{"id":4555,"date":"2016-04-04T10:47:33","date_gmt":"2016-04-04T15:47:33","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/business-operations\/competitive-analysis.html"},"modified":"2024-06-06T02:17:04","modified_gmt":"2024-06-06T07:17:04","slug":"competitive-analysis","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/business-operations\/competitive-analysis.html","title":{"rendered":"Competitive Analysis"},"content":{"rendered":"\n
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Competitive Analysis<\/h1>\n
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\n By Susan Buckner, J.D.<\/a> | Legally reviewed by Aviana Cooper, Esq.<\/a>\n | Last updated\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

Small businesses live and die by what they bring to their customers. Any competitive advantage<\/a> they can gain over similar companies can make the difference between a successful year or bankruptcy. What can small-business owners<\/a> do to maximize their business strategy and gain an edge over others in the same small markets?<\/p>\r\n

The answer is competitive analysis. Sometimes called competitive intelligence, it’s a method of systematically learning about the competition. You can design your business plan by gathering competitive intelligence, analyzing the data, and using it to understand how your competition succeeds.<\/p>\r\n

Ethical and effective business intelligence starts with knowing the competitive intelligence tools. So let’s get started.<\/p>\r\n

Getting Started: Why Do This?<\/h2>\r\n

Before you begin a competitive analysis, you must know what you’re analyzing. What information do you want to gather about your competition? For instance, if you’re considering a new product rollout, you need different information than if you want to open a new store in another location. The only thing worse than no information is the wrong information.<\/p>\r\n

Step One<\/h3>\r\n

Identify your direct and indirect competitors. In marketing, a direct competitor is a business that does exactly what you do. An indirect competitor is similar but not quite the same. Pay attention to both because a Google search can lead customers to all of them.<\/p>\r\n

For instance, suppose your business makes custom leather handbags. Your direct competitors are other companies that make custom leather handbags. Your indirect competitors include those who make custom denim handbags and those who make custom leather backpacks.<\/p>\r\n

Step Two<\/h3>\r\n

Identify the competitors’ products. Analyze their product lines. Find out their market share and how it fits with industry trends. What are their pricing strategies? How are their products similar to or different from yours?<\/p>\r\n

Step Three<\/h3>\r\n

Learn what you can about their sales techniques. Although accosting their salespeople is an unethical strategy, social media provides a window into their customers’ opinions. Take a look at their reviews and their online marketing tactics. If they’re an LLC<\/a> or corporation, their annual report is public record. Are their sales declining or improving?<\/p>\r\n

Step Four<\/h3>\r\n

Perform a SWOT analysis with each of your nearest direct competitors. By looking at strengths, weaknesses, opportunities, and threats, a SWOT analysis lets you use information you’ve gathered on all your competition to assess your own strengths and vulnerabilities in the competitive landscape. From there, you can revise your marketing plan accordingly.<\/p>\r\n