general competitive practice in business plan

• High School
• You don't have any recent items yet.
• You don't have any courses yet.
• You don't have any books yet.
• You don't have any Studylists yet.
• Information

General Format of a Comprehensive Business PLAN

Business administration, pangasinan state university, recommended for you, students also viewed.

• Developing A Business PLAN
• Characteristics of an Entrepreneur
• The Development of Entrepreneurship
• Concept of Entrepreneurship
• The Role of Monopoly in Microeconomics
• Market Structure, Income Distribution and Poverty

Related documents

• Choices of Goods
• Consumer Behavior and Elasticity
• Price System
• The Production Process and Price System
• Classification of Credit
• Credit System its Fundamentals Sources and Bases

Preview text

General format of a comprehensive business plan, i. introduction.

The introduction contains the rationale and the background of the study undertaken. It should include the importance of the project and the proponent's background and their desire to establish the business.

II. PROJECT SUMMARY

A. Name of the Firm

B. Business Location

C. Brief Description of the Business

Brief history or how the business was organized.

Highlights of the findings in every phase of the business study.

III. MANAGEMENT AND PERSONNEL COMPONENTS

Iv. marketing studies.

A. Market Profile- This refers to the market segmentation for the distribution of the product or service. The study must cover the possible users of the product and how to reach the particular market segments.

B. Demand Analysis

• Projected consumption in the first year of operation, then Five years and Ten years operation.
• Major segment users of the product and their location.

C. Supply Analysis

• Source of Product Supply. a. Foreign Suppliers b. Local Suppliers
• Factor Analysis of the Past and Future Supply Chain.

D. Competitive Analysis

Selling Price - This refers to the selling price of the product.

Competitions - It refers to the competing product in the markets as to its quality and market

Distribution and Cost of Transportation - It refers to the transfer or movements of products from the producer to the ultimate user. The usage of different vehicles and ways to transport the product should be easily defined.

Channel of Product Distributions - A mean of reaching the target market or it is the method or strategy to penetrate a particular market segments.

General Competitive Practice - It is the analysis of how competitors distribute the product to existing end users.

E. Program Analysis of Marketing Strategies

• Geographic Segmentation Strategy-This refers to the place of target market and the approaches to penetrate the market niche.
• Psychographic Strategy - The educational background and the lifestyle of target market.
• Demographic Segmentation Strategy - It means the target market as sex, age, income and the other personal factors of the target market.
• Pricing Strategy - This has something to do with the price index of any pricing strategy that will attract customers.
• Channel of Distribution The choices could be retailers, wholesalers, dealership, franchise, or direct marketing.
• Promotion and Advertising-Media network, personal selling, billboard, or any media penetration strategy.

VI. FINANCIAL STUDIES

A. For New Business Venture

Total Project Cost - This has to do with the entrepreneur fixed cost and the working capital in the operation of the business.

Capital Investments Required.

Pre-operating cash flow and its relation to time table-financial projections for the first year of operation, for the five year operation in projected balance sheets and income statements.

Supporting Schedules in the Financial Statements and Income. a. Collection Period for Projected Sales or Revenue b. Inventory Levels c. Payments for Purchases and Expenses d. Production Costing, Administrative Expense and Cost of Sales and other Projected Financial Expenses.

Projected Financial Estimates showing return on investments, return on equity, break-even analysis, price analysis.

B. For Existing Project

• Audited Financial Statement - last 3 years

a. Balance Sheet

b. Income Statement

c. Cash Flow

• Fixed Assets, Capital Investments, Depreciation used in Capital Assets.
• Tax Assessment, Liabilities, and other Payables.
• Financial Trends and Ratio Analysis.
• Financial Cost for Administrative expenses, Production and Selling Expense.
• Financial Projection for the Next Five Years. 7. Financial Analysis for Return of Investment, Return of Equity, Break even Analysis, Production Volume and Price Analysis.

MICRO BUSINESS PLAN

The major objective of business plan is to assess, examine and analyze the viability or feasibility of the study. Business plan is the ticket to success. It is also a blueprint to success and document details what you plan to do with your venture, and how exactly you want to achieve them. It is your road map to your business, according to Elizabeth Manuel, Chief of the Trade Business Management Division of the government run Philippine Trade Training Center. (p. 18 Entrepreneur book: Ultimate Guide to Starting Your Own Business 2011 copyright)

Validate your business concept, instead of doing a business plan outright. Identify the business SWOT, business planning begins before it has materialized on paper. Have clear goals, your end goal must be clear to you and your team. Evaluate not only the business idea but also your capacity to handle and nurture it.

A. Executive Summary

Synopsis of your business plan so ideally, this part should be written last in order to include all the necessary information and target points of the document. You must possess the ability to predict the financial path of your venture in correlation to the present economy. If your external analysis tells you what you can and cannot do, your internal analysis tells you what you are able or not able to do.

B. Marketing Plan

Push or pull, you must be able to tell how fast or slow your product will move in the market, whether it would make use of a push or pull strategy or both. The push strategy tells how I will move my products to the marketplace, while the pull strategy tells how I will make customers ask for my product. The pull strategy promises, the push strategy outlines what makes the business stay.

C. Operations Plan

Ernesto Pineda, director of the UP, Institute of Small Scale Industries, defines the operations plan as the company's expected sales for the coming year and the costs of running the business in general. It keeps track of the business performance for its conception down to its purchase. Determining the number of people to hire to keep your perspective business running smoothly is also a must. Managing your inventory and computing the production costs are crucial at this point so you can project possible profits.

According to Dr. Alejandro Ferreria, entrepreneur and faculty member of Ateneo Graduate School of Business, "Your main concerns in your operations plan are the key areas of quality, delivery and productivity, both in keeping and improving." This section of the business plan provides the competencies necessary to get things done,

D. Financial Plan

According to Dr. Ferreria, "Your financial plan must show how much money is needed to generate sales; how much is going to be spent on a particular item; and how much will be borrowed and paid." The income statement describes your company's ability to generate cash by computing for sales and expenses. The balance sheet shows your financial condition by accounting for your assets (cash, receivables, inventory, equipment, property, investments) and liabilities (accounts payable, salaries, taxes, and bonds, notes and mortgage payables.)

Although your business plan does not guarantee you the results you want to achieve, it's still a step closer to making things work in your favor. After all, any business venture is a risk and any entrepreneur must be ready for a series of trial and error tests.

• Multiple Choice

Course : Business Administration

University : pangasinan state university.

• More from: Business Administration Pangasinan State University 999+   Documents Go to course

AI ASSISTANTS

Upmetrics AI Your go-to AI-powered business assistant

AI Writing Assist Write, translate, and refine your text with AI

AI Financial Assist Automated forecasts and AI recommendations

AI Research Assist Your go-to AI-powered research assistant

TOP FEATURES

AI Business Plan Generator Create business plans faster with AI

Financial Forecasting Make accurate financial forecasts faster

INTEGRATIONS

QuickBooks Sync and compare with your QuickBooks data

Strategic Planning Develop actionable strategic plans on-the-go

AI Pitch Deck Generator Use AI to generate your investor deck

Xero Sync and compare with your Xero data

See how easy it is to plan your business with Upmetrics: Take a Tour  →

AI-powered business planning software

Very useful business plan software connected to AI. Saved a lot of time, money and energy. Their team is highly skilled and always here to help.

- Julien López

BY USE CASE

Secure Funding, Loans, Grants Create plans that get you funded

Starting & Launching a Business Plan your business for launch and success

Validate Your Business Idea Discover the potential of your business idea

E2 Visa Business Plan Create a business plan to support your E2 - Visa

Business Consultant & Advisors Plan with your team members and clients

Incubators & Accelerators Empowering startups for growth

Business Schools & Educators Simplify business plan education for students

Students & Learners Your e-tutor for business planning

• Sample Plans

Plan Writing & Consulting We create a business plan for you

Business Plan Review Get constructive feedback on your plan

Financial Forecasting We create financial projections for you

SBA Lending Assistance We help secure SBA loans for your business

WHY UPMETRICS?

Reviews See why customers love Upmetrics

Blogs Latest business planning tips and strategies

Strategic Planning Templates Ready-to-use strategic plan templates

Business Plan Course A step-by-step business planning course

Customer Success Stories Read our customer success stories

Help Center Help & guides to plan your business

Ebooks & Guides A free resource hub on business planning

Business Tools Free business tools to help you grow

How to Write Competitive Analysis in a Business Plan (w/ Examples)

The Competitive Analysis Kit

• Vinay Kevadia
• January 9, 2024
• 14 Min Read

Every business wants to outperform its competitors, but do you know the right approach to gather information and analyze your competitors?

That’s where competitive analysis steps in. It’s the tool that helps you know your competition’s pricing strategies, strengths, product details, marketing strategies, target audience, and more.

If you want to know more about competitor analysis, this guide is all you need. It spills all the details on how to conduct and write a competitor analysis in a business plan, with examples.

Let’s get started and first understand the meaning of competitive analysis.

What is Competitive Analysis?

A competitive analysis involves collecting information about what other businesses in your industry are doing with their products, sales, and marketing.

Businesses use this data to find out what they are good at, where they can do better, and what opportunities they might have. It is like checking out the competition to see how and where you can improve.

This kind of analysis helps you get a clear picture of the market, allowing you to make smart decisions to make your business stand out and do well in the industry.

Competitive analysis is a section of utmost value for your business plan. The analysis in this section will form the basis upon which you will frame your marketing, sales, and product-related strategies. So make sure it’s thorough, insightful, and in line with your strategic objectives.

Let’s now understand how you can conduct a competitive analysis for your own business and leverage all its varied benefits.

How to Conduct a Competitive Analysis

Let’s break down the process of conducting a competitive analysis for your business plan in these easy-to-follow steps.

It will help you prepare a solid competitor analysis section in your business plan that actually highlights your strengths and opens room for better discussions (and funding).

Let’s begin.

1. Identify Your Direct and Indirect Competitors

First things first — identify all your business competitors and list them down. You can have a final, detailed list later, but right now an elementary list that mentions your primary competitors (the ones you know and are actively competing with) can suffice.

As you conduct more research, you can keep adding to it.

Explore your competitors using Google, social media platforms, or local markets. Then differentiate them into direct or indirect competitors.

Direct competitors

Businesses offering the same products or services, and targeting a similar target market are your direct competitors.

These competitors operate in the same industry and are often competing for the same market share.

Indirect competitors

On the other hand, indirect competitors are businesses that offer different products or services but cater to the same target customers as yours.

While they may not offer identical solutions, they compete for the same customer budget or attention. Indirect competitors can pose a threat by providing alternatives that customers might consider instead of your offerings.

2. Study the Overall Market

Now that you know your business competitors, deep dive into market research. Market research should involve a combination of both primary and secondary research methods.

Primary research

Primary research involves collecting market information directly from the source or subjects.  Some examples of primary market research methods include:

• Purchasing competitors’ products or services
• Conducting interviews with their customers
• Administering online surveys to gather customer insights

Secondary research

Secondary research involves utilizing pre-existing gathered information from some relevant sources. Some of its examples include:

• Scrutinizing competitors’ websites
• Assessing the current economic landscape
• Referring to online market databases of the competitors.

Have a good understanding of the market at this point to write your market analysis section effectively.

3. Prepare a Competitive Framework

Now that you have a thorough understanding of your competitors’ market, it is time to create a competitive framework that enables comparison between two businesses.

Factors like market share, product offering, pricing, distribution channel, target markets, marketing strategies, and customer service offer essential metrics and information to chart your competitive framework .

These factors will form the basis of comparison for your competitive analysis. Depending on the type of your business, choose the factors that are relevant to you.

4. Take Note of Your Competitor’s Strategies

Now that you have an established framework, use that as a base to analyze your competitor’s strategies. Such analysis will help you understand what the customers like and dislike about your competitors.

Start by analyzing the marketing strategies, sales and marketing channels, promotional activities, and branding strategies of your competitors. Understand how they position themselves in the market and what USPs they emphasize.

Evaluate, analyze their pricing strategies and keep an eye on their distribution channel to understand your competitor’s business model in detail.

This information allows you to make informed decisions about your strategies, helping you identify opportunities for differentiation and improvement.

5. Perform a SWOT Analysis of Your Competitors

A SWOT analysis is a method of analyzing the strengths, weaknesses, opportunities, and threats of your business in the competitive marketplace.

While strengths and weaknesses focus on internal aspects of your company, opportunities and threats examine the external factors related to the industry and market.

It’s an important tool that will help determine the company’s competitive edge quite efficiently.

It includes the positive features of your internal business operations. For example, a strong brand, skilled workforce, innovative products/services, or a loyal customer base.

It includes all the hindrances of your internal business operations. For example, limited resources, outdated technology, weak brand recognition, or inefficient processes.

Opportunities

It outlines several opportunities that will come your way in the near or far future. Opportunities can arise as the industry or market trend changes or by leveraging the weaknesses of your competitors.

For example, details about emerging markets, technological advancements, changing consumer trends, profitable partnerships in the future, etc.

Threats define any external factor that poses a challenge or any risk for your business in this section. For example, intense competition, economic downturns, regulatory changes, or any advanced technology disruption.

This section will form the basis for your business strategies and product offerings. So make sure it’s detailed and offers the right representation of your business.

And that is all you need to create a comprehensive competitive analysis for your business plan.

Want to Perform Competitive Analysis for your Business?

Discover your competition’s secrets effortlessly with our user-friendly and Free Competitor Analysis Generator!

How to Write Competitive Analysis in a Business Plan

The section on competitor analysis is the most crucial part of your business plan. Making this section informative and engaging gets easier when you have all the essential data to form this section.

Now, let’s learn an effective way of writing your competitive analysis.

1. Determine who your readers are

Know your audience first, because that will change the whole context of your competitor analysis business plan.

The competitive analysis section will vary depending on the intended audience is the team or investors.

Consider the following things about your audience before you start writing this section:

Internal competitor plan (employees or partners)

Objective: The internal competitor plan is to provide your team with an understanding of the competitive landscape.

Focus: The focus should be on the comparison of the strengths and weaknesses of competitors to boost strategic discussions within your team.

Use: It is to leverage the above information to develop strategies that highlight your strengths and address your weaknesses.

Competitor plan for funding (bank or investors)

Objective: Here, the objective is to reassure the potential and viability of your business to investors or lenders.

Focus: This section should focus on awareness and deep understanding of the competitive landscape to persuade the readers about the future of your business.

Use: It is to showcase your market position and the opportunities that are on the way to your business.

This differentiation is solely to ensure that the competitive analysis serves its purpose effectively based on the specific needs and expectations of the respective audience.

2. Describe and Visualise Competitive Advantage

Remember how we determined our competitive advantage at the time of research. It is now time to present that advantage in your competitive analysis.

Highlight your edge over other market players in terms of innovation, product quality, features, pricing, or marketing strategy. Understanding your products’ competitive advantage will also help you write the products and services section effectively.

However, don’t limit the edge to your service and market segment. Highlight every area where you excel even if it is better customer service or enhanced brand reputation.

Now, you can explain your analysis through textual blocks. However, a more effective method would be using a positioning map or competitive matrix to offer a visual representation of your company’s competitive advantage.

3. Explain your strategies

Your competitor analysis section should not only highlight the opportunities or threats of your business. It should also mention the strategies you will implement to overcome those threats or capitalize on the opportunities.

Such strategies may include crafting top-notch quality for your products or services, exploring the unexplored market segment, or having creative marketing strategies.

Elaborate on these strategies later in their respective business plan sections.

4. Know the pricing strategy

To understand the pricing strategy of your competitors, there are various aspects you need to have information about. It involves knowing their pricing model, evaluating their price points, and considering the additional costs, if any.

One way to understand this in a better way is to compare features and value offered at different price points and identify the gaps in competitors’ offerings.

Once you know the pricing structure of your competitors, compare it with yours and get to know the competitive advantage of your business from a pricing point of view.

Let us now get a more practical insight by checking an example of competitive analysis.

Competitive Analysis Example in a Business Plan

Here’s a business plan example highlighting the barber shop’s competitive analysis.

1. List of competitors

Direct & indirect competitors.

The following retailers are located within a 5-mile radius of J&S, thus providing either direct or indirect competition for customers:

Joe’s Beauty Salon

Joe’s Beauty Salon is the town’s most popular beauty salon and has been in business for 32 years. Joe’s offers a wide array of services that you would expect from a beauty salon.

Besides offering haircuts, Joe’s also offers nail services such as manicures and pedicures. In fact, over 60% of Joe’s revenue comes from services targeted at women outside of hair services. In addition, Joe’s does not offer its customers premium salon products.

For example, they only offer 2 types of regular hair gels and 4 types of shampoos. This puts Joe’s in direct competition with the local pharmacy and grocery stores that also carry these mainstream products. J&S, on the other hand, offers numerous options for exclusive products that are not yet available in West Palm Beach, Florida.

LUX CUTS has been in business for 5 years. LUX CUTS offers an extremely high-end hair service, with introductory prices of $120 per haircut.

However, LUX CUTS will primarily be targeting a different customer segment from J&S, focusing on households with an income in the top 10% of the city.

Furthermore, J&S offers many of the services and products that LUX CUTS offers, but at a fraction of the price, such as:

• Hairstyle suggestions & hair care consultation
• Hair extensions & coloring
• Premium hair products from industry leaders

Freddie’s Fast Hair Salon

Freddie’s Fast Hair Salon is located four stores down the road from J&S. Freddy’s has been in business for the past 3 years and enjoys great success, primarily due to its prime location.

Freddy’s business offers inexpensive haircuts and focuses on volume over quality. It also has a large customer base comprised of children between the ages of 5 to 13.

J&S has several advantages over Freddy’s Fast Hair Salon including:

• An entertainment-focused waiting room, with TVs and board games to make the wait for service more pleasurable. Especially great for parents who bring their children.
• A focus on service quality rather than speed alone to ensure repeat visits. J&S will spend on average 20 more minutes with its clients than Freddy’s.

While we expect that Freddy’s Fast Hair Salon will continue to thrive based on its location and customer relationships, we expect that more and more customers will frequent J&S based on the high-quality service it provides.

2. Competitive Pricing

John and Sons Barbing Salon will work towards ensuring that all our services are offered at highly competitive prices compared to what is obtainable in The United States of America.

We know the importance of gaining entrance into the market by lowering our pricing to attract all and sundry that is why we have consulted with experts and they have given us the best insights on how to do this and effectively gain more clients soon.

Our pricing system is going to be based on what is obtainable in the industry, we don’t intend to charge more (except for premium and customized services) and we don’t intend to charge less than our competitors are offering in West Palm Beach – Florida.

3. Our pricing

• Payment by cash
• Payment via Point of Sale (POS) Machine
• Payment via online bank transfer (online payment portal)
• Payment via Mobile money
• Check (only from loyal customers)

Given the above, we have chosen banking platforms that will help us achieve our payment plans without any itches.

4. Competitive advantage

5. SWOT analysis

Why is a Competitive Environment helpful?

Somewhere we all think, “What if we had no competition?” “What if we were the monopoly?” It would be great, right? Well, this is not the reality, and have to accept the competition sooner or later.

However, competition is healthy for businesses to thrive and survive, let’s see how:

1. Competition validates your idea

When people are developing similar products like you, it is a sign that you are on the right path. Having healthy competition proves that your idea is valid and there is a potential target market for your product and service offerings.

2. Innovation and Efficiency

Businesses competing with each other are motivated to innovate consistently, thereby, increasing their scope and market of product offerings. Moreover, when you are operating in a cutthroat environment, you simply cannot afford to be inefficient.

Be it in terms of costs, production, pricing, or marketing—you will ensure efficiency in all aspects to attract more business.

3. Market Responsiveness

Companies in a competitive environment tend to stay relevant and longer in business since they are adaptive to the changing environment. In the absence of competition, you would start getting redundant which will throw you out of the market, sooner or later.

4. Eases Consumer Education

Since your target market is already aware of the problem and existing market solutions, it would be much easier to introduce your business to them. Rather than focusing on educating, you would be more focused on branding and positioning your brand as an ideal customer solution.

Being the first one in the market is exciting. However, having healthy competition has these proven advantages which are hard to ignore.

A way forward

Whether you are starting a new business or have an already established unit, having a practical and realistic understanding of your competitive landscape is essential to developing efficient business strategies.

While getting to know your competition is essential, don’t get too hung up in the research. Research your competitors to improve your business plan and strategies, not to copy their ideas.

Create your unique strategies, offer the best possible services, and add value to your offerings—that will make you stand out.

While it’s a long, tough road, a comprehensive business plan can be your guide. Using modern business planning software is probably the easiest way to draft your plan.

Use Upmetrics. Simply enter your business details, answer the strategic questions, and see your business plan come together in front of your eyes.

Build your Business Plan Faster

with step-by-step Guidance & AI Assistance.

Frequently Asked Questions

Is swot analysis a competitive analysis.

SWOT analysis is just a component of a competitive analysis and not the whole competitive analysis. It helps you identify the strengths and weaknesses of your business and determine the emerging opportunities and threats faced by the external environment.

Competitive analysis in reality is a broad spectrum topic wherein you identify your competitors, analyze them on different metrics, and identify your competitive advantage to form competitive business strategies.

What tools can i use for competitor analysis?

For a thorough competitor analysis, you will require a range of tools that can help in collecting, analyzing, and presenting data. While SEMrush, Google Alerts, Google Trends, and Ahrefs can help in collecting adequate competitor data, Business planning tools like Upmetrics can help in writing the competitors section of your business plan quite efficiently.

What are the 5 parts of a competitive analysis?

The main five components to keep in mind while having a competitor analysis are:

• Identifying the competitors
• Analyzing competitor’s strengths and weaknesses
• Assessing market share and trends
• Examining competitors’ strategies and market positioning
• Performing SWOT analysis

What is the difference between market analysis and competitive analysis?

Market analysis involves a comprehensive examination of the overall market dynamics, industry trends, and factors influencing a business’s operating environment.

On the other hand, competitive analysis narrows the focus to specific competitors within the market, delving into their strategies, strengths, weaknesses, and market positioning.

About the Author

Vinay Kevadiya

Vinay Kevadiya is the founder and CEO of Upmetrics, the #1 business planning software. His ultimate goal with Upmetrics is to revolutionize how entrepreneurs create, manage, and execute their business plans. He enjoys sharing his insights on business planning and other relevant topics through his articles and blog posts. Read more

Get started with Upmetrics Al

• 400+ sample business plans
• Al-powered financial planning
• Collaborative workspace

Reach Your Goals with Accurate Planning

How to Write a Competitive Analysis for a Business Plan + Example

Written by Dave Lavinsky

If you are writing a business plan , hopefully by this point you’ve conducted thorough market research to identify industry trends and the target audience for your business. Now it’s time to conduct a competitive analysis. This section is included in virtually every simple business plan template , and the information you include will depend on several factors such as how many competitors there are, what they offer, and how large they are in comparison to your company.

Download our Ultimate Business Plan Template here

What is a Competitive Analysis?

A competitive analysis is a type of market research that identifies your competitors, their strengths and weaknesses, the business strategies they are using to compete with you, and what makes your business unique. Before writing this section it’s important to have all the information you collected during your market research phase. This may include market data such as revenue figures, cost trends, and the size of the industry.

Why Do You Need a Competitive Analysis?

In this section of your business plan, you need to provide an overview of your business competitors.

This is important since readers want to know 1) you understand your competitive environment, and 2) have competitive advantages that will allow your own business to succeed.

If you are planning to raise capital, the investor will require a business plan that includes the competitive analysis section. When entrepreneurs tell investors they have no competition, it often raises a red flag. This is because if there’s no competition, it signals that a market does not exist. Sometimes competition is indirect. For instance, when washing machines were invented, while there were no direct competitors (other washing machine brands), there was indirect competition (consumers manually washing their clothing).

This section will also come in handy if your company is considering increasing prices or adding new products and services. You can use the information you find to determine how well-positioned your business is to perform in the competitive landscape.

How To Conduct a Thorough Competitive Analysis

A comprehensive competitive analysis involves the following three steps:

• Identify Your Competition
• Select the Appropriate Competitors to Analyze
• Determine Your Competitive Advantage

1. Identify Your Competition

To start, you must align your definition of competition with that of investors. Investors define competition as to any service or product that a customer can use to fulfill the same need(s) as the company fulfills. This includes companies that offer similar products, substitute products, and other customer options (such as performing the service or building the product themselves). Under this broad definition, any business plan that claims there are no competitors greatly undermines the credibility of the management team.

When identifying competitors, companies often find themselves in a difficult position. On one hand, you may want to show that the business is unique (even under the investors’ broad definition) and list few or no competitors. However, this has a negative connotation. If no or few companies are in a market space, it implies that there may not be a large enough base of potential customers to support the company’s products and/or services.

Finish Your Business Plan Today!

2. select the appropriate competitors to analyze.

Once your competition has been identified, you want to consider selecting the most appropriate competitors to analyze. Investors will expect that not all competitors are “apples-to-apples” (i.e., they do not offer identical products or services) and therefore will understand if you choose only companies that are closest in nature. So, you must detail both direct and, when applicable, indirect competitors.

Direct Competitors

Direct competitors are companies that fill the same customer need you do with the same or a similar solution. They serve the same potential customers with similar products and services. For example, direct competitors of a pizza shop would be other local pizza shops.

If you sell your products or services online, your direct competitors would also include companies whose website ranks in the top 5 positions for the same target keyword on Google. For example, if you are a home-based candle-making company , you would consider direct competitors to be other candle makers that offer similar products at similar prices. Online competitors would also include companies who rank for the following keywords: “homemade candles”, “handmade candles”, or “custom candles.”

Detail your direct competitors. What products/services do they offer? At what price points?

Indirect Competitors

Indirect competitors are those that serve the same target market with different products and services or a different target market with similar products and services. They fill the same customer need you do with a different solution. For example, a supermarket that sells frozen pizzas would be an indirect competitor to a pizza shop.

In some cases, you can identify indirect competitors by looking at alternative channels of distribution. For example, a small business selling a product online may compete with a big-box retailer that sells similar products at a lower price.

Detail your indirect competitors. What products/services do they offer? At what price points? Use the same 9-point checklist mentioned above for direct competitors.

Analyze Competitors

After selecting the appropriate competitors, you must conduct primary and secondary research on them to learn more about how they are conducting their business and what drives customers to purchase from them. Here are some methods you can use to learn more about your competitors:

Primary Market Research Methods

• Customer Interviews: Directly ask customers about their preferences, needs, and perceptions of your competitors.
• Surveys: Gather quantitative data on customer satisfaction, brand awareness, and perceived value.
• Focus Groups: Facilitate discussions among a group of customers to gain insights into their decision-making processes.
• Mystery Shopping: Conduct undercover shopping experiences to assess competitor’s customer service, product quality, and pricing.

Secondary Market Research Methods

• Industry Reports: Analyze reports from market research firms to identify market trends, challenges, and opportunities.
• Business Websites: Gather information on products, services, pricing, marketing strategies, and customer reviews.
• Social Media Monitoring: Track competitor’s social media activity to gauge brand perception and customer engagement.
• News Articles and Press Releases: Stay updated on competitor’s recent news, acquisitions, and strategic partnerships.
• Financial Reports: Analyze competitor’s financial performance to assess their strengths and weaknesses.

With these primary and secondary research methods, you can gain a comprehensive understanding of your competitive landscape and develop effective strategies to differentiate your business.

For each of your primary competitors, perform a SWOT Analysis and create a competitive matrix to identify their strengths and weaknesses, market presence, compare product features, and more, and identify opportunities where your business can succeed.

For each of your main competitors, you should research the following information:

• Competitor Name
• Competitor Overview (company history; how long have they been operating)
• Product and/or Service Offerings
• Pricing Strategy
• Revenue Streams
• Estimated Market Share
• Location(s)
• Target Customers (Service and Market Segment)
• Sales and Marketing Tactics
• Customer Reviews

By understanding what your competitors offer and how customers perceive them, you can determine your company’s competitive advantage against each competitor.

3. Determine Your Competitive Advantage

In this part of your competitive analysis, you need to detail the reasons your business is in a competitive position to outperform both direct and indirect competitors, and how the company’s business model creates barriers to entry. “Barriers to entry” are reasons why it would be difficult for new companies to enter into or compete in the same market.

For instance, you may have a patent that provides value to your customers and makes them less likely to switch suppliers, which protects your business from potential competitors. Or, you may have more resources than the competition and thus be able to provide superior customer service.

Below is a list of areas in which you might have competitive edge or advantage. Review each and expand upon the relevant ones:

• Size of the Company – Large companies have more resources and can usually offer lower prices than smaller businesses. This is a significant barrier to entry, as starting a small business and competing with a larger company may be difficult.
• Product or Service Differentiation – If your product or service is unique in some way, this will make it less likely that customers will switch to a competitor.
• Experience & Expertise – Experience and knowledge are valuable attributes that can help differentiate you from the competition.
• Location – If you are located in an area where there is high demand for your product or service, this can be a barrier to entry because competitors will not want to open new locations.
• Patents & Copyrights – Protecting intellectual property can prevent others from entering the same market and competing with your company.
• Brand Recognition – Customers are loyal to brands they have come to trust, which protects the company from new competitors.
• Customer Service – Providing excellent customer service can help you retain customers and prevent them from switching suppliers.
• Lowest Cost Offerings – If you can offer a lower price than your competitors, this makes it more difficult for them to compete with you.
• Technology – New technology that enables you to provide a better product or service than your competitors can be an advantage.
• Strategic Partnerships & Alliances – Collaborating with a company that your customers want to work with can help keep them from switching.
• Human Resources – If you have a highly skilled and talented workforce, it can be difficult for competitors to find and employ the same skills.
• Operational Systems – Strong operational systems that lead to greater efficiencies can protect your business from the competition.
• Marketing Strategy – Investing in strong marketing strategies can make your business difficult to compete with.

For instance, you could say that your [enter any of the bullets from above] is better than your competitors because [insert reason].

Competitive Analysis Example

The bend brew shop: competitive analysis.

The Bend Brew Shop is a new specialty coffee shop and brewery in Bend, Oregon. We offer a unique blend of high-quality coffee, craft beer, and a welcoming atmosphere. Our goal is to become a beloved local hangout, known for its exceptional beverages and friendly service.

Direct Competitors:

• Thump Coffee Roasters: A local roaster known for its dark roasts and strong coffee.
• Deschutes Brewery Public House: A popular brewery and restaurant offering a wide range of beers and food.
• Boneyard Beer Pub: A local brewery with a strong following, particularly among beer enthusiasts.

Indirect Competitors:

• Starbucks: A global coffee chain with multiple locations in Bend.
• McMenamins: A regional chain offering food, drinks, and lodging.
• Dutch Bros Coffee: A drive-thru coffee chain with a strong local presence.

SWOT Analysis

Competitive advantages.

• Unique Blend of Coffee and Beer: We offer a unique combination of high-quality coffee and craft beer, appealing to a wider range of customers.
• Community-Focused Atmosphere: We aim to create a welcoming and inclusive space for locals and visitors alike.
• High-Quality Ingredients and Expert Baristas: We source the finest beans and hops, and our staff is trained to create exceptional beverages.
• Strong Local Partnerships: We collaborate with local businesses to offer unique experiences and support the community.

By understanding our competitors’ strengths and weaknesses, we can position The Bend Brew Shop to capitalize on our unique selling points and build a loyal customer base.

The competitive landscape is one of the most important considerations in developing a business plan since it sets the stage by providing information on past and current competitors and their respective strengths and weaknesses. A strong understanding of the market landscape is needed before you can develop a business strategy for differentiating your company from the competition. Follow the above guidelines for conducting a thorough competitor analysis, and you will be well-prepared to create a winning competitive analysis section for your business plan.

How to Finish Your Business Plan in 1 Day!

Don’t you wish there was a faster, easier way to finish your business plan?

With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!

Click here to finish your business plan today.

OR, Let Us Develop Your Plan For You

Since 1999, Growthink has developed business plans for thousands of companies that have gone on to achieve tremendous success.

Click here to see how a Growthink business plan consultant can create your business plan for you.

How to Write a Competitive Analysis: a Comprehensive Guide

• September 4, 2024

Writing a competitive analysis is like mapping out the playing field of your business. It helps you see who you’re up against, what you’re doing well, and where you could do better.

Whether you’re just starting or looking for ways to grow, understanding your competition is crucial. Let’s dive into how you can get a clear picture of your competition, and how to use it in your business plan.

What is a Competitive Analysis?

A competitive analysis is a comprehensive evaluation designed to assess the competitive landscape in which a business operates. It involves identifying your main competitors and critically analyzing their strategies, strengths, weaknesses, products, services, and market positioning.

The purpose of this analysis is not only to understand who your competitors are but also to evaluate how they meet their customers’ needs and how your offerings compare.

Key Components:

Here are the key components we include in a competitive analysis:

• Competitor Identification : Begins with identifying both direct competitors (those offering similar products or services) and indirect competitors (those offering alternative solutions to the same customer needs).
• Product and Service Comparison : Involves comparing your products and services against those of your competitors to identify similarities, differences, advantages, and disadvantages.
• Market Positioning : Examines how each competitor positions themselves in the market, including their marketing strategies , target audiences, and brand messaging.
• Strengths and Weaknesses : Assesses the internal factors that contribute to competitors’ success or shortcomings, such as proprietary technology, brand reputation, financial resources, and operational efficiencies.
• Opportunities and Threats : Identifies external factors that could represent opportunities or threats to your competitors, providing insights into potential market shifts, regulatory changes, technological advancements, and evolving customer preferences.
• Customer Base Analysis : Looks at the type of customers your competitors are attracting, their loyalty programs, customer service strategies, and feedback channels.

Why Do We Conduct Competitive Analysis?

The primary purpose of a competitive analysis is to equip businesses with the knowledge to make strategic decisions that enhance their competitive advantage. It helps in:

• Differentiation : Understanding what competitors offer allows a business to differentiate its products or services more effectively, highlighting unique features or benefits that address gaps in the market.
• Strategy Development : Insights gained can inform strategic decisions around marketing, sales, product development, and customer service, ensuring they are tailored to outmaneuver competitors.
• Anticipating Competitor Moves : By analyzing competitors’ strengths and weaknesses, businesses can better anticipate future moves, whether it’s a new product launch, market expansion, or pricing strategy .
• Market Trends Identification : Keeps businesses informed about broader market trends and customer preferences, ensuring they remain relevant and responsive to market demands.
• Risk Mitigation : Identifying threats in the competitive landscape allows businesses to develop contingency plans to address potential challenges proactively.

Why Do We Use a Competitive Analysis in a Business Plan?

We use a competitive analysis in a business plan for several key reasons:

• Market Understanding : It helps to gain a deep understanding of the market dynamics, including how saturated the market is, what the competitors offer, and where there might be gaps in the market.
• Strategic Positioning : By identifying your competitors’ strengths and weaknesses, you can better position your own business to compete effectively. It allows you to highlight what makes your business unique and attractive to potential customers.
• Opportunity Identification : Competitive analysis can reveal market trends and shifts that present new opportunities for your business, whether through innovation, market expansion, or diversification.
• Risk Management : Understanding the competitive landscape helps in anticipating potential threats and challenges your business might face, allowing you to develop strategies to mitigate these risks.
• Investor Confidence : Including a competitive analysis in your business plan demonstrates to investors and stakeholders that you have a realistic grasp of your industry and are aware of the competitive challenges. It reassures them that you are prepared to navigate these challenges effectively.
• Informed Decision Making : The insights gained from a competitive analysis can inform various aspects of your business strategy, from marketing and pricing to product development and customer service. This ensures that decisions are made based on a comprehensive understanding of the competitive environment.

How to Conduct a Competitive Analysis?

Preparing a competitive analysis involves several structured steps to ensure a comprehensive understanding of your competitive landscape. Here’s how to go about it:

1. Identify Your Competitors

• Direct Competitors : These businesses offer the same products or services as you do to the same target market .
• Indirect Competitors : These businesses offer different products or services that satisfy the same customer needs as yours.

Start with a broad list and then narrow it down to the most significant competitors for a detailed analysis.

2. Gather Information

Collect data on your identified competitors. Useful sources include:

• Competitors’ websites and social media profiles
• Customer reviews and feedback on platforms like Yelp, Google, or industry-specific forums
• Industry reports and market analysis documents
• Press releases and news articles

Look for information on their products, services, pricing, marketing strategies, target customers , market share, and any other relevant data.

3. Analyze Their Offerings

Compare your competitors’ products or services to your own. Consider:

• The range of products or services offered
• Quality and pricing
• Unique features or benefits
• Customer service and support
• Branding and marketing strategies

4. Evaluate Their Strengths and Weaknesses

Based on the information gathered, assess each competitor’s strengths and weaknesses. Consider their operational efficiency, customer loyalty, market positioning, innovation capabilities, and financial stability.

5. Identify Opportunities and Threats

From your analysis, determine:

• Opportunities : Areas where your competitors are not meeting customer needs effectively, market segments they are overlooking, or strategic alliances they haven’t formed.
• Threats : Competitors’ strategies that could pose a challenge to your business, such as aggressive pricing, new product launches, or market expansion plans.

6. Assess Their Marketing Strategies

Look at how your competitors are marketing their products or services:

• Which channels are they using? (e.g., social media, email marketing, SEO, PPC)
• What key messages are they conveying?
• How are they positioning their brand?

7. Summarize Your Findings

Create a detailed report summarizing your findings for each competitor, highlighting their key strengths, weaknesses, the opportunities they present to you, and the threats they pose.

Related Posts

Sit Still Franchise FDD, Profits, Costs & Fees (2025)

• December 4, 2024

Tapville Social Franchise FDD, Profits & Costs (2025)

Crisp & Green Franchise FDD, Profits & Costs (2025)

Privacy overview.