The competitor analysis simply looks at what your business’ competitors are doing in the marketplace. More specifically, an analysis provides insight into how the activities of competing businesses on your radar compare to your own business activities.
This offers an indication of what your unique selling niche is in the marketplace, and you can market your business more effectively with that point of difference.
Award winning business management consultant Wendy Fogarty suggests breaking up your competitor analysis into four sections: direct competitors, indirect competitors, emerging competitors, and competitors from a bench marking perspective.
- Direct competitors Direct competitors devour some of your potential market share, and possess the same sort of customers that you would want to have. Intensely study these competitors to see what their offerings are, how they market themselves, what networks they are part of, and anything that will give you a comprehensive understanding of the way they work.
When competing in a local marketplace, you need to pinpoint an answer to this question from customers: “what’s the difference between you and them?”
- Indirect competitors Indirect competitors may not even be in your industry, or they may be much smaller than your businesses or do not eat up much market share. However, these competitors can often turn into direct by way of changing their tact—or indeed, by you changing your tact.Wendy Fogarty gives a personal example in that she provides management consulting, marketing plans and implementation. Her indirect competitors are the marketing consultants who only provide marketing, for example, but they can easily become direct competitors if they were to add other services to their business repertoire.At least make a note of your indirect competitors and keep them in your peripheral vision.
- Emerging competitors This branch of your competitor analysis is focused on businesses that have just started up, or are gradually gaining traction in the marketplace or via the local media. Like indirect competitors, emerging competitors can rapidly become direct competitors, so it’s good to keep them also in check.
- Competitors from a bench marking perspective Once you’ve taken note of the first three sections of the analysis, it is a wise idea to look at competitors from a bench marking perspective. This involves looking at where you want to take your business in the future, and seeing who is achieving what you want to achieve.Take three of your direct competitors and analyse them by their marketing elements and note what works for them. If they have been around far longer than you have, they will have already tried and tested things in the marketplace, so it’s beneficial to delve into their hidden treasure and pull out things you can weave through your own business framework. From a bench marking perspective, looking at competitors will shape your own business vision and help propel you forwards to where you plan to be.
Any business owner must know their place in the market, and recognise who the direct, indirect and emerging competitors are in order to safeguard, strengthen and grow their business. This article is based on an extract from the MentorNet mentoring program session on Business Planning. For more information about the HerBusiness Network’s mentoring services, see the Mentoring section of this website. For details of the next Business Plans Made Easy, visit the Upcoming Events section of this website. This article was co-authored by Elizabeth Rowe. Elizabeth graduated with a Bachelor of Arts (English Literature) at the ANU and a Masters of Media Practice at the University of Sydney. She is currently completing an internship with the HerBusiness Network.
