Competitor Analysis

In my capacity as a business coach and consultant, I am often surprised that small to medium business owners neglect to analyse their competition. An in depth analysis of your industry competitors can assist you, in your business, to identify opportunities for improvement. It is so important to know what companies you will be competing with, including those who are not currently in the market. Can you imagine that Microsoft doesn't know what Apple is doing in terms of its product development and market share, or vice versa?

A comprehensive analysis of your competitors will allow you to monitor how your business compares in terms of:

Staying power (financial resources)
Key personnel
Product availability
Service standards including after sales service, warranty policy
Ability to satisfy customer needs and requirements
What is the market share of each competitor in your target market and what market share can you expect to achieve in both the short term and the long term
Do you provide a product or service which is complimentary to any of your competitors? Is it feasible for you approach them for a strategic partnership opportunity rather than competing with them in the marketplace?
What do they offer to their customers for the price they are charging? Can you offer something more or something different to entice consumers to choose your business instead of that of your competitor?
What sort of Return on Investment (ROI) are your competitors attaining from their marketing campaigns and are there certain forms of marketing that yield a greater Return on Investment than others?
What do their customers think of them as a service / product provider overall? Can you capitalise on any gaps in product or service provision?

When you have correctly and comprehensively undertaken a competitor analysis, you will then be able to effectively determine strategies for capitalising on opportunities in regards to your industry competitors and minimise potential threats (see Competitor Analysis - Implications to Your Business). Again, the following example of a competitor analysis is taken directly from a business plan I developed in 1997 for a start up business I was involved with at the time. It has no reference to any business currently in operation.

	Business Name 1	Business Name 2	Business Name 3
Market Share	Very small percentage of a large industry – based on industry statistics and business turnover, market share is less than 0.00001%	Very small percentage of a large industry – based on industry statistics and business turnover, market share is less than 0.00001%	Wholesaler of imported giftware to a large number of retail outlets – statistics on market share unavailable
Major Customers	R.G. Madden (a line of giftware stores in Australia) nationally and Brazen (a boutique giftware store in Melbourne)	Small number of retail outlets and general public through market stall sales	Upmarket giftware retail outlets. Supply a small amount of stock to Myer (large dept. store in Australia)
What do their customers think of them	Generally reliable and very good quality product	Constantly late in delivery, generally friendly and reasonable prices	Very reliable and usually deliver stock in a timely manner
Pricing Policy	Usual mark-up is 75% but currently offering 15% discount on all stock to ‘get it moving’	Usual mark-up is 100%. Retail stores and customers purchasing in bulk receive 10% discount	Mark-up varies based on product. Averages between 60% - 85%
Financial Strength	Currently over $5000 in debt due to business start up costs	Family business with low overheads	Speculation – large factory warehouse. Assume business is on stable footing
Product / Service Range	A variety of picture and mirror frames custom made to suit requirements and décor	A variety of kitchen and bathroom containers	Vases, frames, candles and a variety of other trinkets targeted at the upmarket homeware and giftware market
Product / Service Quality	Exceptional quality – if a product isn’t perfect, it isn’t offered for sale	Very good quality, could find no fault with products	Mass produced stock, initial inspection indicates good quality
Customer Loyalty	Repeat business from photographers, artists and other businesses that require custom frames	Due to large number of matching products, customers try to buy entire range to ensure continuity in their kitchens	Regular orders from retail outlets to whom they supply stock
Brand Recognition	Very distinctive products but very little brand recognition as this is a start up business just establishing themselves in the marketplace	Original design but not very distinctive. A number of products like them in the marketplace	Common range of products, can be found in any upmarket homeware and giftware store
Length of Time in Business	18 months	3 years	7 years
Alliances	Fencing contractor supplies leftover wood for frames	No alliances	Share premises with another wholesaler and they sometimes share leads
Premises / Location	Address, phone number and website details go in here	Address, phone number and website details go in here	Address, phone number and website details go in here
Research & Development	Constant experimentation	Only changes product if asked to do so by customer – no research undertaken to ascertain market trends	Company Director tours overseas twice a year to source new products – mainly Asian and America
Plant and Technology	Latest equipment in good condition. Well organised home-based workshop	Well organised home-based workshop	Small but very classy showroom
Manufacturer, Wholesale, Service, Retail	Manufacturer and Wholesaler	Manufacturer and Wholesaler	Wholesaler
Advertising	Business cards Tags on products Informal networking	Business cards Weekend market stall	Business Cards Advertisement in Yellow Pages Industry periodicals
Customer Service	Reliable and friendly, said to be good on follow-up	Generally friendly, no after sales service. Often late on delivery	Overly friendly, very pressured sales environment
Positioning	Tag line goes in here	Tag line goes in here	Tag line goes in here
Number of Employees	No employees, only self works in business	Family business, husband and wife team	Shares receptionist with adjoining business, two sales people and two delivery drivers
Distribution Methods	Delivers in person if in Melbourne or uses registered post for interstate orders	Deliver stock to retailers themselves. All Melbourne based customers	Delivery drivers deliver stock to retailers. Occasionally retailers will pick up orders to save on delivery charges
Patents	Has licence on back of frame but no patents	No licences or patents	Not applicable
Sales Tactics	Door-to-door sales and direct sales tactics	Market stall, informal networking	Customers come to warehouse after exposure to advertising
Growth	Currently expanding interstate and investigating opportunities for export	Not looking to expand any further	Always looking to capture new retailers to sell products but not pro-active in sourcing