How to do a Perfect Competitive Analysis for a Business Plan?
In any of the business scenarios, it is always said to be one step ahead of your competition. But, how precisely do you achieve that – particularly as a beginner in the market? Well, to stay a step forward, you need to consider your competition and observe them on a continuing basis. This extensive study is known as competitive analysis. It enables you to anticipate your competitor’s actions and behavior. Knowing your competition is as significant as knowing your product and your client.
Does the question arise how to write a competitive business plan? A business plan should be to lead with your strength and overcoming your weaknesses. Also, it should utilize opportunities in the best possible way with the identification and mitigation of threats. It is essential to understand that knowing more about your competitors is a crucial business requirement. To turn all this information into actions in your business plan shall help you go a long way.
Below is a precise step-by-step guide to creating a competitive analysis and to help you thrive among your competitors:
Firstly, Figure Out Who Your Competitors Are!
Competitors are businesses or groups who offer a related product or service like yours. If you are planning to start a business, it’s important to have ideas about who your business competitors are and how they operate. It would help if you studied the market segments served by your competitors, benefits offered by them to the consumers, their pricing and promotion strategy, and their unique competitive advantage, which makes the customers purchase products from them.
If you’re going to operate locally, you can quickly know your business competitors by doing an online search for local businesses, look in the printed local phone book, or even driving around the target market spot. However, it is crucial to be also aware of non-local competitors. For instance, if you’ve opened a local Kirana store, you need to also keep a tab on these big eCommerce giants that have now started venturing into supplying essential daily use products.
How to Create a Competitor Analysis Report?
How to do a Competitive Analysis is the question of the hour. Note down a brief report of the competitor’s business and understand what makes them your biggest rivals. The starting point to it would be by either visiting them directly or on their website. You need to look around carefully to observe even the minute details about your competitors. Details such as how their customers are treated, their pricing strategy, and the relationships they have with vendors as well as suppliers are worth knowing.
You can always try to contact their vendors or suppliers, employees, or customers to find facts about your competitor’s business. There are chances that they may not be keen to speak to you, but it’s worth seeking them out through inquires.
Press releases, online publications, and magazines, publicly available information about your competitors are the other sources that help to gather information for competitive analysis reports.
Identify the Client Base
The next step would be to know the customers that your competitors are targeting. By visiting their websites, social media pages, blogs, advertising, and other marketing material, one can have a fair idea about the customers they are trying to reach. This knowledge can also help you to check your position when compared to your competitors.
Below mentioned points shall help you in knowing more about your competitor’s target market:
- What income group are they targeting?
- What message does their marketing material convey?
- Is there a separate marketing message for varied market segments?
- Whether their material is attention grabbing or elegant?
- Do the marketing materials appear gendered?
- What consumer demographics can you conclude based on your competitor’s marketing message?
It is essential to be aware of the pricing policy adopted by your competitors on their products and services. Gather information related to the –
- Price of the product
- Additional charges charged for additional services such as after-sales services
- Amount charged when the product is shipped
- Interest cost if the product is provided on an installment basis
- Any other services which are provided by them and is added to the cost
Deconstruct the Marketing Strategy
It is vital to dig deeper and look into the marketing strategy adopted by your competitors. In today’s time, where technology has advanced to a large extent, digital marketing is something that is welcomed by most businesses. However, due to inadequate resources, small businesses may not take on an extensive marketing plan.
Marketing is the way to connect with our customers and convey our message. Thus it is vital to have an understanding of the marketing strategy adopted by the competitors and us as well. Analyze the marketing methods taken on by your competitors by studying the following:
- Social media platforms on which your competitors are active, the number and frequency of posts shared by them, number of followers, likes, and comments of their followers.
- If the company has a blog and how periodically it is updated?
- Have they marketed the products via advertising? If yes, analyze the content they have featured in ads and the medium through which they are advertising.
- Are they cross-promoting their product with other partners?
- What different promotional strategies are being used by them to increase their sales?
- Make a note of the technique used by them to plan their website. The design and the content presentation is something that attracts users to dig deeper.
Recognize the Competitive Advantage
Study the information you have gathered about all of your competitors and figure out means as to how shall you compete with them. The purpose of your analysis is to discover and increase upon your competitive advantage. This includes the benefits that you can propose with your business that can be put forward in front of clients that your competition can’t or won’t deliver. Identify your future business’s competitors, how much of the market they manage, and related facts about the rivalry.
Does SWOT Analysis serve as a summary of how to do a market analysis for a business plan? You will study in-depth your competitor’s business and its strengths along with their weaknesses. Companies succeed based on their capability to win over consumers. Understand what features of your competitor’s products are highly unique and why your clients will fall in love with it.
Analyze your Business Strategies
Note down how prepared you are to handle the noted competitor strengths. Are you competent enough to outperform them? Next, focus on how well you know the weaknesses that subsist. Do your homework properly and figure out if this weakness can present you with an opportunity. Analyze if it will be simpler to convert these weaknesses into strengths and how long will it take for you to do so.
Sooner or later, your competition is going to cause some severe threats to your business. Consider the possible threats that can be caused to your business by your competitors. When you comprehend your competition is sleeping on the situation and you’re ready to pounce on that opportunity, it presents a great way to eat up some delicious market share.
Hence, it will assist you if you have already explored the market segments, advantages offered by these segments to the consumers, the pricing and marketing strategy, and the competitive edge, which makes the customers buy your products.
So, to establish yourself as a successful business, you need to convince the reader of your business plan that you are well-informed about the competition and that you have an explicit, decisive plan that will enable your new venture to compete successfully.