When preparing a business plan, do not forget about such important elements as market and competitor analysis. After all, recognizing the business environment is crucial to identifying the potential of the entire enterprise and the necessary actions to conquer the market.
Competitor analysis – table of contents:
- Market research
- Market size
- A competitive matrix
- SWOT analysis
- Competitor analysis
- What is a product positioning map?
A startup has to struggle not only with huge competition, but also with finding the right niche in the market. However, for this to be possible, it is necessary to do thorough market research. If you make a mistake at this stage, your startup may simply go out of business.
Market research is crucial for your company, therefore it should be included in your business plan. Only then will it be taken seriously. It is therefore necessary to estimate the market size and the position of your business in the identified market, as well as analyze its main competitors. All this will make it easier to convince investors to support your company.
Estimate how many customers may need your product. Don’t assume that everyone will scramble for what you offer. The analysis must be reliable and realistic. Collect as much data as possible.
First, it is necessary to get to know the profile of your ideal customer, which will require a thorough analysis of the selected group of consumers. Also, study trends in the chosen industry. Everything depends on the offered product. Check carefully whether a particular market will show an upward or a downward trend in the coming years.
A competitive matrix
An important element of the business plan is a reliable analysis of the competition. The best solution is to create a competitive matrix. This will help identify competitors, analyze their products, sales and marketing strategies. This approach will let you assess where you are in the market, how to differentiate yourself from your competitors, and how to beat them.
A competitive matrix is a visualization of your competitive analysis. In fact, there are different types of such matrixes:
- SWOT analysis
- competitive advantage matrix
- competitive profile matrix
- pricing matrix
- sales matrix
- benefit matrix
One of the most popular methods of assessing how a company compares with its competitors is the SWOT (strengths, weaknesses, opportunities, and threats) analysis. The analysis helps business owners make informed business decisions, such as whether it’s worth entering a new market or not.
The first two parameters – strengths and weaknesses – relate to internal issues, such as team, location, intellectual property, and company reputation. These issues can change over time.The next two parameters – opportunities and threats – are related to external factors such as competition, market trends and material prices. Companies have no influence on them and can’t change them.
Competitor analysisThere are three important factors that can help you differentiate your company from the competition and create strong market positioning. First, check whether you can achieve cost leadership. The idea is to see if there is the potential to maximize profits while offering lower prices than the competition.
The second issue is what we might call differentiation. This time it’s about analyzing how your product or service is different from the best products already on the market, and what features make it even more competitive.
In the end, it is also important to segment the market and find a niche that will allow you to gain a strong position and target other audiences in the future.
What is a product positioning map?
The search for competitive advantage can be greatly facilitated by the so-called positioning map. After all, in order to effectively fight the competition, you need to have a good, effective strategy. A positioning map is a chart that allows you to compare your product to the competition and identify opportunities for new products.
How to draw a competitive positioning map? Divide a sheet of paper into four equal parts. Each of the intersecting axes can represent various factors (e.g., price-functionality, price-benefit, utility-efficiency). It depends on the specific product and its most important features.
Then, put competitors in the appropriate place drawing circles. The larger the market share of a particular competitor, the larger the circle. Finally, you need to place your own product on the chart. Such a technique will let you easily and quickly visualize your position in the market.
You’ve just learned what competitor analysis is. Read also: How to promote a startup?
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