How to do a competitor analysis?
- Frances Gallimore
- 2 Mar 2023
- 2 min
- Managing and growing
How do you make sure a customer chooses you and not your competitor? Do a competitor analysis and see how well or poorly your competitors score on quality, service, promotion, or location. See what your own strengths and weaknesses are and determine where you can become better than your competitors.
A competitor analysis has 2 parts: a market or industry survey, and a competative analysis. In the market research or industry survey you look at the general opportunities and developments in your sector. In the competitive analysis, you investigate the behaviour of your direct competitors.
You make a competitor analysis in the 4 steps listed below.
1. Determine who your competitors are
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, for instance peanut butter. Indirect competitors sell a different product or service that aims to satisfy similar needs, providing an alternative to your offering. For instance, businesses that sell jam instead of peanut butter; this is a bread spread competitor. An indirect competitor may also be located in a region that your company does not focus on. Focus your competitive analysis on your direct competitors.
2. Collect information
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 (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 target 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.
- What service does my competition provide?
- What is their brand awareness? And how does my competition advertise? Via social media, commercials, or folders?
- Are the products or services produced sustainably? Does sustainability play a role in my competitor's market position?
3. Make a competitor analysis matrix
Finally, put all the data of 3 or 4 of your biggest competitors in an easy-to-read table, also called a competitor analysis matrix. How do your competitors score on elements such as price, quality, location, service or sustainability? What are your own strengths and weaknesses in these? This is how you determine your company's competitive position.
4. Determine your competitive advantage
Based on your competitive matrix, choose which opportunities and possibilities exist for your own business. The above example includes the following opportunities:
There is no bicycle shop in the neighbourhood that scores high on service. By focusing on customer retention, for instance with special discount offers or stamps, you can distinguish yourself from your competitors.
Bicycle shop B advertises a lot and has many followers and interaction on social media. Are you not doing this yet, but would you like to increase your brand awareness? See what you can easily do yourself, such as advertising on social media.
Corporate social responsibility
Research conducted by the Consumentenbond (Dutch Consumers' Association) shows that over 70% of consumers consider sustainability important when buying a product or service. Do you sell second-hand bikes or use parts from old bikes? Then making a bicycle has less impact on the environment. As a bicycle dealer, you can then market yourself as a socially responsible business. Just be careful not to pretend to be more sustainable than you are. If you deliberately mislead your customers with sustainable promises, also known as greenwashing, you can be fined heavily for this.