How to create a Competitor Analysis (start with reading these 4 essential steps)
A competitor analysis is a comparative analysis in which you compare the performance of your own company with the performance of your most important competitors, based on key success factors. In this article, I present 4 essential steps which will help you to create a reliable competitor analysis.
1. Start with a market definition
Before you dive into the analysis of the most important competitors on your market, start with creating a market definition by asking yourself: “What business are we in?”. The following dimensions are commonly used to define the scope of a market: Customer Groups (Who are the customers on this market?), Customer Needs (What are the needs of these customers?) and Technologies (Which products and services are currently being offered to satisfy these needs?).
Tesla, for example, serves individuals and business drivers. Their needs are sustainable, safe and comfortable transport. Tesla satisfies these needs with all-electric cars, state-of-the-art software and Supercharger locations.
2. Are there any existing market reports?
Don’t waste your time on desk research if you have access to existing and reliable market reports, which usually include a quantitative analysis of the total market size and the market shares of its most important providers. Many banks and consulting firms have departments which are dedicated to research on established as well as upcoming markets.
Consider to hire a market analyst if there are no (recent) reports available about your industry. The outcomes of such an analysis are not only valuable for your competitor analysis, but also suitable for public relation purposes.
3. Define key success factors
Insights in the market shares, growth and profitability of your competitors are important, but are still insufficient to define a successful strategy. To get a full understanding of the opportunities and threats within your industry and your company’s strengths and weaknesses in relation to its competitors, you should also assess your business and your competitors on key success factors.
Key success factors are skills and resources which will make a difference in the near future. Take your time to define these criteria and think about evolving customer needs, technological changes, upcoming regulation and product specialization: which skills made Apple to become a market leader, for example?
4. Analyze on strengths, weaknesses, opportunities and threats
After you have analyzed your competitors on market share, growth, profitability and key success factors, you should be able to identify opportunities and threats within your market and strengths and weaknesses of your company. In which key success factors are your competitors not performing well or just particularly good? And how does that relate to your own skills and resources?
Use these insights to develop a successful and sustainable strategy and let me know if you have a new example for this blog! 😉
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