How to analyse the competition
- Now we have our list of competitors, we want to work with that information a little bit so that we can identify key facts which will help us understand our local industry a little more; and also clarify the type of businesses we will be competing with. Doing so will really help us flesh out the detail of the services or products we are going to offer, and also help us work to create our
- in the next Component. Analysing the competition does not have to be complicated.
There are just 3 steps to complete:
If there is no competition in the operating area, then an alternative paragraph can be prepared stating why you believe this to be the case (see the previous lesson for considerations).
- Make a full list of the business competition in your operating area (use online resources like business listings, Google, local city/town directories etc, visit the local library or town hall, drive or walk around the neighbourhood noting down their names and locations, talk to friends or other local contacts) [this step was completed in the previous activity]
- Research each business (check out their websites, visit them, call them) by noting down the pertinent information about each competitor ie the services/products they offer, their pricing scales, the type of customers they seem to be targeting, the geographical area they cover, any promises or guarantees they make, your assessment of their strengths and weaknesses etc.
- Pick the top 1-3 businesses you believe will be your most significant competition and write a short paragraph on each of them (or fill in the table on worksheet 3).
Here’s what two of our Case Studies said
Geoff Walker knows his market very well and was aware of only one competitor who he has a friendly relationship with. He chose not to use the Worksheet in favour of writing his own paragraph:
My business will be operating within Spruce Grove but will be attracting clients from the north of Alberta (they will be transporting their vehicles to me). In that area, there is currently only one hobby-shop type business that provides classic car restoration and repair. Although he is my competitor, he is also a friend. He is operating on a hobby basis (as I am currently) and is not seeking to change to a more full-time business. His charges are slightly under what I will be charging – I have more experience and use superior materials so need to cover those costs. I also currently have a client waiting list. His strengths are his low prices; his weaknesses are his customer service skills which are rather abrupt, his limited experience and the fact his time is so limited. Although we are targeting the same people, his clients may have more of an eye on cost-savings; while mine are willing to pay a little more to ensure a perfect finish.
Jennifer Rain also knows her industry well – she has worked as a manager in the business she wants to buy for the last 5 years and is also very active in local health food industry circles and online. She completes the Worksheet for this Activity to ensure she covers all her bases. She also added an introductory sentence:
The number of health food type stores and services in the Edmonton area are increasing and there seems to be a variety of different qualities and prices represented. My top 3 competitors are listed in the table below with a combination of Organic Deliveries Inc and Healthy Living Food and Nutrition being the closest to my concept.
- Using the list you previously prepared, research your competitors sufficiently so that you can identify the closest 1-3 to your business concept. Then write a paragraph on each or complete the table in the Worksheet.