Important factors to consider in competitive analysis
To complete a full competitive analysis, you need to know the competitive landscape. You must know who your competitors are. Prepare an overview of your competitors, their strengths and weaknesses. Position each competitor’s product against your products. Understand the needs and preferences of the customers you are competing for.
When considering your competitors, determine what are the similarities and differences between their products and yours. You should also consider how their prices compare to yours and how well they are doing. You must have a specific plan to compete. For example, you can offer better quality services, lower prices, more support, or easier access to services. It should address the following basic questions:
o Define your target market.
o Determine the size of the target market.
o Dig deeper into your specific segment within the target market.
o Define the size and revenue opportunity your segment represents.
o Determine how fast the overall market and your specific segment are growing.
o Learn what factors are most important to your customers, such as price, technology, ease of use, or new uses.
o You must know the most important characteristics of your industry. Is it driven by high or low volume? Is it capital or labor intensive? Is it seasonal?
o Identify and profile your target customers by their consumption budgets and how they make decisions to purchase a product.
o Identify your direct and indirect competitors and understand their impact on you.
o Identify the characteristics that differentiate your product from that of the competition.
To tackle the basics, you need to know where to find industry and competitor information. Information is available from the Federal Department of Commerce online or in the library. You can check Edgar Online and business websites for required financial filings. Look up an industry trade association and industry publications. Go to Hoovers Online or Bacon’s to find trade publications in your industry. You can also look online at http://www.usdata.com or the North American Industry Ratings at http://www.naics.com.
Once all the basic issues have been addressed and your competitive research is complete, you should be able to describe all of your competitors and their strengths and weaknesses. You must be able to clearly articulate what is different about your product and why customers will choose your product over the competition. You should also be able to describe your target market and target customer and what will motivate them to buy your product. Finally, you must be able to explain how you will gain and maintain a sustainable competitive advantage.
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