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Any organisation that wishes to succeed in their market, needs to analyse their competitor's strategies. Competitor analysis is a vital part of the marketing planning process. A strong competitor can hinder business success, even lead to business failure. Competitor analysis helps firms to anticipate their competitor's actions and exploit competitor's weaknesses. It also helps firms to identify their firm's unique selling points, so that these can be promoted in marketing campaigns. Competitor analysis is an ongoing task, as successful competitors will continuously develop their marketing strategies, in response to changes in the market place.


Competitor analysis information and data types diagram


Market Entry

A new business or a firm entering into a new market should gather information to help answer the following questions about their competitors:

Who are your competitors?

The firm should decide on which competitors are likely to impact on their business and which businesses the firm will be able to compete with. This will depend on the size of the business and whether it is a national or local business. For example a local shop will not be able to compete with a national supermarket but they may need to take a local store of a supermarket into account if it is located near to the shop. There are a number of models which can be used to identify competitors including Porters Five Forces model.

What is their size and dominance within the market?

An understanding of the market share each competitor has, will help you identify their size and dominance. It will also reveal whether there is market share available for your business.

What customer base do competitors have?

This will help you identify if a firm is a competitor. If a firm is aimed at a different customer base to yours they may not be a competitor. However if their success is due to their customer base should your firm reconsider your customer base? Or would you like to compete directly with the competitor?

What is their positioning strategy within the market?

This question is about the perceptions customers have about your competitor's products. Are they quality products? cheap products or luxury products? Think about how each competitor's positioning strategy is the same or different to yours?

What objectives does each competitor have?

This includes future growth plans and company values. For example are they about to embark on an aggressive growth programme? Or do they believe in recycling and saving the planet. To gather information about competitor objectives and plans look at their websites, company reports, press releases and marketing material. It is important to analyse competitor objectives so that you get an idea of their values and likely strategy.

What are their strengths and weaknesses?

A SWOT analysis may help you to identify and record the answers to this question. Each competitor will have strengths that give them a competitive advantage. They are also likely to have weaknesses that may give you or other competitors an advantage. Once you know a competitor's strengths you can think about how to minimise their impact on your business. Conversly if a competitor has a weakness your marketing plan should look at how to exploit it and benefit your firm.



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