My newest client is one of a very small number of competitors in their market, across the UK. Following a couple of initial meetings, we decided that carrying out a Competitor Analysis was an essential exercise before proceeding onto our own strategy.
(For obvious reasons I must keep the client and industry anonymous, but it is an industry that relies entirely on its product … think available books in a book shop …).
So … how did we do it? Where can you start? Here’s how:
First and foremost, draw up a list of competitors!
Secondly, define your analysis criteria (the rest of the article will help with this). Now create a spreadsheet template. Beautiful.
Look at their website / social media pages.
- How many and what are their different genre’s of product?
- How similar are their products to yours?
- Who are their target audience?
- How many products are on offer?
- How many are available now?
- What are their prices? Roughly. Cheaper or more expensive than yours. You are the benchmark.
- What are they promoting now! i.e. what appears to be their current focus (or strategy if you will …). Why do you think they are promoting this? Do you know? Or what is it that you don’t know?
Do they get much press coverage? If so, what are they promoting. Are they focusing on a single product or genre? Why do you think that is? Excess stock? Or is it going to make them a lot of money!?
Do you know of any first hand accounts of buying from them? What is their customer care like? If no – or even if yes – have you tried setting up an email address and making an enquiry yourself (gee shocks, can I do that? Well, yeah, you can). How did they respond? How quickly, how friendly, and how honest? Please don’t waste too much of their time though, I don’t wish to promote underhand tactics.
And the obvious one. Are you able to get hold of their annual financial reports? All submissions to Companies House are made public to us all. And they’re free. Contact me if you need help accessing these and I will show you how (also for free).
How well are they performing, financially? But also, who are the directors? Do they appear to have more backers than you assumed? Have any Directors joined or left recently? This can often provide a better insight into current performance than the financial statements themselves.
So … what are their Strengths? What are their Opportunities? Are they offering anything that you could too; which would reduce their product advantage? Do you think they know what their opportunities are? This may be a weakness …
What are their Weaknesses? What are their Threats? Is there anything you could (legally and ethically) do which would increase this weakness or trigger a threat?
Finally, are there any other possible issues or items to note? i.e. are they a part of a bigger Group of companies?
What appears to be their current strategy?
- Are they keeping prices low – hoping to gain market share? (Market Penetration).
- Are their prices low because their costs or quality are low? (Cost Leader). Do potential customers know about this? How are you going to let customers know about your better quality products?
- Are they aiming their product at a different market to you? Can you enter this market too?
- Is there much focus on product development or innovation? How will you compete once these innovations have gained traction in 6 months / 12 months time, et cetera?
This isn’t intended to be an exhaustive list, but hopefully short and good enough to set a small business owner off in the right direction for their own competitor analysis.
