Market Analysis 4: Examine Your Competition Past, Present, & Future

This continues our series exploring how to prepare the market analysis section of your business plan

A key section of your market analysis examines your competitors. Competition both stimulates and jeopardizes your business. It spurs your business to greater excellence, productivity, and service. It also attacks your revenues, market share, and perceived reputation. Understanding and compensating for your competitors’ efforts require regular analysis.

Information You Examine about Your Competitors

You need to examine several things about your competition:

• How the quality, price, and availability of your product or service compares to theirs
• How their availability and convenience of purchasing & receiving compares to yours
• What would motivate clients to purchase their product or service over yours
• How does the competitor market to, communicate, entice, and influence clients
• What experiences and relationships does your competition provide their clients
• How do their prices, fees, and added costs compare to yours
• What products/services do they offer that you don’t? Will they introduce new ones?
• How will you compete? (This refers back to defining your competitive advantage)

Defining Your Competition

Many companies compete directly with yours. They sell the exact same products, services, or experiences you do. Indirect competitors sell similar products, services, or experiences. For example, a direct competitor to a restaurant would include other restaurants or dining establishments. Indirect competitors, however, would include theaters, movie houses, or entertainment opportunity.

In addition to direct and indirect competition, some companies compete for the dollar a client might spend with you, but chooses to spend elsewhere. For example, another competitor for the restaurant dollar could be a car or a vacation because the family chooses not to go out to dinner so they can save money for the car or vacation.

How to Examine the Competition

• Study their web site, advertisements, brochures, and other marketing materials
• Mystery shop the store and immediately make notes of your experience
• Read journals, articles, press releases, and publications describing your competitors
• Interview your clients and theirs to assess attitudes about you and the competition

Please come back on Thursday when we discuss how to predict market demand and trends