How to do a competitive analysis for a business plan!

As part of our business plan and feasibility study services, we do a lot of competitive analysis across sectors. Today, we have tried to collate these learnings into this blog so that it can help consultants and analysts to do it better. What we have done here is to bring out 2 different matrix and discuss about them. The table below is a mapping that we did for a client who are into restoration of furniture and interiors. A strategy we generally take when doing competition analysis is to check whether we have the opportunity to do an apple-to-apple comparison with the competition. Also we check that how much information we can get about each of the parameters that we have considered. Sometimes we also try to do a scoring on the competition that also gives us a clear picture on the standing of a competitor vis-à-vis the client. What we do not see in the table below is future roadmap of the clients or the competitors. This is a parameter that we occasionally try to incorporate into the analysis as it gives us a good idea on the road ahead of the competition.

Another very important aspect is the pricing strategy of the competition. The pricing strategy determines how you should create the pricing strategy of your products. Whether, it should be a premium product or placed in the midmarket segment or the lower end of the market depends on the pricing strategy that is adopted by the competition.

                                                Table 1

                                        Figure 2

The picture above, is another format for doing a comparison analysis. It is quite exhaustive and analysts can choose to delete the sections which they do not want to use.

It has become remarkably difficult to distinguish direct competitors from indirect threats - and when you do, you find competition often comes from surprising places. In fact, competition in different industries is increasingly coming from indirect competitors, whose core businesses enable [1]them to invade adjacent verticals and industries.

Limiting your organization to direct competitors only might lead you to a very narrow view of the market. The competition framework should allow you to evaluate companies that aren’t just your direct competitors but companies that could easily move into your turf. You want to consider companies that aren’t currently in your category but could potentially leverage their product or technology in your space.

Outside of direct competition, the most dangerous competitors are those that sell to the same target customer. These companies already have access to customers so it’s much easier for them to provide products or services that solve another problem for the same customers.

When you are starting a competition analysis, some of the key factors that you should focus on are number of customers, market share, organization strengths and weaknesses, age of the competitor, possible growth etc. Infact, there is no limit to the depth of which you can take your competition analysis to.

While it is always important to know the competition, it is equally important that we should not make any attempts to copy the competition. Rather, you should focus on better quality products, innovation and related factors that can make your products or services more acceptable to the customers. At the end of the day, no matter how much you map competition, it is your product that will either be accepted or rejected by the customers.

Developing a competition analysis requires specific skillset that many companies do not have. Connect with us at info@intelligentq.co.in so that we can help you create an indepth competitive research so that you can know your competition better.