All businesses have some form of competition, whether it be from direct or indirect sources. Businesses might find that they face competition from similar products, from substitute products, or simply competition for the amount of dollars that the consumer has to spend.
Once you have identified your primary competitors, you need to analyse their strategies, objectives, strengths and weaknesses.
Strategies: decisions a company makes on product quality, service quality, vertical integration and the entry barriers to the chosen market.
Objectives: what is each of your competitors seeking from the market place? What drives them?
Strengths & Weaknesses: analyse what your competitors do well at and areas they are weak in.
When you analyse your competition, look at these 3 factors
Share of market = share of your target market
Share of mind = customer recall of a brand
Share of heart = brand loyalty for purchasing
Identify your competitors into categories:
Market leader - has the greatest share of the market
Market challenger - is focused on becoming the leader
Market follower - a business that is just happy doing their own thing
Market nichers - businesses that concentrate on unique offerings that don't interest the market leader.
Evaluate the needs of the market and how you think your competitors' offerings meet those needs. Can you see areas to create a niche business? Do you have product differentiation or are you competing on price? Can you take advantage of an emerging trend? Do you have major promotional selling points that your competitors lack? Do you have enough resources and financial backing to take on the market leader?
You should also analyse your own business to see where it sits against current competitors and how it would cope with emerging competitors. Plan where you want to be in 3, 5 and 10 years. Have you positioned yourself with a strong, long term Competitive advantage?