Each business, save for the monopoly, is generally under the threat of competition from other like-minded players. It hence goes that before venturing out in a particular business, you have to ascertain the level of competitiveness and how to counter the same altogether. Carrying out a competitive analysis is a sure way of achieving this.
Competitive analysis refers to examining the strengths, weaknesses, opportunities, and threats that exist in a particular business environment with the view of determining the courses of actions as well as the levels of preparedness you need to put in place to counter the same.
How to Create a Competition Analysis Template
Step 1: Carry out a competitive overview
Start off by carrying out a competitive overview. By ‘competitive overview’ we mean identifying the strategies and advantages that your competitors in the business employ to find out how they fair on with your own. While at it, you should examine the following:
- Total industry revenue
- Each player’s market share
- Company sizes and their management regimes
- Strengths and weaknesses of each player
- Customer perceptions of each player or company
Step 2: Undertake market research
Other than knowing about your competitors, you must also understand the target market and how likely they are to respond to your entry. For this reason, you have to study the nature, demographics, and the conduct of the market to know the nature of your potential clients and the prevailing industry trends.
To do this, you will make use of the direct interviews, online surveys or questionnaires, in-person focus groups, past company records, current economic conditions, and the prevailing technological developments.
Step 3: Compare the products and services on offer
Having understood the nature of the market, you now have to compare the products and the services that your competitors provide one-on-one to find out how they fair on. Some of the parameters you have to care for are:
- Customer support
- Ease of use
- Number of features
- Product quality
Step 4: Ascertain your strengths and weaknesses
Now, move on to assess your own strengths and weaknesses in a swot analysis. This analysis basically evaluates your own competitive position by delineating your core strengths, weaknesses, opportunities, and the threats you have to counter head-on to stay afloat. You have to summarize them preferably in a tabular form for ease of interpretation.
Step 5: Determine your position in the competitive landscape
After finding out all of the above details concerning your target market, you now have to determine where exactly you fit in the competitive landscape. This is to give you a realistic assessment of the kind of milestones you are likely to hit and the challenges you have to contend with in order to make any meaningful headway.
Nb: it is always important to make use of a competitor analysis template to be able to achieve that professional look and feel. The template is also needful for the guidance that it brings along, more so to the person who has never attempted to carry such an analysis before.
Competitive Analysis Samples & Templates
Main Elements of Competition Analysis Template
Under this subheading, you compare and contrast the main facts about the competitors you are likely to take on while in the market. Some of the issues you might have to focus on here are the years when the companies were founded, the length of time they have been operational, the market values, client base, and the number of employees.
#2: Additional Value
In this section, you will basically seek to know the fringe benefits that the metrics we have mentioned above may add to the potential client. Simply put, what advantage, if any, do those issues you have identified above give to the respective companies?
#4: Finer Details
Here, you will now examine each product in greater detail to know what it potentially brings along to the client. As you do so, you have to compare similar products that are produced by other companies of its kind. Do not hesitate to draw deductions where appropriate.
Lastly, you also have to examine the cost aspects of each product and services that are produced. Weigh these costs with the values that each product potentially brings along. That way, it will be possible for you to come up with a fairer and more accurate conclusion.
Purpose of Competition Analysis
The competitive analysis serves many purposes. Below are but a few of those purposes:
- The core reasons underlying the success of the firms
- What motivates customers to pick the services of the firms in question
- A breakdown of the costs that eventually determine the price levels
- Barriers to entry, progress, and overall performance
- Past and future strategies that have been employed by competitors to stay afloat
- Helps companies ascertain their own competitive edge and how they can leverage the same for their future growth and stay in business
- Aid the entrants to formulate strategies to take on the market
- Forecast the future revenue inflows and how to hit those targets
- Learn how to outmaneuver the opponents in the marketplace and stay profitable
- How best to endeavor to execute the marketplace strategies to bring in maximum revenue inflows
Things to avoid
Failing to make any follow-ups
Trends come and go. A conclusion that may hold as a fact today may not necessarily hold for the long run. That is why you are advised to make follow-ups from time to time. As you do so, be sure to update the facts and conclusions you arrived at earlier.
Disregarding your own prejudices
We all have our own biases. However, it is not prudent to allow those biases to cloud our own judgments, and ultimately, the decisions we arrive at. Unfortunately, many people allow this very thing to happen to them. Instead, you should allow the data to give you factual conclusions.
Taking no concrete actions
It is pointless carrying out such studies yet doing nothing concrete to implement them. Many people, yet again fall short of this. They study the markets, arrive at appropriate conclusions yet do nothing more thereafter. This is not wise at all. You have to follow up on your studies with timely implementations.
Approaching it from a wide scope
You can never bite more than you can chew or swallow. This is a commonly agreed ethos that nonetheless escapes the comprehension of many people. You should, therefore, make it a point of approaching this whole issue from a scope that is somewhat narrow. Widening your scope excessively might only overwhelm you.
Having no formal outline to guide you through
For best results and suitable outcomes, you have to put in place a formal outline to guide you through. The lack of such an outline yet again will only disparage you. This is where a template comes in handy. It does provide the guidance and the support necessary for better outcomes to be realized.
Not factoring the timing
Lastly, quite a number of times, people tend to disregard the timing. Obviously, any study has to happen within a stipulated timeframe. Taking too long or too short may definitely compromise the outcomes and the reliability of the data and conclusions arrived out. That is why you have to carry out everything within a set timeline.
Tips for Competitive Analysis Template
Compile a list of all your competitors
To be able to arrive at the fairest and most reliable deductions, you have to compile a list of all your competitors. Remember, the market place is some kind of a battlefield. You have to know your opponent deeply to be able to stand a fair chance of facing off with him.
Summarize the products and services of your competitors
After compiling the list of your competitors, you thereafter have to summarize the products and the services that the competitors have to offer. Be systematic and detailed in your analysis. That way, you will get to know the exact products of your competitor that your match.
Mind about the strengths and weaknesses of your competitors
Needless to say, you have to mind the strengths and weaknesses of your competitors. That way, you will get to know the exact issues you might confront and the manner of ways you. While at it, inquire what makes those companies stand out, why clients prefer their products, and the factors that keep them at the top, and so on.
Study and grasp the market outlook
The nature of the market also counts. Remember, you can only make a sufficient amount of money in an environment where people are moneyed and are open to business. This entails studying the consumption habits of people, their likes and dislikes, and the things they care for while seeking to meet their ends.
Make projections and future trends
It is always good to stay ahead of the game. This can only mean adopting a futuristic approach towards the approach of the clients and the market as a whole. For this, you have to make projections and future trends on the basis of the data and behaviors of the market at the moment.
Types of competition analysis
Like any other field of study or concept, competition analysis also comes about in various types. Two of the most common forms are:
Competition analysis in marketing
As the name suggests, this is an analysis that is mainly concerned with matters of marketing. It endeavors to find out the challenges that an entrant in the market is likely to confront. At the same time, it also looks into the strategies that the said entrant is supposed to implement to be able to gain a strong foothold.
Some of the issues that this analysis comprises are:
- Assessment of your rival’s weaknesses and strengths
- The situations that may give your opponents a competitive edge
- Circumstances that may pose a threat to your competitors
- The strategies to employ to counter the aforementioned threats
- Your own plan and how they may fair on with those of your opponents
Competition analysis in strategic management
The competition analysis in strategic management endeavors to find out the most cost-effective planning, monitoring, analysis and the assessments that are needful for the organization to meet its objectives and strategies. The analysis also takes into consideration the alterations in the business environment and how they may impact the performance of the business as a whole.
This analysis contains the following points:
- Planning, monitoring, analysis, and assessments of the business strategies
- Likely changes in the business environments
- Impacts of these changes on the performance of a business venture
- What an organization ought to do to operate smoothly
- How to alter and reinvent these strategies if and when the time comes