Competitor Analysis: A Definition and Guide
Taking a close look at what your competitors are doing and determining their strengths and weaknesses is an important part of fine-tuning your own business. This vital information can give you the insights you need to create your own marketing and business strategies, based on your points of distinction from your competition.
How to identify your competitors
Identifying your competitors is the first and most important step in analyzing your competition, and there are several ways to find current competitors to your product, service or store. Start with a simple online search for your type of business and location (e.g., “sports stores in Winnipeg” or “coffee shops in Calgary”). You can also use the internet to monitor mentions of your competitors online and in social media so you can keep an eye on what they’re doing.
Brick-and-mortar businesses can use a review site such as Yelp to search for similiar businesses in a specified geographic area. You can also walk around town to get a firsthand look at which competing businesses are already in your chosen neighbourhood or city. Don’t forget to look at the major brands or retailers in your sector and consider how online retailers could affect you.
What to look at when analyzing competitors
Break your competitive analysis into the following sections to look at the various facets of your competitor’s businesses.
Look at the history of their businesses, with a focus on important dates and events. Include research on the ownership, financials and organizational structure of those businesses.
Consider the location of your competitor’s offices or store and its online presence. Location is a key part of your competitor’s strengths and weaknesses as it affects foot traffic, logistics and accessibility. If you have a brick-and-mortar business, your location is vital to your success. Look at where your competitors are based — perhaps you’re opening a brewery and you want to be in the new “brewery quarter” or you’re hoping to open a coffee shop in a cool hipster area.
Companies that are making and selling products should consider how location logistics such as shipping and zoning might affect manufacturing and distribution. Researching your rival’s business operations gives you an overview of what facilities you need in addition to any weaknesses that you want to avoid in your own business plan.
Staffing is an important consideration and your competitor analysis should give you an idea of the number of employees, as well as the types of compensation, benefits, and employee retention rates that can be expected. Resources such as Glassdoor can give you this information, as well as details about required skillsets and and the management style that your competitors are using.
Product-based businesses should look at competitors to see the types of products offered, the depth and breadth of product lines, and whether they are missing any key products. You can search for the product line on the website of most businesses, or you may have to physically visit the store or cafe to see what they’re offering. Look at whether they are currently developing any new products, and whether they have any patents and licenses pending (search the Canadian Patent Database to find out).
Use our guide to market research to identify your target market and find out how much of that market your competitor is reaching. Consider whether you actually share a common target market with your competitor. If they target different customers, it’s worth considering whether you should, too.
Check your competitor’s social media and online presence to see how much of a loyal brand following they have. What are people saying about the company and why they love them? Have they had any PR fails that made their audience unhappy? Take a look at their marketing tactics — are they spending money on advertising, or relying more on special offers and social media to get the word out? If you own a retail business, then you can go into your competitors’ stores to see what promotions they’re running. For other types of businesses, however, you may need to make discreet enquiries about special offers or pricing plans.
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