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Marketing Plan Components: Competitor & Issues Analysis
The purpose of the Competitor and Issues Analysis section of your marketing plan is to explain in detail the external challenges and opportunities your business may face.
Even though preparation of the analysis will take time, it will be worth it. You can benefit in a number of ways.
Benefits of Preparing a Competitor and Issues Analysis
- You'll discover your company's competitive advantage-the reason customers do business with you instead of your competition. Then you'll be able to communicate your competitive advantage effectively to win potential customers.
- Analyzing current issues and your competitors' offerings may spur ideas for innovative improvements to your product offerings.
- You might find that there are some categories of customers whose needs are not being met. For example, if you plan to prepare and deliver gourmet meals, you may discover that a particular part of town is not currently being served. If you can satisfy unmet needs, you'll develop a market "niche."
- By observing the actions of your competitors, you might learn more about your market. For example, does a successful competitor offer reduced prices during a particular season? If so, what might that tell you about your market's spending habits?
- If you find that your market is saturated with capable competitors, you can avoid the costly mistake of starting a business without adequate demand. You can then redirect your efforts toward something that will pay off instead. (For example, your research may tell you that there's an ample number of thriving gourmet meal services in your targeted market area already.)
COMPETITOR ANALYSIS
What to address in your competitor analysis
- Names of competitors - At first glance, this may seem like an exercise in list-making. Obviously, if you sell ice cream by the cone, your competitors include other ice cream vendors. However, you're also competing with other dessert treats offered by grocery stores as well as other items competing for consumers' discretionary funds. So, list all of your competitors and include information on any that might enter the market during the next year.
- Summary of each competitor's products - This summary should also include their location, quality, advertising, staff, distribution methods, promotional strategies, customer service, etc.
- Competitors' strengths and weaknesses - It's important to see your competitors' strengths and weaknesses from your customer's viewpoint, not yours. List their strengths and weaknesses. State how you will capitalize on their weaknesses and meet the challenges represented by their strengths.
- Competitors' strategies and objectives - This information might be easily obtained by getting a copy of their annual report. Probably, however, you will need to do some detective work or conduct an analysis of many information sources to understand competitors' strategies and objectives.
- Strength of the market - Is the market for your product growing sufficiently so there are plenty of customers for all market players? Or, is the market so tight you are selling primarily to your competitors' customers? (If so, you need to have a strong competitive advantage.)
Ideas for gathering competitive information
- Internet - Read Researching on the Internet for more detail about this powerful tool.
- Personal visits - If possible, visit your competitors' locations. Observe how employees interact with customers. What do their premises look like? How are their products displayed? Priced?
- Talk to customers - Your sales staff is in regular contact with customers and prospects. Your competition is also in contact with these people. Learn what your customers and prospects are saying about your competitors-and about you, too!
- Competitors' ads - Analyze competitors' ads to gain information about their target audience, market position, product features and benefits, prices, etc.
- Speeches or presentations - Attend speeches or presentations made by representatives of your competitors.
- Trade show displays - View your competitor's display with a critical eye and from a potential customer's point of view. What does their display "say" about the company? Even observing which trade shows or industry events competitors attend provides information on their marketing strategy and target market.
- Written sources: Review general business publications, marketing and advertising publications, local newspapers and business journals, industry and trade association publications, industry research and surveys, computer databases (available at many public libraries), annual reports, and Yellow Pages
Hint: Create a file for each competitor. As you run across things like their marketing literature, tips from sales people or customers about them or articles that mention them, place it in their file. Then, when you're ready to conduct or update your competitor analysis, you will already have some relevant resources.
ISSUES ANALYSIS
Your business will face obstacles to success in addition to those posed by the competition. Half of the battle of overcoming these external obstacles is understanding them. And half of the key to benefiting from "lucky breaks" is being on top of developments and events that can be used to your advantage.
Threats and Opportunities (from Outside)
Identify, and rank by order of importance, any threats or opportunities your business may face from outside influences. Threats and opportunities come from a variety of sources including:
- The economic outlook of your market's economy -- Are you starting your business in a healthy economy? If not, can your product still thrive?
- Product innovations -- How will changes made to the products of your competitors affect you? What's happening with products that are "complementary" to yours? (If you write software that runs on Windows, IBM PCs would be "complementary products" to you.)
- Technological advancements -- What changes in technology will impact you?
- Environmental issues -- Is your product earth-friendly?
- Government regulations -- What impact does complying with government regulations have on your business? Is there any pending legislation that may impact you?
- Barriers to market entry -- Are there high or low barriers to market entry in your field? What would it take for a competitor to start a business in your field? Could a competitor start up overnight (low barrier) or does you business require special knowledge, expensive machinery, etc. (high barrier)?
Strengths and Weaknesses (inside your company)
Identify internal strengths and weaknesses of your company. For example, your education, experience and reputation in your area of expertise is most likely a strength. A weakness if you plan to have employees, might be a lack of supervisory experience.
Summarize the Main Issues in an Issues Statement
Finally, determine which issues are most significant and integrate them into an Issues Statement. Use your carefully researched Issues Statement as you set your marketing objectives and strategy.
Here's an example of an issues statement:
While there are few barriers to entry to offer public relations counseling to small business owners (a telephone and computer is all that's required), the 30 years combined experience of the partners of Miller Public Relations is its competitive advantage. No other PR agency in the area Miller serves offers a comparable depth of experience.
A professional manager is being recruited to compensate for the owner's lack of experience and interest in supervising employees. This person should be in place by November.
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