5 Competitor analysis
Informi blog (no date) defines competitor analysis as ‘the process of identifying, analysing and learning from your competitors’.
You can identify your competitors in various ways, including:
- looking through local directories
- reading relevant industry magazines and press advertising
- talking to customers
- attending exhibitions and trade fairs
- searching on the internet
- collecting flyers, brochures and marketing literature, and
- investigating who your target organisations are working with currently.
As a creative, other research might include:
- visiting any competitor outputs or locations that are open to the public, e.g. events, workshops and galleries.
- mystery shopping, for example posing as a potential customer in order to find out product prices.
If your business or idea involves a product, you could purchase similar products from your competitors to check out their processes, such as their packaging, delivery time, delivery communication and so on. Try leaving something in your online basket to see what marketing tools they might use to persuade you to buy their product – do they send you an email offering you a discount?
If you are offering a product or service to organisations, it might be more difficult to identify your competitors – but social media platforms such as LinkedIn can be useful tools. You’ll learn more about different social media platforms in Week 5.
Now have a go at Activity 5.
Activity 5 Identifying competitors
Sarah wants to set up a photography business in York. She plans to specialise in taking pictures of children. Will she have many competitors?
Use your preferred online search engine to research this for Sarah and summarise your findings in the box below.
Now spend 5 minutes researching your own business idea/location and summarise your findings here.
There are numerous photographers in York who specialise in photographing children. By visiting their websites, Sarah could find out more about how much they charge, whether they have a particular niche, the quality of their work and how they promote themselves, for example.
Even in five minutes, you have probably gathered a significant amount of data that could be explored further.
How did you get on when you repeated the same exercise for yourself? Depending on your business or creative idea, you might have found that a simple internet search provided limited detail, but it should have given you a starting point for further research.
The more you can discover about other businesses offering similar products or services, the more informed you will be when you start to promote your own.
When you’ve identified who your competitors are, you should try to work out what you can learn from them. For example:
- Are they doing anything that you could do better?
- Have you got a unique selling point (USP) (i.e. something that makes your business stand out) that they don’t have?
- Can you access any online customer reviews and analyse the points that users are most likely to be negative about?
- What do they do particularly well – can you compete with that?
- How do they market their products and services?
- What do they charge for their products and services?
Xero (no date) suggests some of the strengths and weaknesses you might discover, including:
Table 1 Business strengths and weaknesses
|Good distribution – they’re in all kinds of shops||Dull reputation – customers don’t get a thrill|
|Huge brand awareness – people know and trust them||Cheap packaging – lacks polish|
|Really good networks – good relationships with buyers||Bad reviews – customers unimpressed with quality|
|Low price point – impossible for you to compete||Poor customer service – customers don’t feel valued|
As you learn more about them, you’ll begin to see which of your competitors challenge you the most.
As well as analysing the competitors that are out there now, you need to keep an eye on those who might emerge, so this is not a one-off activity. Xero (no date) recommends you ask yourself:
- How hard would it be for someone new to come in with the exact same idea and take customers away from me?
- How easy would it be for an established business to tweak their service or products to take away my competitive advantage?
Identifying your competitors is just as important as identifying your target audience when you do your market research. Knowing who you are up against will allow you to adjust your offer and the way you promote it.