How to do a competitor analysis?
- Frances Gallimore
- 2 Mar 2023
- 2 min
- Managing and growing
What makes your business successful? Perhaps you achieve success if your product is better or cheaper, or if you provide better service than your competition. So take a good look at your competitors and distinguish yourself from the rest. A competitor (or competitive) analysis will help you.
With a competitive analysis you list the strengths and weaknesses of your company and compare them to your competitors. Such an overview also provides data for your SWOT analysis. What does a competitor analysis model look like?
Direct and indirect competitors
First, find out who your competitors are. Make a distinction between direct and indirect competitors. Direct competitors offer the same product or service that you do. Indirect competitors sell a different product or service that aims to satisfy similar needs, providing an alternative to your offering. An indirect competitor may also be located in a region that your company does not focus on. Focus your research on your direct competitors.
Sustainability, quality, and price
Research by the Consumentenbond (in Dutch) shows that more than 70% of consumers consider sustainability important when purchasing a product or service. That can affect the way you and your competitor produce or offer a product or service. For example, it may be that your competitor's sustainable production process ensures that its product distinguishes itself in the market and therefore sells better. At the same time, it also applies: with a cheaper product you can often compete better. So think about which specific target groups you would like to reach and what they find important and make a good balance between sustainability, quality, and price.
If you know who your direct competitors are, answer the following questions:
- Where are each of your competitors located? View the website of these companies and request additional information from the Dutch Business Register if necessary.
- How many other entrepreneurs are located nearby? Use the Netherlands Chamber of Commerce KVK Location Scan (in Dutch) for this.
- How many other entrepreneurs in my industry are there nearby? You can use the KVK Company Counter for this.
- What products or services are my competitors selling?
- What audience are my competitors targeting?
- What prices or hourly rates do they charge? Do they give a discount? Try requesting a quote. This will give you valuable information.
- Are the products or services produced sustainably? Does sustainability play a role in my competitor's market position?
- What is their brand awareness? And how does my competition advertise? Via social media, commercials, or folders?
- Does my competition claim that its products or services are sustainable? To what extent can I do the same without the risk of false sustainability claims, like greenwashing?
- What service does my competition provide?
Make a competitor analysis
Finally, put all the data in a competitor analysis matrix. This way, you can determine the competitive position of your company. Here you list strengths and weaknesses of each company.
The example above shows that there is no bicycle dealership yet that scores high on price level. Perhaps opening a bicycle dealership with low(er) prices might be an interesting opportunity. Moreover, what can you learn about achieving brand awareness from bicycle dealership B? Does this entrepreneur advertise a lot, or are they active on social media? And which bicycle dealer uses reusable parts, so that making a bicycle has less impact on the environment?
This way, you can discover which opportunities to use for your own company.