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How to Conduct Competitor Analysis

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  • 0:00 Competitor Analysis
  • 0:23 Identifying Competitors
  • 1:31 Direct Competitors
  • 2:45 Indirect Competitors
  • 3:33 Lesson Summary
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Lesson Transcript
Instructor: Sean Kennedy

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

Conducting competitor analysis is vital to determine your own strengths and weaknesses compared to your competitors. In this lesson, we will identify how to determine direct and indirect competitors.

Competitor Analysis

Competitor analysis is a way to compare competing businesses' strengths and weaknesses with your company. Using competitor analysis can give you an idea of what needs to be improved, and what is working well. Knowing your competitors before developing your product allows you to create a unique product.

Identifying Competitors

The first step in competitor analysis is to identify competitors, or companies that perform in the same segment, have a similar product, and compete for the same type of customer. To identify your exact competition, do research to determine which competitors are directly competing with your product. Then you should determine if your products are similar enough for analysis. Both direct and indirect competitors will play a role in conducting competitor analysis.

You should also use the size and scope of your company to determine appropriate competitors. For example, if you own a local candy shop, you would want to compete with other local candy shops in the area, not Hershey's. Although the products may be similar, you would want to concentrate on competing with smaller companies that distribute within your area.

While determining competitors, you should investigate things like how long they have been in business, if they are growing, and how customers view them. You want to be aware of what you are going against, and what your company should focus on to improve growth.

Direct Competitors

The best way to determine direct competitors, or companies that produce the same product and target the same customers, is through talking with customers and industry experts. You can also purchase a competitor's product that is similar to yours and test it out. Being able to see and try the product will give you the most knowledge about the product. Doing extensive research on where your company's product is being sold and who is competing in those stores will give you a better idea of competition.

For instance, Hershey's is a chocolate company that competes with Dove, Nestle, and Mars. Dove, Nestle, and Mars would be considered direct competitors and are vital to Hershey's competitor analysis. They have similar products and are targeting the same type of customer.

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