples of their advertising and promotional materials as well as any pricing
information. Review these files periodically, determining when and how often they advertise, sponsor promotions and offer
sales.
Study the copy used in the advertising and promotional materials, and their sales strategy. For example,
is their copy short? Descriptive? Catchy? Or how much do they reduce prices for sales?
Using this technique can
help you to understand your competitors better and how they operate their businesses. But the purpose isn’t to copy
their business profile and strategies, but to identify ways to make YOUR business stand apart from your competitors.
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