Marketing Plan
ASSESS THE COMPETITION
When preparing the competitive analysis portion of your business plan, focus on identifying:
Who-Who are your major competitors?
What-On what basis do you compete?
How-How do you compare to thee competition?
Future-Who are your potential future competitors?
Barriers-What are the barriers to entry for new competition?
Competitive Position
It is tempting to want to judge your competition solely on the basis of whether your product or service is better than theirs. If you have invented a clearly superior widget, it is comforting to imagine that widget customers will naturally buy your product instead of the competitors’ and the money will roll in.
Unfortunately, many other factors will determine your success in comparison to other manufacturers of widgets. Perhaps their brand name is already well-known. Perhaps their widgets are much cheaper. Perhaps their distribution system makes it easier for them to get placement in stores. Or maybe customers just like the color of your competitors’ packages better.
The objective features of your product or service may be a relatively small part of the competitive picture. In fact, all the components of customer preference, including price, service, and location, make up only half of the competitive analysis.
The other half of the equation consists of examining the internal strength of your competitors’ companies. In the long run, companies with significant financial resources, highly motivated or creative personnel, and other operational assets will prove to be tough, enduring competition.
“You can’t be 5% or 10% better than the competition. You have to be 10 times better. There’s a huge lethargy factor — you don’t get people to change their bank account, or whatever you’re trying to get them to change, if you’re 10% better; you’ve got to be 10 times better.”
Andrew Anker
Venture Capitalist