Competition Analysis in Business Planning

Competition Analysis in Business Planning
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  • 0:03 What Is Competition Analysis?
  • 1:10 How to Determine Your…
  • 2:38 Using SWOT Analysis
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Instructor: Sean Kennedy

Sean has 8 years experience as a supervisor and has an MBA with a concentration in marketing.

Do you own a business and want to know how to stand out from the pack? In this lesson, we will discuss what competition analysis is, how to determine your competitors, and ways to compare yourself to competitors through business planning.

What Is Competition Analysis?

Are you wondering, 'How do I decide who my competitors are?' Or, 'How do I analyze how we are similar, and how we are different?' Deciding who your direct and indirect competitors are and how you compare with them is an essential step in determining how you should sell and market your product or service.

Competition analysis is looking at your competitors' strengths and weaknesses compared to your company's. It is crucial for you to know information about your competitors so you can make your products or services different and, ideally, better than theirs. You must determine which competitors are your direct competition and which are your indirect competitors so that you can use this information in your business planning.

Imagine you own an Italian restaurant. You look at other Italian restaurants in the area. They are your direct competitors because they are the same type of business (restaurants), and they also serve the same kind of food. An example of an indirect competitor would be a French restaurant. You both sell food, but you serve different items.

How to Determine Your Competitors

The best way to learn who your competitors are is through research. Identifying your competitors allows you to gain information needed to form or change your company strategy. If you own a larger company, you will want to concentrate on looking at similarly sized competitors. It may be easier to gain information on competitors by looking through their websites, looking online at reviews, their brochures and marketing materials, or even buying some of their products and analyzing the products and related customer service experience first-hand. For smaller businesses, let's say local restaurants, you could examine their menus, go to the restaurants to try their food items and experience their service, ask around for information about their services, and check out local review websites.

It may be helpful to write down all of your competitors and decide what you have in common with them and what is different. Consider all relevant factors, like product quality, physical location and appearance, expertise, payment methods and refund policies, customer service, and marketing style. You can determine your strengths compared with theirs after doing research. The point of doing this is to learn how you can make your product or service stand out and use that information in planning your business activities. Competition analysis can be done whenever you are planning a product or service launch or revision.

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