How to Conduct and Prepare a Competitive Analysis
Clarke Ricks
School of Business, Liberty University
BUSI 690: Policy and Strategy in Global Competition
Dr. Hicks
April 6, 2021
How to Conduct and Prepare a Competitive Analysis
An in-depth investigation and analysis of your competition is one of the most important
components of a comprehensive market analysis. A competitive analysis allows you to
assess your competitor's strengths and weaknesses in your marketplace and implement
effective strategies to improve your competitive advantage. This Business Builder will take
you through a step-by-step process of competitive analysis, helping you to identify your
competition, determine and weigh their attributes, assess their strengths and weaknesses,
and uncover their objectives and strategies in your market segment.
What Types of Organizations Should I Consider as Competitors?
Any business marketing a product similar to, or as a substitute for, your own product in
the same geographic area is a direct competitor. Firms offering dissimilar or substitute
products in relation to your product or service are considered indirect competitors. Indirect
competition would exist between the manufacturer of butter and a manufacturer of
margarine selling to the same customers. Another example is the manufacturer of
eyeglasses who competes indirectly with contact lens manufacturers.
Stated in other terms, indirect competition will satisfy the customer's need with a
particular product or service, although the product or service used may be different from
yours. If a firm has similar products and distribution channels, but has chosen to operate in
different market segments, they are not at this time your direct competitor. However, it's
important to monitor the marketing activities of such firms because they may decide to
move into your market segment, just as you may decide to move into theirs. Take a moment
and identify your direct and indirect competitors:
Why is a Comprehensive Competitive Analysis an Important Part of a Marketing
Plan? To achieve and maintain a competitive advantage in reaching and selling to your
target market, you must possess a thorough knowledge of your competition. An in-depth
competitive analysis will provide you with the following:
An understanding of how your existing and potential customers rate the
competition.
A positive identification of your competitor's strengths and weaknesses.
