Creating your Competitive Analysis eBook

CREATING YOUR COMPETITIVE ANALYSIS

a. What is a competitive analysis?b. Benefits of your competitive analysisc. Where do I start? • Who are my competitors? • Determine what you need to know • Gathering information • Tools to analyze your datad. Determine your competitive positione. Conclusion

Creating your Competitive Analysis

Contents

Customers get first dibs on your attention.

But who else should be on your radar? If you don’t know who you’re competing with, you’ll be blindsid-ed when your clients and revenue suddenly disap-pear to the competitor down the block.

Every business has competitors. It’s vital to know who your compeition is, what their strengths and weakenesses are, and what their objectives are.

HINT: They want YOUR customers and YOUR revenue.

1

What is a competitive analysis?

A competitive analysis identifies your competitors and evaluates their abilities and

strategies. You can begin determining their strengths and weaknesses by understand-

ing what strategies they use. Keeping a keen eye on the competition can give small-

and medium-sized businesses an edge since they’re the most vulnerable to new

entrants in the market.

The danger of thinking, “We have no competition.”

One of the biggest mistakes a new busi-

ness can make is assuming they don’t

have competitors. All business own-

ers—from franchisees to a doggy day-

care—who are serious about running an

enduring business should have a com-

petitive analysis in their arsenal. If you’re

looking for funding from an investor, you

can be certain they’ll be interested in

learning about the health and perfor-

mance of your competitors.

It’s natural for new business owners to be ecstatic about their new product or service

ready to take over an untapped market, but danger lies in improperly assessing and

underestimating the impact a competitor could have on your business.

How a competitive analysis will benefit your company

Now that we’ve established that you DO have competitors, here are 10 ways a little

research can give your business the upper hand:

Find out WHY customers buy. After analyzing the competition and market as a whole, you’ll develop a better understanding for why customers buy.Ensure you’re not leaving money on the table by learning what products and/or services a company offers and how much they charge for them.Better understand the competitors strategies and tactics. Many business strat-egies are dictated by resources. Is there a resource you have that they don’t? If so, use it!Gain a better understanding of your target market. Are they capturing a portion of your customers? If so, why? What value are they creating that you’re not? (or vice versa).Identify your competitors strategic advantages as well as your own. Some-times, you may not recognize one of your strengths because it’s only a strength relative to your competitor. Understanding their strengths and weaknesses may illuminate advantages you didn’t even know you had. Develop new strategies to help your business thrive and acquire new patrons. Doing a competitive analysis can be a little time consuming, however, the return is huge when you identify key opportunities. Estimate your competitor’s revenue and costs (if possible). If they’re making huge profit margins, it could be time to reevaluate your costs and how they’re structured to save you some dough. Identify potential partnerships. Partnerships with suppliers and companies that offer products and/or services that compliment yours can add significant value to your customers.Determine your competitive position in the market space. Are you the leader in your market? Once you know where you stand in your market, you can set goals and begin planning for next steps. Get more funding! Need more cash flow for growing your business? Great, you’re on the right track! An investor will most likely need to see a competitive analysis before funding you.

Most importantly, while it’s important to pay attention to your competitors, don’t lose sight of number 1: your customers! If you’re only focused on reacting to what your competitors are doing, that means you’re not focused on your customers, which is the only reason you’re in business in the first place.

Where do I start?

A quality competitive analysis is a time

investment. But your ROI is worth the

effort. You’ll be prepared to maintain

your market position when your com-

petitor launches their new service,

promotion or strategy.

Unless you own the “new” Standard Oil from the late 19th century, you have competi-

tion and it’s imperative that you keep tabs on what they’re doing in your market. The

first step to tackling your competition? Know what you don’t know! Find out what kind

of information is most useful when you’re researching your competition. Sometimes,

just figuring out what information is the most important is the hardest part. Then, go

educate yourself!

Because “knowing what you don’t know” is difficult to do and takes time, here’s a

guide to walk you through the basic steps to get going:

1. Who are my competitors?

Direct Competitors

Begin your analysis by creating a list of businesses that are direct competitors going

after the same target market you’re trying to attract. If you’re opening a clothing

retail store for trendy women ages 25-40, you don’t need to include the Men’s Ware-

house next door in your evaluation. Yes, it’s a clothing retail store, but they have a

completely different target market. You aren’t competing for the same dollar.

Indirect Competitors

Indirect competitors can also be significant players so don’t neglect them. An indirect

competitor is a business that offers products or services that are close substitutes

for your product or service. This type of competitor is probably targeting a portion of

your target market, but delivering a different product or service. For instance, if you

run a yoga studio, an indirect competitor could be a Zumba, martial arts or boxing

studio because each service is competing for attention of a consumer’s time dedicat-

ed to working out and relieving stress.

Including indirect competitors in your analysis isn’t required, but if you think an indi-

rect competitor in your industry can significantly impact your business, include the

most noteworthy one in your analysis.

Future Competitors

You’ll also want to think about which competitors in the market space could possibly

become future competitors. If you run a business that offers spinning classes online

so your customers can tune in from home, consider if it’s popular enough that other

studios might consider offering online classes as well.

Identifying all of your existing and potential competitors is an impossible endeavor.

There are too many of them to analyze or consider, so you’ll have to draw the line

somewhere. We suggest you identify 2-5 competitors that are going to have a real

impact on your business over time.

The number of competitors you analyze is less import-ant than their competitive position and the depth of your analysis.

2. Determine what you need to know

During your analysis, you want to collect information to give you insight into your

competitors’ strategy. Some common strategies include: price undercutting, unique

offerings, brand names, or quality.

You’ll want to identify which strategies your competitors are using, so figure out what

questions will help you get there. These questions can be grouped in two sec-

tions—from the view of the customer and a business insider:

Customer Perception Questions: Answer these from your customers’ point of view.

○ What products and/or services do they offer? What

key features do they have?

○ How much do they charge?

○ What drives them to price it this way? Are their

prices cost-driven or value-driven?

○ What promotions do they run? When?

○ What level of quality do they offer?

○ How are they perceived in the marketplace?

○ How do they reach their market? ○ Which social media channels do they use? ○ What kind of advertising to they use?

○ Do they have a customer loyalty program? ○ How do they interact with their customers? ○ How do they retain their custom

○ What core values do they embrace? ○ Are they involved with issues important to customers such as the environment, civic involvement, etc.? ○ Do they have a good location? ○ How convenient are they? ○ How is much market share do they have? ○ How do customers pay? Are those preferred methods? What are their credit policies? ○ On a scale from 1-10, how would customers rate their customer service?

Internal Operation Questions:Answer from a business insider's point of view.

• Do your competitors have large amounts of financial resources?• Do they have highly motivated, passionate or creative personnel and management? • Do they have more operational assets than you do? (ie. more instructors = more class times)• Do they have the latest and greatest technology to run their business?• Do they have a highly trained, customer-focused sales team?• What strategic partnerships do they have?• Do they have patents or trademarks?

This is just a sample of information you can search for. Depending on your industry

and breadth of competitors, different questions may be necessary to get a good

reading on your competition.

3. Gather Information

Now that you know what information you’re looking for, you can begin choosing your

resources and collecting information. An Excel spreadsheet or Google sheets work

great to record your findings. Along the top row, list your competitors. Along the left

column, list the questions you created in Step 2.

Dedicate the first column (after your ‘questions’ column) in your spreadsheet to your

company. That’s right, the first thing you’re going to do is analyze your own business.

This allows you to consistently compare your business to theirs to get a snapshot of

the entire market.

Your spreadsheet may look something like this:

Resources on tap

Internet searchCompetitor’s Website Look at their website for pricing, packaging and core

values (on the “about us” page). Look for strategic partnerships they might

have, key investors or staff certifications.

Google search ‘em! Run a Google search on the name of their company or

instructors to find press releases, news articles and reviews.

Social media stalking Check out their Facebook page, follow them on Twitter,

Instagram or Pinterest to see how they communicate with customers.

Are they private or public? If they’re publicly traded, you can find a plethora

of strategic and financial information in their SEC filing with the IRS. Try going

to http://finance.yahoo.com/lookup to find their stock symbol.

Let Google do the work for you! Use Google alerts to get email updates on your com-

petitors when new articles or news is published.

Go Sherlock on ‘em!Go sign up for one of their classes! This is one of the best ways to get to

know your competitor and the insight is well worth the money spent. Take

notes on the check-in process, level of customer service,

prices on retail items and new member promos.

Interview their clients While in class, ask classmates questions about what

they like about your competitor. What offerings or features made them choose

to take classes there?

Get your customers’ thoughtsRegarding the customer perception questions; Internal perceptions are usually

biased so don’t be afraid to ask some of your customers these questions to

get a clear understanding of the real attributes driving customer choice and

relative importance.

Use Public or College/University LibrariesInfoTrac - This database features millions of articles from magazines and

reference books not available on other free sites.

Reference USA - A good starting point for finding information on companies in

the U.S. region. Also good for building sales lists by industry or region.

EDGAR Database - Great source for collecting financial and investment

information on publicly traded companies.

Access it at http://www.sec.gov/edgar.shtml

4. Analyze your data. Now, take a long, hard look at the information you’ve collected and try to spot pat-

terns and bits of data that stand out. These could identify potential strengths, weak-

nesses and strategies.

Be sure to evaluate your competitor’s price, services and features compared to yours.

What features and benefits are unique to you? To them? The more uniqueness, the

better your competitive position. In identifying potential strategies, look at your prod-

uct, pricing, promotions, marketing, and service. Then consider these factors:

Innovation: Is there an opportunity to create a new offering, a new way of

doing business or creating a better customer experience? Can you patent it?

Has your competition done this?

Differentiation: Have you found a gap? Can you spot a way to distinguish

your product/service in the marketplace? Has your competition done this? In

what ways?

Time: Can your business reduce the service cycle time? Offer self-serve or

express customer service? Can you reduce admin time to focus more on your

customers? Identify ways to use time in ways your competitors are not?

Growth: Are there areas where you can offer better or more services? Is there

a potential market that has been ignored that you can tap into? Can you use

your resources more efficiently to increase enrollment and revenue?

Cost leader: Can you be the low-cost leader in your market and still sell quali-

ty services? Can you get your costs low enough to make the margin profitable

for your business? Do you want to be? Does a competitor currently hold this

position?

Partners: Are your competi-

tors successful because of

partnerships, alliances and/or

relationships with suppliers or

distributors? In what ways?

Can you improve your com-

petitive position by strengthen

your relationship with prospec-

tive partners to improve promo-

tion and customer

value?

You’ve conducted your research and filled out the Competitive

Analysis Grid! Great job!

Now what does all this information tell you?

Think critically about inconsistencies in the data. By answering these questions, you

should be able to disclose strategies and competitive advantages for both your busi-

ness and your competitors’. You may start to recognize areas of opportunity. For

example, you realize your prices are significantly lower than your competitors but your

registration numbers aren’t as high! You have multiple potential problems:

You’re leaving money on the table If customers are paying more money for

the same services somewhere else, they may interpret the price point as an

indication of quality. You might consider raising your prices to improve quality

of your product or service.

Your customers’ perception of quality isn’t high enough. As mentioned, this

could be due to price. But what if it’s actually about customer service, instruc-

tor certification or convenience? By looking at you research, you may be able

to use the process of elimination to identify reasons for why you have lower

enrollment.

One opportunity in this situation might be raising your prices. This will both increase

margin and improve the customer perception of quality in your service/product (if your

target market is sensitive to price point). You won’t know for sure until you look at your

research. Use your information to make data-driven decision about your business

instead of just shooting in the dark.

Examples of advantages you might find include:

• Great branding

• Patents that allow them to offer unique services and/or products

• Innovative sales techniques

• They create huge switching costs so their customers stay

• Access to a lot of capital

• Cheaper services and/or products

• More efficient or clever production or delivery methods

• Superior customer relationship management strategies

The S.W.O.T. Analysis

From your data spreadsheet, you can create a S.W.O.T. analysis—Strengths, Weak-

nesses, Opportunities and Threats—to illustrate and organize key observations.

This analysis gives you, your staff and investors a quick understanding of where

you stand in the market.

Your competitors may have other competitive advantages over you, but the first

step in successfully taking action is by understanding what those strengths are so

you can make better business decisions. This practice will help you exploit oppor-

tunities and minimize threats.

There are a variety of elements that can impact your success. Some are within

your control, like your location and pricing, however environmental elements are

not, like the state of the economy or barriers to entry. This allows you to better

understand which ‘levers’ you can pull to make a more positive impact on your

bottom line.

The S.W.O.T. analysis is a 2x2 matrix where the controllable, internally influenced

attributes are located in the top row; these are your strengths and weaknesses.

Along the bottom row are attributes that are externally influenced that you have

little or no control over; these are your opportunities and threats. Here’s an exam-

ple of what a S.W.O.T. analysis might look like for a Do-It-Yourself Auto Garage:

Once you’ve organized your S.W.O.T., you can use the information to:

1. Exploit and use your strengths as much as possible.

2. Try to transform your weaknesses into strengths.

3. Take advantage of the opportunities in your environment.

4. Be aware of and mitigate the threats to your business as much as possible.

Your competitive analysis is a living document. Continue to monitor your competitors’

actions. This way you can detect strategic and tactical changes. For instance, if your

main competitor has had steady pricing and packaging for a while, but they recently

hired new management or ownership, that could be an indication that they’re shaking

things up. Keep an eye out for major marketing and operational shifts soon.

5. Determine your Competitive Position

Now that you have a good handle on your competitive advantages,you can see what

you have that your competitors don’t, and vice versa. So, if you have one strength,

and your competitors have other strengths, who’s better? This is where the Weighted

Competitive Assessment Table comes in handy.

Weighted Competitive Assessment Table

The Weighted Competitive Assessment Table is a method used to evaluate the

strength of your competitive positioning relative to your rivals. It can reveal key suc-

cess factors (KSFs) in your industry that separate industry winners from losers. This

analysis puts you in the customer’s shoes and stack ranks the importance of key

factors to simplify decision-making.

When a customer is making a purchase decision, what are their top 3-5 consider-

ations? Those factors are the KSFs. Which of these are most important to your cus-

tomer when making their decision? Stack rank your KSFs and assign weights to them.

The total of the KSFs should sum to 100%.

For example: You just got a promotion and are deciding on a restaurant for a celebra-

tory dinner. What do you consider when making that decision? You might say the most

important factors are the quality of the food, the price, the location, the beverage

selection and the atmosphere. For this example, let’s assume that customers general-

ly find these factors important (each factor is weighted based on importance):

1. Social, energetic atmosphere 30%

2. Location 25%

3. Beverage Selection 20%

4. Food Quality 15%

5. Price 10%

100%

Considering the information we just put together, we can build the following weighted

competitive assessment table to analyze which Seattle restaurant would be the best

fit for our criteria:

Each location is rated on a scale from 1 to 10. 10 being the best

Someone who weighs the key success factors as they’re defined above would choose RN74, a French restaurant with an extensive wine list near Seattle’s Pike Place Market as the restaurant to celebrate their job promotion.

This table takes customer perception, benefits,value and competitive advantages into account to give you one score to easily see where you fall among your the competi-tors in your market. Using this table to assess your business and your competitors can give you insight into your competitive position in the market place.

As you go through this process, you’ll likely see some quick, easy changes you can make to improve your business. Go ahead and make your changes, but be sure to document the changes and figure out a way to track it. That way, you can see if your efforts are paying off or not.

Conclusion

A well-executed competitive assess-

ment can take a good amount of time,

but the insight you gain can kick start

your new strategy become a game

changer for your business. To speed

things up, start by getting your initial

thoughts on paper. Ask your staff and

other trusted friends and business

owners in the industry for their thoughts.

Once you have a good foundation you

can begin digging into the weeds.

Just don’t forget, your customers always come first.





12



























Where do I start?












educate yourself!




Direct Competitors

















Future Competitors










































the entire market.


Resources on tap











































what ways?










position?










tion and customer

value?

















enrollment.







• Great branding





















bottom line.
















“No competition is a red

flag for investors. If you

say, ‘there is no competi-

tion,’ then there’s either

no market or you just

don’t understand the

competition.”

- Lauren Flanagan, Cofounder and Managing Director, BELLE Capital USA






















2. Location 25%


4. Food Quality 15%

5. Price 10%

100%








Conclusion













855.417.7120





1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

3



























Where do I start?












educate yourself!




Direct Competitors

















Future Competitors










































the entire market.


Resources on tap











































what ways?










position?










tion and customer

value?

















enrollment.







• Great branding





















bottom line.





































2. Location 25%


4. Food Quality 15%

5. Price 10%

100%








Conclusion













855.417.7120





4



























Where do I start?












educate yourself!




Direct Competitors

















Future Competitors










































the entire market.


Resources on tap











































what ways?










position?










tion and customer

value?

















enrollment.







• Great branding





















bottom line.
















“True wisdom is knowing what you don’t know.”

-Confucius






















2. Location 25%


4. Food Quality 15%

5. Price 10%

100%








Conclusion













855.417.7120





5



























Where do I start?












educate yourself!




Direct Competitors

















Future Competitors










































the entire market.


Resources on tap











































what ways?










position?










tion and customer

value?

















enrollment.







• Great branding





















bottom line.





































2. Location 25%


4. Food Quality 15%

5. Price 10%

100%








Conclusion













855.417.7120





6



























Where do I start?












educate yourself!




Direct Competitors

















Future Competitors










































the entire market.


Resources on tap











































what ways?










position?










tion and customer

value?

















enrollment.







• Great branding





















bottom line.





































2. Location 25%


4. Food Quality 15%

5. Price 10%

100%








Conclusion













855.417.7120





7



























Where do I start?












educate yourself!




Direct Competitors

















Future Competitors










































the entire market.


Resources on tap











































what ways?










position?










tion and customer

value?

















enrollment.







• Great branding





















bottom line.





































2. Location 25%


4. Food Quality 15%

5. Price 10%

100%








Conclusion













855.417.7120

Products and/or Services

Quality

Communciations/Marketing

Customers Relationships





8



























Where do I start?












educate yourself!




Direct Competitors

















Future Competitors










































the entire market.


Resources on tap











































what ways?










position?










tion and customer

value?

















enrollment.







• Great branding





















bottom line.





































2. Location 25%


4. Food Quality 15%

5. Price 10%

100%








Conclusion













855.417.7120

Social Consciousness

Other





9



























Where do I start?












educate yourself!




Direct Competitors

















Future Competitors










































the entire market.


Resources on tap











































what ways?










position?










tion and customer

value?

















enrollment.







• Great branding





















bottom line.





































2. Location 25%


4. Food Quality 15%

5. Price 10%

100%








Conclusion













855.417.7120





10



























Where do I start?












educate yourself!




Direct Competitors

















Future Competitors










































the entire market.


Resources on tap











































what ways?










position?










tion and customer

value?

















enrollment.







• Great branding





















bottom line.





































2. Location 25%


4. Food Quality 15%

5. Price 10%

100%








Conclusion













855.417.7120





11



























Where do I start?












educate yourself!




Direct Competitors

















Future Competitors










































the entire market.


Resources on tap











































what ways?










position?










tion and customer

value?

















enrollment.







• Great branding





















bottom line.





































2. Location 25%


4. Food Quality 15%

5. Price 10%

100%








Conclusion













855.417.7120





12



























Where do I start?












educate yourself!




Direct Competitors

















Future Competitors










































the entire market.


Resources on tap











































what ways?










position?










tion and customer

value?

















enrollment.







• Great branding





















bottom line.





































2. Location 25%


4. Food Quality 15%

5. Price 10%

100%








Conclusion













855.417.7120





13



























Where do I start?












educate yourself!




Direct Competitors

















Future Competitors










































the entire market.


Resources on tap











































what ways?










position?










tion and customer

value?

















enrollment.







• Great branding





















bottom line.
















“Any fool can know. The point is to understand”

-Albert Einstein






















2. Location 25%


4. Food Quality 15%

5. Price 10%

100%








Conclusion













855.417.7120





14



























Where do I start?












educate yourself!




Direct Competitors

















Future Competitors










































the entire market.


Resources on tap











































what ways?










position?










tion and customer

value?

















enrollment.







• Great branding





















bottom line.





































2. Location 25%


4. Food Quality 15%

5. Price 10%

100%








Conclusion













855.417.7120





15



























Where do I start?












educate yourself!




Direct Competitors

















Future Competitors










































the entire market.


Resources on tap











































what ways?










position?










tion and customer

value?

















enrollment.







• Great branding





















bottom line.





































2. Location 25%


4. Food Quality 15%

5. Price 10%

100%








Conclusion













855.417.7120





16



























Where do I start?












educate yourself!




Direct Competitors

















Future Competitors










































the entire market.


Resources on tap











































what ways?










position?










tion and customer

value?

















enrollment.







• Great branding





















bottom line.





































2. Location 25%


4. Food Quality 15%

5. Price 10%

100%








Conclusion













855.417.7120





17



























Where do I start?












educate yourself!




Direct Competitors

















Future Competitors










































the entire market.


Resources on tap











































what ways?










position?










tion and customer

value?

















enrollment.







• Great branding





















bottom line.





































2. Location 25%


4. Food Quality 15%

5. Price 10%

100%








Conclusion













855.417.7120































Where do I start?












educate yourself!




Direct Competitors

















Future Competitors










































the entire market.


Resources on tap











































what ways?










position?










tion and customer

value?

















enrollment.







• Great branding





















bottom line.
















18






















2. Location 25%


4. Food Quality 15%

5. Price 10%

100%








Conclusion













855.417.7120































Where do I start?












educate yourself!




Direct Competitors

















Future Competitors










































the entire market.


Resources on tap











































what ways?










position?










tion and customer

value?

















enrollment.







• Great branding





















bottom line.
















19






















2. Location 25%


4. Food Quality 15%

5. Price 10%

100%








Conclusion













855.417.7120































Where do I start?












educate yourself!




Direct Competitors

















Future Competitors










































the entire market.


Resources on tap











































what ways?










position?










tion and customer

value?

















enrollment.







• Great branding





















bottom line.
















20






















2. Location 25%


4. Food Quality 15%

5. Price 10%

100%








Conclusion













855.417.7120

“Companies that soley focus on competition will die. Those that focus on value creation will thrive”

-Edward Bono





There’s nothing small about your business.

Front Desk is the fastest, most reliable, and

most flexible solution available. We’ll help

you reduce time spent on administrative

chores and spend more time building

relationships with clients to grow your

business.

You get terrific support, pricing that works

(no matter your size), and a relationship your

mom would be proud of

With Front Desk you can:

Let clients manage themselves

Automate billing and notifications

Increase appointments and reduce

no-shows with online scheduling

Securely accept payments at a flat rate

with no hidden fees

Get custom reports that identify new

opportunities for growth

And much more

Start your free 14 day trial at www.frontdeskhq.com

Build your BusinessUse Front Desk from any smart phone, tablet, or computer to keep helping clients wherever you are.

or call us at 855.417.7120



























Where do I start?












educate yourself!




Direct Competitors

















Future Competitors










































the entire market.


Resources on tap











































what ways?










position?










tion and customer

value?

















enrollment.







• Great branding





















bottom line.





































2. Location 25%


4. Food Quality 15%

5. Price 10%

100%








Conclusion













Creating your Competitive Analysis eBook

Business

Transcript of Creating your Competitive Analysis eBook