how to make competitive analysis in business plan

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How to create a competitive analysis (with examples)

Competitive analysis involves identifying your direct and indirect competitors using research to reveal their strengths and weaknesses in relation to your own. In this guide, we’ll outline how to do a competitive analysis and explain how you can use this marketing strategy to improve your business.

Whether you’re running a business or playing in a football game, understanding your competition is crucial for success. While you may not be scoring touchdowns in the office, your goal is to score business deals with clients or win customers with your products. The method of preparation for athletes and business owners is similar—once you understand your strengths and weaknesses versus your competitors’, you can level up. 

What is a competitive analysis?

Competitive analysis involves identifying your direct and indirect competitors using research to reveal their strengths and weaknesses in relation to your own. 

Direct competitors market the same product to the same audience as you, while indirect competitors market the same product to a different audience. After identifying your competitors, you can use the information you gather to see where you stand in the market landscape. 

What to include in a competitive analysis

The purpose of this type of analysis is to get a competitive advantage in the market and improve your business strategy. Without a competitive analysis, it’s difficult to know what others are doing to win clients or customers in your target market. A competitive analysis report may include:

A description of your company’s target market

Details about your product or service versus the competitors’

Current and projected market share, sales, and revenues

Pricing comparison

Marketing and social media strategy analysis

Differences in customer ratings

You’ll compare each detail of your product or service versus the competition to assess strategy efficacy. By comparing success metrics across companies, you can make data-driven decisions.

How to do a competitive analysis

Follow these five steps to create your competitive analysis report and get a broad view of where you fit in the market. This process can help you analyze a handful of competitors at one time and better approach your target customers.

1. Create a competitor overview

In step one, select between five and 10 competitors to compare against your company. The competitors you choose should have similar product or service offerings and a similar business model to you. You should also choose a mix of both direct and indirect competitors so you can see how new markets might affect your company. Choosing both startup and seasoned competitors will further diversify your analysis.

Tip: To find competitors in your industry, use Google or Amazon to search for your product or service. The top results that emerge are likely your competitors. If you’re a startup or you serve a niche market, you may need to dive deeper into the rankings to find your direct competitors.

2. Conduct market research

Once you know the competitors you want to analyze, you’ll begin in-depth market research. This will be a mixture of primary and secondary research. Primary research comes directly from customers or the product itself, while secondary research is information that’s already compiled. Then, keep track of the data you collect in a user research template .

Primary market research may include: 

Purchasing competitors’ products or services

Interviewing customers

Conducting online surveys of customers 

Holding in-person focus groups

Secondary market research may include:

Examining competitors’ websites

Assessing the current economic situation

Identifying technological developments 

Reading company records

Tip: Search engine analysis tools like Ahrefs and SEMrush can help you examine competitors’ websites and obtain crucial SEO information such as the keywords they’re targeting, the number of backlinks they have, and the overall health of their website. 

3. Compare product features

The next step in your analysis involves a comparison of your product to your competitors’ products. This comparison should break down the products feature by feature. While every product has its own unique features, most products will likely include:

Service offered

Age of audience served

Number of features

Style and design

Ease of use

Type and number of warranties

Customer support offered

Product quality

Tip: If your features table gets too long, abbreviate this step by listing the features you believe are of most importance to your analysis. Important features may include cost, product benefits, and ease of use.

4. Compare product marketing

The next step in your analysis will look similar to the one before, except you’ll compare the marketing efforts of your competitors instead of the product features. Unlike the product features matrix you created, you’ll need to go deeper to unveil each company’s marketing plan . 

Areas you’ll want to analyze include:

Social media

Website copy

Press releases

Product copy

As you analyze the above, ask questions to dig deeper into each company’s marketing strategies. The questions you should ask will vary by industry, but may include:

What story are they trying to tell?

What value do they bring to their customers?

What’s their company mission?

What’s their brand voice?

Tip: You can identify your competitors’ target demographic in this step by referencing their customer base, either from their website or from testimonials. This information can help you build customer personas. When you can picture who your competitor actively targets, you can better understand their marketing tactics. 

5. Use a SWOT analysis

Competitive intelligence will make up a significant part of your competitor analysis framework, but once you’ve gathered your information, you can turn the focus back to your company. A SWOT analysis helps you identify your company’s strengths and weaknesses. It also helps turn weaknesses into opportunities and assess threats you face based on your competition.

During a SWOT analysis, ask yourself:

What do we do well?

What could we improve?

Are there market gaps in our services?

What new market trends are on the horizon?

Tip: Your research from the previous steps in the competitive analysis will help you answer these questions and fill in your SWOT analysis. You can visually present your findings in a SWOT matrix, which is a four-box chart divided by category.

6. Identify your place in the market landscape

The last step in your competitive analysis is to understand where you stand in the market landscape. To do this, you’ll create a graph with an X and Y axis. The two axes should represent the most important factors for being competitive in your market. 

For example, the X-axis may represent customer satisfaction, while the Y-axis may represent presence in the market. You’ll then plot each competitor on the graph according to their (x,y) coordinates. You’ll also plot your company on this chart, which will give you an idea of where you stand in relation to your competitors. 

This graph is included for informational purposes and does not represent Asana’s market landscape or any specific industry’s market landscape. 

Tip: In this example, you’ll see three companies that have a greater market presence and greater customer satisfaction than yours, while two companies have a similar market presence but higher customer satisfaction. This data should jumpstart the problem-solving process because you now know which competitors are the biggest threats and you can see where you fall short. 

Competitive analysis example

Imagine you work at a marketing startup that provides SEO for dentists, which is a niche industry and only has a few competitors. You decide to conduct a market analysis for your business. To do so, you would:

Step 1: Use Google to compile a list of your competitors. 

Steps 2, 3, and 4: Use your competitors’ websites, as well as SEO analysis tools like Ahrefs, to deep-dive into the service offerings and marketing strategies of each company. 

Step 5: Focusing back on your own company, you conduct a SWOT analysis to assess your own strategic goals and get a visual of your strengths and weaknesses. 

Step 6: Finally, you create a graph of the market landscape and conclude that there are two companies beating your company in customer satisfaction and market presence. 

After compiling this information into a table like the one below, you consider a unique strategy. To beat out your competitors, you can use localization. Instead of marketing to dentists nationwide like your competitors are doing, you decide to focus your marketing strategy on one region, state, or city. Once you’ve become the known SEO company for dentists in that city, you’ll branch out. 

You won’t know what conclusions you can draw from your competitive analysis until you do the work and see the results. Whether you decide on a new pricing strategy, a way to level up your marketing, or a revamp of your product, understanding your competition can provide significant insight.

Drawbacks of competitive analysis

There are some drawbacks to competitive analysis you should consider before moving forward with your report. While these drawbacks are minor, understanding them can make you an even better manager or business owner. 

Don’t forget to take action

You don’t just want to gather the information from your competitive analysis—you also want to take action on that information. The data itself will only show you where you fit into the market landscape. The key to competitive analysis is using it to problem solve and improve your company’s strategic plan .

Be wary of confirmation bias

Confirmation bias means interpreting information based on the beliefs you already hold. This is bad because it can cause you to hold on to false beliefs. To avoid bias, you should rely on all the data available to back up your decisions. In the example above, the business owner may believe they’re the best in the SEO dental market at social media. Because of this belief, when they do market research for social media, they may only collect enough information to confirm their own bias—even if their competitors are statistically better at social media. However, if they were to rely on all the data available, they could eliminate this bias.

Update your analysis regularly

A competitive analysis report represents a snapshot of the market landscape as it currently stands. This report can help you gain enough information to make changes to your company, but you shouldn’t refer to the document again unless you update the information regularly. Market trends are always changing, and although it’s tedious to update your report, doing so will ensure you get accurate insight into your competitors at all times. 

Boost your marketing strategy with competitive analysis

Learning your competitors’ strengths and weaknesses will make you a better marketer. If you don’t know the competition you’re up against, you can’t beat them. Using competitive analysis can boost your marketing strategy and allow you to capture your target audience faster.

Competitive analysis must lead to action, which means following up on your findings with clear business goals and a strong business plan. Once you do your competitive analysis, you can use the templates below to put your plan into action.

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

Free Competitive Analysis Kit

• Vinay Kevadia
• January 9, 2024

13 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.

After having a brief knowledge of what a competitive analysis is, let’s understand how to conduct it:

How to Conduct a Competitive Analysis?

• Identify your direct and indirect competitors
• Study the overall market space
• Prepare a competitive framework
• Take note of your competition’s strategies
• Perform a SWOT Analysis of your competitors

1. Identify Your Direct and Indirect Competitors

First things first — identify all your business competitors and list them. You can make the final list later, but right now jot down all the competitors including new competitors.

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

Direct competitors

Businesses offering the same products or services, 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.

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 the market research. The research should be a combination of both primary and secondary research methods.

Primary research

It means being involved in getting the information directly from customers or by buying the product itself. Some examples of primary market research methods include:

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

Secondary research

The 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
• Identifying technological advancements

Have a good understanding of the market at this point before you proceed with the next step.

3. Prepare a Competitive Framework

Creating a competitive framework is like charting a strategic roadmap for your business in the competitive landscape. It includes defining your USPs, market positioning, and various strategies.

Establishing your competitive positioning clarifies where your business stands among competitors.

Plan how to make your product or service stand out by figuring out ways to make it different to stand out, whether it’s through new features, better quality, or excellent customer service.

Craft unique value propositions that resonate with your target audience, communicating the benefits of choosing your offerings. This framework serves as a compass for crucial business decisions, ensuring alignment with your strategic positioning.

By consistently referencing this framework, your business can effectively meet customer needs, fostering satisfaction and loyalty through tailored products, services, and interactions.

4. Take Note of Your Competition’s Strategies

By stepping into your competitors’ research, you will learn what strategies they use to market their products or services and how they engage with their customers.

This will motivate you to do something more for customers and give you an idea of what your consumers like.

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

Evaluate their pricing strategies and offerings, and keep an eye on their distribution channel to better understand your competitors. For example, here are the pricing strategies of a barber shop and its competitors:

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

You would love to know the opportunities and threats of your business, right? To be prepared for it when the time comes.

Well, conducting a SWOT analysis is like the same, it is more about getting to know about your strengths, weaknesses, opportunities, and threats. It also helps you understand your competitive edge in the market.

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

Things to include in your SWOT analysis are:

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

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

Opportunities

As the name says, it is all about the opportunities that will come your way in the near or far future. It is mainly about the external factors related to the market or industry trends.

For example, it might include emerging markets, technological advancements, changing consumer trends, profitable partnerships in the future, etc.

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

These were the elements to help you conduct the competitive market analysis. Let us now go through how to write it in a business plan.

Want to Perform Competitive Analysis for your Business?

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How to Write Competitive Analysis in a Business Plan

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 Competitive Advantage

One of the most important things in the competitive analysis is to know your competitive advantage and gain insight into how you are a better option than competitors.

Your competitive analysis should pinpoint the competitive advantage based on the competitors’ product line or service and market segment, pricing, and other such situations. Some of the points you might include in this section are:

• Product/service differentiation in terms of quality or innovation
• Cost leadership or competitive pricing
• Brand reputation
• Customer service excellence
• Diverse and effective marketing strategy

3. Explain your strategies

Your competitor analysis section should not only highlight what opportunities or threats your business has. It should also mention that what will be the strategies to overcome those threats or capitalize on the opportunities.

It could be for taking a top-notch quality for your products or services, exploring the unexplored market segment, or having creative marketing strategies.

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.

Competitive analysis example

Need help writing the competitive analysis section of your business plan? Here’s the barbershop competitive analysis example to help you get started.

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

Advantages of a Competitive Environment

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. It pushes you to innovation and improvement

In the competitive environment, a businessperson might get a new idea to bring innovation to the market to keep their products and services trending. This way innovation is promoted.

2. Competition validates your idea

Having a good idea becomes valid when others are developing similar products or services. A competitive market confirms that there is a market for your product and service. It also implies that the expenses of marketing and educating your target customers might likely decrease.

3. Efficiency and cost control

Businesses competing with each other get the motivation to operate efficiently to reduce costs and offer competitive prices. This thing for more sales benefits both businesses and customers.

4. Market responsiveness

A competitive environment forces businesses to be quick to adapt to market changes and customer demands. Companies need to adapt quickly to stay relevant and meet consumer preferences.

Competitive Analysis is critical, but don’t go overboard

Whether you are starting a new business or have an experience in the same field, gaining insight from your competitors will always be beneficial for your business.

Remember: Competitive analysis is essential for your business, but you can not assume all things positive on your side. Be realistic and practical while both conducting and writing this section.

Not only competitive analysis, but the whole business plan is necessary for any business to stay on the path. It will be your guide whenever your business is in any problem.

For assistance, you can visit our business plan writing guide . Additionally, we wish you all the luck in your competitive analysis journey.

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Frequently Asked Questions

Is swot analysis a competitive analysis.

SWOT analysis is a component of a competitive analysis, not the whole competitive analysis. Competitive analysis covers a broad topic of analyzing competitors and knowing the competitive advantage.

What Tools Can I Use for Competitor Analysis?

Executing a thorough competitor analysis requires the use of various tools to collect and analyze data. Here are some tools you can consider:

• Google Alerts
• Social media analytics
• Google Trends
• Google Analytics
• Competitors’ website

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

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How to Write the Competitive Analysis of a Business Plan

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 identified the target market for your business. Now it’s time to conduct a competitor 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 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 the Competitive Analysis?

If you are planning to raise capital, the investor will require a business plan that includes the competitive analysis section. This section will also come in handy while writing a business plan template , 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.

3 Steps to Writing a Competitive Analysis

The steps to developing the competitive analysis section of your business plan include:

• 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.

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 chose only companies that are closest in nature. So, you must detail both direct and, when applicable, indirect competitors.

Direct competitors are those that serve the same potential customers with similar products and services. If you sell your products or services online, your direct competitors would also include companies whose website ranks in the top 5 positions for your same target keyword on Google Search.

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.”

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.

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.

After selecting the appropriate competitors, you must describe them. In doing so, you must also objectively analyze each of their strengths and weaknesses and the key drivers of competitive differentiation in the same market.

For each competitor, perform a SWOT Analysis and include the following information:

• Competitor’s Name
• Overview of Competitor (where are they located; how long have they been operating)
• Competitor’s Product or Service
• Competitor’s Pricing
• Estimated Market Share
• Location(s)
• Potential Customers (Geographies & Segments)
• Competitor’s Strengths
• Competitor’s Weaknesses

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

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3. Determine Your Competitive Advantage

Perhaps most importantly, you must describe your company’s competitive advantages over the other companies in the space, and ideally 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 a competitive advantage:

• 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 campaigns 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].

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 competitive landscape is needed before you can develop a strategy for differentiating your company from the competition. Follow the above competitive analysis example and you will be well-prepared to create a winning competitor analysis section of your business plan.

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Other Resources for Writing Your Business Plan

How to Write a Great Business Plan Executive Summary

How to Expertly Write the Company Description in Your Business Plan

The Customer Analysis Section of Your Business Plan

How to Write the Market Analysis Section of a Business Plan

The Management Team Section of Your Business Plan

Financial Assumptions and Your Business Plan

How to Create Financial Projections for Your Business Plan

Everything You Need to Know about the Business Plan Appendix

Business Plan Conclusion: Summary & Recap

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What is a Competitive Analysis — and How Do You Conduct One?

Published: November 10, 2022

When was the last time you ran a competitive analysis for your brand? And most importantly, do you know how to do one efficiently?

If you‘re unsure or if the last "analysis" you ran was a quick perusal of a competitor’s website, you're likely missing out on important intelligence that could help your brand grow.

In this detailed guide, you'll learn how to conduct a competitive analysis to give your business an advantage.

Table of Contents

What is a competitive analysis?

• Understanding Competitive Market Research

Competitive Analysis in Marketing

How to do a competitive analysis, competitive product analysis, competitive analysis example, competitive analysis templates, competitive analysis: faqs, what is a competitive market analysis.

A competitive analysis is a strategy that involves researching major competitors to gain insight into their products, sales, and marketing tactics. Implementing stronger business strategies, warding off competitors, and capturing market share are just a few benefits of conducting a competitive market analysis.

A competitive analysis can help you learn the ins and outs of how your competition works and identify potential opportunities where you can outperform them. It also enables you to stay atop of industry trends and ensure your product is consistently meeting — and exceeding — industry standards.

Let's dive into a few more benefits of conducting competitive analyses:

• Helps you identify your product's unique value proposition and what makes your product different from your competitors, which can inform future marketing efforts.
• Enables you to identify what your competitor is doing right. This information is critical for staying relevant and ensuring your product and marketing campaigns outperform industry standards.
• Tells you where your competitors are falling short — which helps you identify areas of opportunities in the marketplace and test out new, unique marketing strategies they haven't taken advantage of.
• Learn through customer reviews what‘s missing in a competitor’s product, and consider how you might add features to your own product to meet those needs.
• Provides you with a benchmark against which you can measure your growth.

Competitive analysis is a meticulous strategy that dives deep into the operations of your prime competitors.

It's not just about knowing what they offer. You need to understand their sales strategies, marketing tactics, and the ethos driving their brand.

10 Free Competitive Analysis Templates

Track and analyze your competitors with these ten free planning templates.

• SWOT Analysis
• Battle Cards
• Feature Comparison
• Strategic Overview

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10 Competitive Analysis Templates

Fill out the form to access the templates., why is a competitive analysis important.

The ripple effects of a well-executed competitive analysis are manifold:

• Strategic business decisions. Anchoring your business strategies on solid, data-driven insights ensures you stay ahead in the game.
• Fortifying defenses. By knowing what your competitors are up to, you can better defend your market share and even capture new territories.
• Unearth golden opportunities. Delving into the intricacies of your competition’s operations can spotlight areas where you can shine brighter.

Beyond Just the Basics

While it's essential to understand how your competition operates, the real magic happens when you can:

• Spot your unique value. What sets you apart? How can you amplify that difference in your marketing efforts?
• Learn from their triumphs. Your competitors might just be doing something genius. Identifying their strengths ensures you're always at par, if not ahead.
• Discover their shortcomings. Every brand has its Achilles' heel. Find it. This knowledge can carve out opportunities and new strategies for your business.
• Tap into customer sentiments. Dive into customer reviews. What’s lacking in their product? Can you incorporate those missing features into your offerings?
• Benchmark your progress. Your journey is unique. However, setting a benchmark based on your competitors can offer valuable growth metrics.

What is competitive market research?

Competitive market research is a vital exercise that goes beyond merely comparing products or services.

It involves an in-depth analysis of the market metrics that distinguish your offerings from those of your competitors.

A thorough market research doesn't just highlight these differences but leverages them, laying a solid foundation for a sales and marketing strategy that truly differentiates your business in a bustling market.

In the next section, we’ll explore the nuts and bolts of conducting a detailed competitive analysis tailored to your brand.

Every brand can benefit from regular competitor analysis. By performing a competitor analysis, you'll be able to:

• Identify gaps in the market.
• Develop new products and services.
• Uncover market trends.
• Market and sell more effectively.

As you can see, learning any of these four components will lead your brand down the path of achievement.

Next, let's dive into some steps you can take to conduct a comprehensive competitive analysis.

• Determine who your competitors are.
• Determine what products your competitors offer.
• Research your competitors' sales tactics and results.
• Take a look at your competitors' pricing, as well as any perks they offer.
• Ensure you're meeting competitive shipping costs.
• Analyze how your competitors market their products.
• Take note of your competition's content strategy.
• Learn what technology stack your competitors use.
• Analyze the level of engagement on your competitors' content.
• Observe how they promote marketing content.
• Look at their social media presence, strategies, and go-to platforms.
• Perform a SWOT Analysis to learn their strengths, weaknesses, opportunities, and threats.

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A Guide to Competitive Analysis: It’s Not Just about Competitors

By Joe Weller | April 16, 2018 (updated February 13, 2024)

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If you were running a cross-country marathon, wouldn’t you want to know something of the terrain and expected weather conditions before you began? The same principle of preparation applies when starting and continuing a business. It’s not enough to focus on your own production and financial goals: You need to understand what’s happening around you, how others create goods or services, the economic forecast, changes in rules and regulations, and more. In other words, you need to conduct a competitive analysis. The thought of searching for and digesting the required information may seem overwhelming, but we make it easy.

In this article, we explain how to focus your analysis by first deciding what questions you want answered. Learn how to find current and potential competitors and how many of them you need to review. Then, we cover the specific aspects of your competitors that you need to consider as well as where to find more information about them. Marketing experts weigh in on how to maintain focus during analysis. We also offer free, downloadable competitive analysis templates to start you on your own information gathering and analysis.

What Is Competitor Analysis?

Competitor analysis (CA) is a process of identifying competitors and gauging their business and marketing strategies to understand both their strengths and weaknesses and those of your own business. Competitive analysis provides a higher-level perspective of the entire marketing landscape and competitive intelligence.

“Competitive analysis is the process of analyzing all collected information to derive some insight for reducing risk and making better decisions,” explains competitive intelligence expert and author Babette Bensoussan .

“It is about your broader competitive environment,” she says. “I always remind my clients that competitors make up only one element of a business’s competitive environment. Other elements include government, technology, buyers, and suppliers, to name a few that impact how well you can compete.”

What Is the Purpose of a Competitive Analysis?

Researching your competitive landscape is essential to business growth and survival, and helps you offer better products or services to customers. You should gain an understanding of how customers view your company, what you’re doing right, and what you’re doing wrong. Therefore, competitive analysis forms a crucial part of marketing plans to help you understand what differentiates your product or service. Particularly when applying for funding, competitive analysis provides valuable insight into business plans. However, competitive analysis offers much more:

• Branding possibilities
• Insight into how competitors design products and messages
• SEO possibilities
• CRO (conversion rate optimization)
• GTM strategies
• User experience (UX) advantages of your and others’ products and websites
• Gaps in the market
• New products and services to develop
• Market trends

According to a Conductor survey , 60 percent of marketers don’t feel proficient in competitive analysis. Many don’t practice it on a regular basis. Knowledge derived from these exercises is critical, and you need to assess competition regularly. Nevertheless, marketing departments often skip competitive analysis, which leaves them with a fragmentary understanding of the landscape and competitors. Being proactive can help you anticipate and prepare for competitor developments and provide you with the agility to take advantage of changes.

According to Bensoussan, “In today’s world of constant change and information overload (whether the information be real or fake), it is critical for any business person to understand the competitive landscape and the forces that impact the profitability and viability of a business.”

What Should Be Included in a Competitive Analysis?

In most cases, a competitive analysis contains a few basic sections, which may vary depending on the size and form of your company and the focus of your analysis:

• A list of your main competitors
• An overview or what you know about them
• Who their target customers are
• A list of their products or services
• What media they use to market their goods and services
• Their current and past marketing strategies
• Their value proposition and effectiveness
• An analysis of all of the strengths and weaknesses of your competition (and your own company)
• An overview of the strategies being used by the competition to achieve their objectives
• An overview of the market and projections for the future

How to Prepare for a Competitive Analysis

One of the crucial prerequisites for a successful competitive analysis is an open mind. Check your beliefs at the door — what you think about your company, your customers, or your competitors isn’t necessarily true. That can be a good thing.

In addition, it is vital to understand why you are conducting an analysis. What are your goals for the business? What are your goals for this analysis? “Always, always be very clear as to what the decision you will be making is all about,” advises Bensoussan. “If you are not clear about your decision, then you will never know if you have good competitive analysis or just some more information.”

She offers these two questions as examples of how different the impact of each answer can be: “Tell me who’s who in the [manufacturing] of zippers?” versus “Should I enter the zipper-manufacturing industry, and can I achieve a return on investment of, say, 15 percent in three years?”

“Which question would help you the most in delivering good quality CA? Which outcome do you think would provide the most value?” Bensoussan asks.

Companies often enlist the help of outside consulting firms dedicated to conducting competitive intelligence research. Guidance on competitive intelligence support, such as database information, software platforms for market program tracking, and more is available through the Society of Competitive Intelligence Professionals .

Competitor Analysis Frameworks

Over the decades, marketing gurus have developed or advocated several competitive analysis frameworks. Here are six well-known methods to consider.

• Porter’s Five Forces Model: First published in 1979 by Harvard Business School professor Michael Porter, the Five Forces model provides a view beyond competitors to factors in your industry landscape that may threaten or strengthen your position. The Five Forces include the following:

• Potential New Entrants: Consider how much money, time, and effort it would take for a company to displace you.
• Competitive Rivalry: Determine who your competitors are, who the closest competitors are, and their products, prices, and quality. Fewer rivals mean more opportunity for your unique qualities to shine; many rivals mean more competitors to steal your customers and potentially better deals to lead customers elsewhere.
• Suppliers: The more potential suppliers you have, the better for you. Consider how having fewer suppliers might impact your operation.
• Buyers: If you have many customers, you have the power. Otherwise, buyers can negotiate more advantageous deals elsewhere or find sources other than yours. Consider how you would treat that situation.
• Substitutes (or Complements): A competitor could create a product or model that replaces yours. On the other hand, a new product or service could also complement yours, which would create a symbiotic sales situation. Complements are sometimes considered the sixth force in the model.

Porter stressed the importance of not confusing these constants with temporary disruptions, such as technological innovations or government interventions in industry.

You can download the Five Forces model below to answer your own questions about an industry or business proposition.

Download Five Forces Model

Excel  |  PDF

Industry Life Cycle Overview: Both industries and individual products have life cycles, which reflect the state of sales, whether robust or diminishing. Understand which stage of the life cycle your industry, company, or product is in to help target your marketing efforts. Product life cycles contain such stages as these:

• Introduction: At the introductory stage, a new industry or product is not well known or proven. It is usually marketed to a few early adopters. Because resources focus on product development, testing, and refinement, few or no profits accrue. Marketing focuses on explaining the product, creating awareness around it, and establishing a niche.
• Growth: As awareness grows and the industry or product becomes established, profits may also grow. However, in the growth stage, rival products may also appear. Although improvements require funds, production efficiencies may also develop. Some products have only a short growth phase. For example, a particular fashion may last for only one season. Other products experience a long or extended growth phase, such as software products, which continue their usefulness through upgrades. During the growth stage, marketing centers on differentiating the product, so it stands out from competing products.
• Maturity: In the maturity stage of a product or industry, sales may expand, but at a less accelerated rate. Fewer competitors may dominate the market and may attempt to differentiate on quality or increase sales by touting low costs.
• Saturation: You reach the saturation stage when every customer who could buy the product already owns the product. A lack of innovation or competition from a superior product could result in saturation.
• Decline/Termination: Industries and products decline for several reasons. Innovations may overtake them and render them obsolete. Businesses and product lines may fail to upgrade and innovate. At the decline or termination stage, companies may fold, continue in a smaller market, or merge with larger, successful businesses.  

Strategic Groups Analysis: You perform strategic groups analysis on companies within a business sector, such as automobiles, to see how they vie for their share of consumer expenditure. By dividing companies into strategic groups, you can understand how businesses of different sizes behave in the marketing landscape. Businesses within groups tend to be competitors, whereas businesses in other groups are related but not competitive. For example, running shoes and high-end women’s dress shoes are in different groups. Analyzing companies in this way can also reveal other significant information: direct competitors and their basis for competition; if and how a company can move to another group; and strategic problems and opportunities. Strategic groups are usually plotted on an x-y axis, where two highly relevant criteria form the axes. Here are some examples of criteria:

• Brand ownership
• Company size
• Capacity utilization
• Cost structure
• Geographical market segmentation
• Marketing activities
• Ownership structure
• Sales channels
• Product diversity
• Product quality
• R&D capability
• Vertical and horizontal integration

First, plot the companies where you think they belong on the graph. Now, with all companies plotted, create groupings. If you want, you can use larger or smaller circles to indicate market share. To gain greater insight, perform a Five Forces analysis on them, or consider the mobility barriers that prevent companies from shifting to other strategic groups.  

SWOT: Perhaps one of the most commonly addressed marketing analyses is SWOT (strengths, weaknesses, opportunities, and threats). In essence, SWOT represents what competitors do and do not do well. As you look at SWOT for competitors, also consider it for your own products and services.

• Strengths: What do they do better than you? What are they known for? Is their pricing, inventory, convenience, and level of service better than yours?
• Weaknesses: How do they fall short of your company’s standards? Can you leverage their shortcomings to improve your standing with customers?
• Opportunities: What in your competitors’ landscape can you exploit to your advantage?
• Threats: What in your competitors’ landscape threatens their business position?

Note that strengths and weaknesses focus on internal characteristics, while opportunities and threats concern external forces. SWOT can be performed separately, but it may provide a useful frame for studying a business’ products and services, marketing, and sales.  

Competitive Array: Competitive arrays, also known as competitive matrices , provide a way to quantify characteristics that may be unquantifiable. For example, if company A sells 500 widgets and company B sells 250, it’s clear which company sold more. But how do you quantify the attractiveness of online and print media or innovation? Creating the competitive array can be an individual or group exercise. To start, list your competitors across the top of your writing surface. In the left-most column, list important characteristics. Next, create a column for weighting the importance of each characteristic so that the sum of the characteristics totals one. The higher the weighting, the more important the characteristic (you may have a few characteristics with the same weight). Next, grade each competitor for each characteristic on a scale, such as from one to 10. Now, multiply the grade by the corresponding weight.  

Competitive Value Proposition Analysis: The characteristics of a value proposition are exclusivity, clarity, and credibility. This method concerns how unique the product or service is, how clearly the product message is conveyed, and whether the message is credibly supported by evidence, such as testimonials, statistics, or test results. Because customers remember only a few key advantages of your product from your media promotion, the main value proposition must be correct and clear and mesh with your actual competitive advantage. To figure out how to differentiate your company, you must determine how competitors differentiate themselves from each other. POPs (points of parity), PODs (points of difference), and POIs (points of irrelevance) help you dissect value propositions.

• Points of Parity (POPs): These are elements of customer benefit that both you and your competitors offer.
• Points of Difference (PODs): These are features of customer benefit that you offer but competitors don’t. Keep in mind that not every point of difference is significant to consumers.
• Points of Irrelevance (POIs): These are characteristics that customers don’t care about.

Your unique value proposition (differentiating characteristics) doesn’t need to appeal to every customer. Don’t make your value proposition too general. You can’t be all things to all customers, just as you can’t do what your competitors are doing.

Otherwise, there's no differentiation. You end up being like teenagers, everybody in the same jeans," says Sonia Schechter, Chief Marketing Officer of Marxent , a provider of virtual reality and augmented reality apps for furniture retailers. Therefore, target your message.

Discover your points of parity by using our POP template.

Download Points of Parity Template

Excel  |  Word  |  PDF

Who Are Your Competitors?

As a first step in competitive analysis, marketing guides typically suggest determining who your competitors are. Competitors can be divided into groups of direct competitors, indirect competitors, and future competitors.

• Direct Competitor: These are companies who sell a direct substitute for your product, operate in the same geographic area, and/or offer the same goods (such as groceries) to the same market. Ask who your customers would buy from if you weren’t in business.
• Indirect Competitor: These are companies in the same geographic area whose products occupy the same general, but not specific, category as your own (e.g., a general bakery versus a designer cake store). Indirect competition satisfies the customer’s need for a particular product or service, although that product or service may be different from yours. Similar products operating in different market segments do not represent direct competitors. For example, a high-end seafood restaurant doesn’t compete with a burger place.
• Future Competitor: Future competitors may currently be indirect competitors who change and expand solutions. In the bakery example, the general bakery could hire a high-end designer to compete with the specialty cake maker. Or, the designer cake store could branch out into breads and muffins.

It may be difficult at first to envision what types of organizations you need to analyze and whether you need to analyze all competitors.To identify competitors, ask yourself who your customers would buy from if your product did not exist. Perhaps even more important, consider who your customers think your competitors are. How many competitors you review depends: If only a few companies do what you do, analyze everyone. If you have many competitors, use Pareto analysis to focus on the critical 20 percent. Larger businesses may analyze the top 10, whereas a small business can focus on three. Disregard online competitors unless you plan to sell online.

‌ Download Pareto Chart Template - Excel

How to Find Current Competitors

Some competitors may seem obvious, but sleuthing can reveal challengers you weren’t aware of.

• Google search for a product or service similar to yours. Consider the companies in paid ads and organic returns.
• Try SEMrush to check which domains are using which keywords.
• Ask your current customers who they would choose besides you.
• Check Alexa, Google Trends, or SimilarWeb for general estimates on the popularity of domain names and keywords.
• Review Dun & Bradstreet for new incorporations.
• Consult Derwent for new patent information.
• See who has booths at trade shows.

How to Find Potential Competitors

While you consider the current playing field, you must also keep your eye on what’s coming around the corner. These are the future new entrants in your niche. Consider who might start a  business that would compete with yours. New competitors can be found in related markets, related technologies, or related products. Companies from other geographical areas with similar products may begin to sell in your area, and former employees or managers can start their own companies based on the themes of your business. In addition, consider the following conditions that may encourage competition:

• A company gains competitive advantage.
• Buyers are dissatisfied with suppliers.
• An unmet demand for goods exists.
• Few major barriers to entry exist.
• The industry offers high profit margins.
• The industry offers unrealized growth potential.
• Competitive rivalry is not intense.

It’s Not All about Competitors ( Competitive Doesn’t Always Mean Competitor )

Depending on what your product or service is and where it is in its life cycle, a competitor focus may not be optimal. For example, for emerging technologies, no true competitor may exist.

“Looking too closely at competition is a massive distraction,” Schechter notes. “If you’re selling a commodity or established product, such as a drugstore, which sells the same thing anywhere, you’d be looking at specific issues, like price, location, and assortment.”

Schecter says marketers themselves often don’t understand that what the competition is doing is not important: “Successful marketing is how you define yourself in the landscape. People don’t care about a feature-by-feature description, or even one feature. They buy the package. They like you. You’re different or you’re solving a particular problem. A new business must define and lay out the landscape for the customer.”

To succeed, understanding what customers want is key. “Marketers have nuanced detail, and customers don’t care about that detail,” Schechter continues. “But, you have to listen to their questions and engage in dialogue with them to gain real understanding,” she points out. She cites Apple’s promotion of the camera in the first iPhone as an example of marketers understanding what — out of thousands of potential functions — was important to consumers. “B2B marketing is the same. It’s about listening to customers, figuring out how they’re shopping, and trying to see through their eyes,” Schechter emphasizes.

“Obsessing over competition can get you off track. If you’re listening to customers, you’ll build the right product. But you don’t need to build your dreams on other people’s ideas,” she concludes.

Where to Find Information for a Competitive Analysis

Remember that every department of your business is a potential source for information, including the following areas:

• Sales: Questions for potential, current, and lost customers
• Research and Development: New patents
• Purchasing: Suppliers
• Marketing: Customers and other consumers

Once you’ve determined who your competitors are and what you want to learn about them and from them, you need to go information hunting:

• Visit offices or brick-and-mortar stores. What do they look like? Who’s there?
• Get financial and organizational information from public filings and from sources like Hoovers, Manta, and Dun & Bradstreet.
• Monitor PR Newswire for new developments and changes.
• Some marketing platforms may actually include information about your competitors.

Interviews and Research Surveys

Interviewing competitor customers and consumers who know little about your business is important to overcoming your preconceptions about the business landscape. You probably have specific questions in mind, but here are the basics:

• Why are you shopping for a solution?
• What were the main reasons you chose the company you did?
• Ranked from most important to least important, what are your five shopping criteria?

Media Scanning or Competitor Content Analysis

You can learn much about competitor products and messaging by scanning media. Media doesn’t just include online content (web pages, tweets, and Facebook posts) — it also includes such traditional marketing collateral as white papers, case studies, and data sheets. Moreover, consider reference materials, such as LexisNexis and Hoovers, and trade, business, or news publications for ads, news stories, and press releases. Media and content can reveal not only new products and new branding, but also new positioning and segmentation strategies, pricing, target markets, and promotion strategy.

What Information to Search for in Competitive Analysis

The approach to analysis depends on the questions requiring answers. To organize your analysis, divide it into three aspects: product or services, marketing, and sales. Each aspect contains its own questions and means of analysis.

Download Competitive Analysis Checklist

Products and Services

Your understanding of products and services must be thorough. Investigate the complete product or service line. Try to understand who your competitors’ customers are and what they need. Look at their pricing strategy and see if it differs for online and brick-and-mortar stores. Also, consider how they differentiate from their competitors.

Tracking competitor sales processes can involve more legwork. For public companies, SEC filings provide some financial information about growth or contraction, but, for private companies, information is less readily available. Information about sales channels may be easy to find through a look in the phone book or online. You can also gather details about the sale process by asking current customers why they chose your product over others. You can also acquire valuable information by following up even after you lose a sale in order to understand the customer’s thinking. What do their partner resales programs look like? What are their revenues versus sales volume?

Marketing Efforts in Competitive Analysis

What does the competitor marketing plan entail? How do competitors invest marketing efforts? What can you do even better? A variety of approaches can help you define competitor marketing strategy.

When you identify marketing assets, take a reasonable sample of items — no need to review all of them. Just remember to keep samples consistent among competitors. Also, when reviewing items, consider the quality of the collateral. It should appear professional, with no typos, and in the formal, professional, idiomatic voice. In addition, a solid library of resources, such as consistent blog posts, whitepapers, case studies, videos, webinars, and podcasts may point you to themes and leads you should follow.

E-Marketing Strategy Competitive Analysis

Few businesses today can function without a web presence that helps generate traffic and inquiries or purchases. Some statistics say that prospective buyers visit a website as many as nine times before purchasing and, depending on the product, visit multiple sites before purchasing. Forrester research after 2010 suggests potential customers visit three sites on average before buying. The more sites visited, the more money the customer intends to spend.

Therefore, understanding how your site compares to your nearest competitors can be helpful. To drive eyes to websites, online purveyors use search engine optimization (SEO) to employ the keywords most likely to garner high search ratings in Google (and other search engines). Marketers frequently also use SEM (search engine marketing) to promote a business or product by increasing visits to a website through paid keywords. Look at how saturated their content is with keywords and where they use keywords, whether in H1 and H2 tags, page titles, content, or links. Also, look at the difficulty level of their keywords.

Consider the usability of the steps in the sales funnel as well as the navigation. What do the  landing pages say? Also, look at backlinks (i.e., links from other pages to your competitor’s page) to your web page. See how many backlinks exist — and from which pages — to understand if this is something you can improve for your website.

Structure is important, but quality content also matters. Online marketing collateral appears as blogs, white papers, ebooks, case studies or user stories, videos, webinars, podcasts, and more. But words and pictures themselves are not valuable if they don’t offer any unique information or concise approaches to existing knowledge. Check whether content is shared and which topics attract attention, or, conversely, what that content and those topics are linked to. What do readers comment on, if they do comment? Who else is sharing what your competitors are publishing?

Social Media

Certain social media platforms appeal to some audiences more than others. The channels a company favors can reveal clues to the demographics of their target market. Make note of what social media buttons they include on pages and where on the page they include them.

Software Tools for Understanding Online Competitors

Besides monitoring content, you can monitor the mechanics of competitor websites to glean more data about how marketing strategy and product offerings are changing. Software helps to automate these investigations for you. Following are some of the many products available:

• BuiltWith : See what platform was used to build a page.
• Ghostery : Find trackers on a website.
• SEMrush : Discover company rankings, organic keywords, AdWords, and analyses of backlinks.
• Versionista : Track web page and website changes, SEO changes, and more.
• Visualping : Monitor webpage updates.
• SpyFu : Find competitor keywords and AdWords, including AdWord and keyword variations and history.
• iSpionage : Track PPC and other keywords in competitor campaigns.
• SimilarWeb : Compare competitor websites to your own.
• Heatmaps: Use large amounts of data to provide a visual representation of how users interact with a website. Heatmaps can indicate where users click and look and for how long. Levels of intensity of activity are usually displayed through colors.
• Session Recording Tools: Record user browsing sessions. Session recording tools can yield a wealth of rich data, but raise some privacy concerns.
• Tag Management Systems: Advanced e-marketing implementations use tags to aid analysis and reporting. Tags are snippets of code that are usually added to the <head> tags of a web page.

Web Page User Testing for UX in Competitive Analysis

It’s essential to understand how consumers approach your website, especially for web-based products and marketing. Allow customers to test your site, and even view it yourself from a customer’s perspective, to help eliminate unnecessary steps and streamline your sales funnel. Doing so can also help to illuminate the opportunities for upsells and cross-sells.

Limiting the analysis to two or three competitors offers a manageable amount of insight into usability, which helps you avoid reviewer overload and confusion. For impartial results, don’t reveal to test participants which website is yours.

Ask test participants to enter words in Google or list the words and phrases they would use to find a certain product or service. Not only does this yield potentially fruitful keywords, it also indicates whether your site appears in search returns.

To get a sense of each participant’s impression, have them look at each website for five seconds and answer the following questions:

• What three words would you use to describe the site?
• What is it about? What products or services are offered and for whom?
• How does this website make you feel?

To understand their process, give participants a task to perform on each website. Ask them to answer the following questions:

• What was the worst thing about your visit to this website?
• What aspects of the experience could be improved?
• What did you like about the website?
• What other comments do you have?
• Which website did you like best and why?

How Much Data Do You Need in a Competitive Analysis?

It may seem overwhelming to sit down and search out your competitors’ business situations. That’s why setting a clear intention before you begin an analysis is so important. In addition, Babette Bensoussan advises that you don’t need to analyze everything:

“Over the years, I have learned that once you have 70 percent of the information required for your chosen analytical technique, you can proceed to the analysis,” she explains. “You never really need all the pieces of a jigsaw puzzle to tell you what the picture is. This same philosophy applies to analysis. More information may not yield better insights nor improve predictive accuracy.”

How Do I Write a Competitor Analysis Report?

The format of your analysis depends on individual choice and the audience. You may also choose to use one kind of format while you work through the analysis, and another when you present findings.

Take a sheet of paper. In the left-most column, write the names of your closest competitors. Across the top of the page, list the main attributes of each product, such as target market, price, size, method of distribution, extent of customer service, prospective buyers, and so on. Then, make a check or a note for each attribute the competitor fulfils. An additional column can contain information about service or product availability, the website, a toll-free phone number, and other general information.

A competitor profile helps you make a detailed record about each competitor, and also allows you to capture snapshots of a business over time. Consider listing some of the following information:

• Location of offices and factories
• Key personalities, history, and trends
• Ownership, organizational structure, and corporate governance
• Number of employees and skill sets
• Management and management style
• Compensation, benefits, and retention rates
• Plant capacity, utilization rate, age of plant, capital investment
• Product mix per plant and shipping logistics
• Products and services
• Depth of product line
• New products developed and success rate
• Research and development details
• Brands and brand loyalty and awareness
• Patents and licenses
• Quality control conformance
• Cash flow and liquidity
• Profit growth profile
• Method of growth (organic or acquisitive)
• Objectives, mission statement, growth plans, acquisitions
• Marketing strategies
• Segments served, market shares, customer base, growth rate, and customer loyalty
• Promotional mix, promotional budgets, advertising themes, ad agency used, online promotional strategy
• Distribution channels (direct and indirect) and exclusivity agreements

Here is a step-by-step process for writing a competitor analysis report:

• Write down your competitors.
• Write what you know about them already.
• Discover who their target customers are.
• Discover their pricing methods.
• Investigate their marketing strategy.
• Figure out their competitive advantage.

Download our competitive analysis landscape template to get ideas for gathering information and reporting analysis results.

Download Competitive Analysis Landscape Template

Excel  |  Word  |  PDF  | Smartsheet

Competitive Analysis for Small Businesses

Small business can be competitive. Beyond meeting financial targets, you need to understand the competitive landscape (short of allowing it to distract you) and then target a niche market.  Many of the same analyses that apply to large businesses also apply to small businesses. However, if this is your first business, or if you don’t have a marketing background, you may want to pay attention to a few aspects.

First, it is helpful to acknowledge how much or how little you know about your competitors by sketching a profile of your top two or three competitors. Next, try to learn all you can about your competition.

You can use the following template to perform a competitive analysis for your small business.

Download Small Business Competitive Analysis Template

Word    |    PDF

What Is a Competitive Analysis in a Business Plan?

Competitive analysis should play a key role in the preparation of a business plan. Particularly if you seek outside funding, your knowledge of the competitive landscape will show your understanding of your business and the market forces at play.

When starting a business, consider all the analysis questions described above, but pay particular attention to issues of growth and opportunity. Consider addressing the following circumstances:

• Whether current competitors target a specific niche or offer products to the mass market
• If, how, and why competitors are growing or reducing business
• How your company will be stronger than competitors and better able to exploit changes in the market landscape
• What you will offer customers that no one else does (your competitive advantage)

In the business plan, describe the competitive landscape as it relates to direct and indirect competitors and opportunities and risks, emphasizing your competitive advantage. This competitive analysis can form the basis for your first marketing plan.

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What is competitive analysis? Template, examples, and how-to

In this comprehensive guide, we’ll define what a competitive analysis is, describe the benefits product teams stand to gain from conducting one, and walk through the steps of how to do a competitive analysis.

Through the tutorial, we’ll refer to examples to demonstrate how each step of a competitive analysis works in practice. We’ll also provide a list of customizable, free competitive analysis templates for you to use when completing these steps on your own.

Complete guide to competitive analysis

Picture this: you just came up with the next disruptive, game changing, AI-powered e-commerce marketplace. The objective is to connect buyers with sellers to fulfill their tailored and customized product needs.

You’re confident your product will take on Etsy and other big players in the market. You did some market and user research and have a good idea of your ideal customer and their (underserved) needs. Based on this data, you believe your marketplace can reach product-market fit quickly.

It’s now time for you to dust off your copy of Sun Tzu’s  T he Art of War . Why is that, you ask?

The Art of War is an ancient Chinese military textbook that, although dated somewhere between ~500–400 B.C., is one of the most influential management books out there to this day. It provides great strategic and tactical advice. Moreover, it provides guidance to help you assess yourself and your competition to gain an advantage.

Maintaining a competitive advantage is the goal. Even if you have the best product in the world and you know there is a market for it, if you don’t understand your competition, you‘re bound to fail. That’s why you need to perform a competitive analysis.

As the band Rage Against the Machine would say, know your enemy .

What is competitive analysis?

Competitive analysis (sometimes called a competitor analysis or competition analysis) is exactly what it sounds like: a structured approach to identifying and analyzing your competitors. More concretely, it’s an assessment of your competition’s offerings, strategy, strengths, and weaknesses.

A competitive analysis helps you answer questions such as:

• Which other companies are providing a solution similar to ours?
• What are the ideal customer’s minimum expectations?
• What are they currently not getting from our product with regard to those expectations?
• What barriers do competitors in the market fce?
• What should we avoid introducing in our product?
• What price are customers willing to pay for our product?
• What value do we need to provide to make our product stand out in the market?
• What trends are happening and how might they change the playing field?

When conducted thoroughly and regularly, a competitive analysis provides you with tons of information that can be used to improve and optimize your product. The end result is a holistic overview of your competitor landscape.

Why do a competitive analysis?

Competitive analysis is a fundamental product management instrument. It helps PMs learn what works and what doesn’t when trying to acquire market share, identify market trends, and locate gaps in their product offering.

Competitive analysis exists to help you avoid making mistakes and empower you to beat competitors to the punch in the pursuit of product growth and success.

Knowing your competition will bring you great rewards. Conducting a competitive analysis will help you more effectively:

• Create benchmarks
• Identify opportunities to better serve customers
• Make strategic decisions
• Determine your pricing strategy
• Identify market gaps
• Determine distribution and marketing strategies

Typically, the first time you create a competitor analysis is when doing your market research. This helps you get an idea of the product-market fit , which will evolve along your journey.

As a product manager, your role is not to analyze how well your competitors are able to showcase themselves. It is your job to make the product what the customer needs it to be. Understanding your competitor’s capabilities, pricing, and product positioning helps you in this.

Keep in mind that your competitors will likely showcase themselves to appear better than they probably are. You’ll be able to acquire tons of information about them, but you should take that information with a pinch of salt.

How to do a competitive analysis

There is no a single way to do a competitive analysis. In general, a competitive analysis is made up of three fundamental components:

• A shortlist of competitors
• A competitor deep dive
• A holistic overview and strategy

To demonstrate how to do a competitor analysis, we’ll refer back to the example outlined in the introduction.

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Remember, in our example, we’re looking to disrupt the market with an AI-powered e-commerce marketplace app that helps buyers and sellers connect to fulfill highly customized orders. Let’s call our innovative new product AGORA.

1. Create a shortlist of your competitors

There are three types of competitors:

• Direct — Competitors that offer the same product and target the same ideal customer; you are battling direct competitors heads-on
• Indirect — Competitors that either offer a somewhat similar product or target the same ideal customer
• Replacement — Competitors that offer a different product but target the same ideal customer

For a competitive analysis, you need to identify at least your direct and indirect competitors. So how do you do that? By looking inward and researching obsessively .

Look inward

To figure out who your direct and indirect competitors are, you need to look inward first to understand your product positioning: who are you servicing and what is the offering you are providing?

You can answer these questions by doing a self-assessment using the product canvas . Originally introduced by Roman Pichler, the product canvas has since tbeen tweaked and refined.

In its core, the product canvas covers:

• The name of the product
• Objectives and key metrics for success
• The ideal customer
• A high-level overview of what’s required to meet the customer’s needs
• Just enough product details about short-term goals

For our example product, the competitive analysis might look something like this:

Research obsessively

A simple Google search using keywords from your self-assessment can get you pretty far. Other resources that can help you identify your competitors include tools such as Crunchbase, Similarweb, Statista, etc.

As the old saying goes, the customer knows best. If you don’t have many customers yet, review sites such G2, Capterra, Trustpilot, and Google Reviews can help you.

If you do have customers, go ask them. Most customers try and evaluate several products before deciding on the right product to buy. Nothing is stopping you from asking them which other brands they considered and why they ultimately chose yours.

Once you have established who your competitors are, you might find yourself in a market with many direct and indirect competitors. If that is the case, select about seven of the most relevant competitors to include in your competitor deep dive.

2. Do a deep dive on each competitor

From your a shortlist of competitors, choose about seven of your most important and dig up all the relevant information on each one.

The research conducted during the previous step will help you capture the most relevant information about your competitors for the following categories:

Company profile

Ideal customer profile, product information, market approach, swot analysis.

Start by creating a company profile for each of your competitors to gain a better understanding of who they are. Include the following information:

• Name   —  What is the name of your competitor?
• Founding date  —  When was the company founded? How long has it been in the market?
• Company size  —  How many employees does the company have? Are they equipped to service the market and innovate?
• Market share  — The portion of the market controlled by the competitor’s product
• Revenue   —  The income the competitor generates from its product
• Reputation   —  What do customers think of your competitor’s product on a scale from one to five?

Let’s apply this framework to our AGORA competitive analysis example:

It’s important to understand who your competitors are serving and who is buying the product. This not only to reconfirm that the competitor is indeed a direct (or indirect) competitor, but also to understand what customers like and dislike about the competitor’s product.

The information you’re looking for includes:

• Ideal customer   —  Who is the competitor’s target customer and what defines them?
• Motivations   —  What does the customer enjoy about your competitor’s product?
• Frustrations   —  What does the customer hate about the product?
• Primary buyer  —  Who is the primary buyer of the product? Is it the as the ideal customer, or is it a different persona?

Let’s see what this would look like following our AGORA example. Below is an example ideal customer profile for Etsy. First, for the buyer:

And the ideal customer profile for Etsy sellers:

Not to be captain obvious, but you want to capture more details about the product your competitor is offering and its positioning.

The information we’re looking for at this step includes:

• The product   —  What is the tagline your competitor is using to market its product?
• Positioning   —  Based on the quality and price of the product, place the product into a one of several buckets. For example, Economy (low quality, low price), Skimming (low quality, high price), Penetration (high quality, low price), and Premium (high quality, high price)
• Product features   —  What are the key features being marketed and promoted?

Referring to our example AGORA app, the product information associated with Etsy on a competitor analysis might look as follows:

Next, seek to understand how your competitors are bringing the product to market .

List the following information:

• Pricing — What does the product costs? If there is a tiered pricing model, what does it look like?
• Distribution channels — Through which channels is your competitor selling the product?
• Marketing channels — Through which channels is the product being promoted?

In our AGORA competitor analysis example, this section would look something like:

With all the information you’ve collected, you’ll find yourself in a good place to do a SWOT analysis . This is one of the most common and popular competitive analysis frameworks.

SWOT stands for strengths, weaknesses, opportunities, and threats:

• Strengths  —  What is going well for the competitor?
• Weaknesses   —  What is not going well? What obvious flaws are there?
• Opportunities   —  What could give your competitor an advantage?
• Threats  —  What might harm your competitor’s product?

For AGORA, our example competitive analysis might include a SWOT analysis that looks like this:

3. Develop a holistic overview and strategy

Now that you have a better view of your competitors, it’s time to determine how you want to approach them in the market: do you want to avoid your competitors or attack them?

Two extremely useful tools that can help you make this assessment are the competitive matrix and battle cards .

Competitive matrix

One way to operationalize the data you gathered during your competitive analysis is to plot out a four-quadrant competitive matrix.

Define key factors for the and x and y axes and plot yourself and your competition accordingly to see how you stack up. This approach is also known as perceptual mapping.

A competitive matrix for our example would look like this:

Battle cards

You can use the four-quadrant competitive matrix and competitor insights to create battle cards for each of your competitors.

Battle cards are a visual aid that help you compare your product against those of your competitors at a glance. It’s a quick and easy way to see how you stack up in key areas of performance and value. It’s also a neat way to help sales in their conversations with customers.

Here’s what you should include on each battle card:

• Company name — Name of your competitor
• Powers  —  What makes this competitor stand out from the rest?
• How we win   —  What should we do to gain a competitive advantage over this competitor?
• Why we lose   —  What is this competitor better at? What should we avoid so we don’t lose market share?
• Pricing   —  How much of a threat is the competitor’s product to our market share (low, medium, or high)?
• Strategy   — Should we attack or avoid this competitor?

A battle card for our example competitive analysis might look as follows:

Alternative competitive analysis frameworks

If you‘ve followed the framework described above, you should have solid insight into your competitors, your product opportunities, and the best strategy to attack or avoid your competitors in the market.

If you want to dig deeper, you can follow up your competitive analysis by producing a Five Forces analysis and/or customer journey map .

The Five Forces model

You still might want to consider gaining more insights into the competitive structure of the market you are in — in other words, gain a better understanding of how easy it is to either enter or be replaced by a competitor in the market.

A great framework to use for this type of competitor analysis is the Five Forces model , originally conceived by Michael Porter.

According to the Five Forces model, you can assess the market you are in by looking at:

• Intensity of competitive rivalry
• Negotiation power of new buyers
• Negotiation power of suppliers
• Threat of new entrants
• Threat of substitutes

Customer journey map

Instead of zooming out, you can also zoom in on the journey ideal customers make when interacting with the product itself, the distribution, or marketing channels.

On a journey map, your touchpoints are the customer, the activity performed, how the customer experiences the activities, and their expectations.

Free competitive analysis templates

A competitive analysis is a continuously updated document packed with information about your most important competitors to help you determine how to approach them in your target market.

The competitive analysis model described in this article consists of three steps that are designed to produce the insights you need to rule the market once and for all.

Below are free, customizable competitive analysis templates for each step of the process described in this article:

• Competitive analysis template
• Product canvas template
• Competitive matrix template
• Battle card template
• Customer journey map template

NOTE : To use and customize the competitive analysis templates above, after opening, select File > Make a copy from the main menu.

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How to Write the Competitor Analysis Section of the Business Plan

Writing The Business Plan: Section 4

Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

The competitor analysis section can be the most difficult section to compile when writing a business plan because before you can analyze your competitors, you have to investigate them. Here's how to write the competitor analysis section of the business plan.

First, Find Out Who Your Competitors Are

If you're planning to start a small business that's going to operate locally, chances are you already know which businesses you're going to be competing with. But if not, you can easily find out by doing an internet search for local businesses, looking in the online or printed local phone book, or even driving around the target market area. 

Your local business may also have non-local competitors that you need to be aware of.

If you're selling office supplies, for instance, you may also have to compete with big-box retailers within a driving distance of several hours and companies that offer office supplies online. You want to make sure that you identify all your possible competitors at this stage.

Then Find Out About Them

You need to know:

• what markets or market segments your competitors serve;
• what benefits your competitors offer;
• why customers buy from them;
• as much as possible about their products and/or services, pricing, and promotion.

Gathering Information for Your Competitor Analysis

A visit is still the most obvious starting point - either to the brick and mortar store or to the company's website. Go there, once or several times, and look around. Watch how customers are treated. Check out the prices.

You can also learn a fair bit about your competitors from talking to their customers and/or clients - if you know who they are. Other good "live" sources of information about competitors include a company's vendors or suppliers and a company's employees. They may or may not be willing to talk to you, but it's worth seeking them out and asking.

And watch for trade shows that your competitors may be attending. Businesses are there to disseminate information about and sell their products or services; attending and visiting their booths can be an excellent way to find out about your competition.

You'll also want to search for the publicly available information about your competitors. Online publications, newspapers, and magazines may all have information about the company you're investigating for your competitive analysis. Press releases may be particularly useful. 

Once you've compiled the information about your competitors, you're ready to analyze it. 

Analyzing the Competition

Just listing a bunch of information about your competition in the competitor analysis section of the business plan misses the point. It's the analysis of the information that's important.

Study the information you've gathered about each of your competitors and ask yourself this question: How are you going to compete with that company?

For many small businesses, the key to competing successfully is to identify a market niche where they can capture a  specific target market  whose needs are not being met.

• Is there a particular segment of the market that your competition has overlooked?
• Is there a service that customers or clients want that your competitor does not supply? 

The goal of your competitor analysis is to identify and expand upon your competitive advantage - the benefits that your proposed business can offer the customer or client that your competition can't or won't supply.

Writing the Competitor Analysis Section

When you're writing the business plan, you'll write the competitor analysis section in the form of several paragraphs. 

The first paragraph will outline the competitive environment, telling your readers who your proposed business's competitors are, how much of the market they control and any other relevant details about the competition.

The second and following paragraphs will detail your competitive advantage, explaining why and how your company will be able to compete with these competitors and establish yourself as a successful business.

Remember; you don't have to go into exhaustive detail here, but you do need to persuade the reader of your business plan that you are knowledgeable about the competition and that you have a clear, definitive plan that will enable your new business to successfully compete.

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How to Write a Competitive Analysis: a Comprehensive Guide

• March 21, 2024
• Business Plan , How to Write , Uncategorized

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.

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How to Do a Competitive Analysis | Complete Guide with Competitive Analysis Charts

Table of Contents

What is a Competitive Analysis?

Importance of doing a competitive analysis, how to do a competitive analysis with visual techniques, identifying and categorizing top competitors, categorize your top competitors using a mind map, analyzing competitive landscape, swot analysis, pest analysis, porter’s five forces analysis, analyzing competitors’ market positioning, value proposition canvas, perceptual map, conducting competitive intelligence analysis, comparing competitor products and prices, radar chart, compare and contrast charts, competitor price analysis, when to use a competitive analysis, common mistakes and how to avoid them, what are your thoughts on how to do a competitive analysis.

Competitive analysis is a major part of any comprehensive market analysis. It allows you to gather information about your competitors, assess their strengths and weaknesses and helps you build strategies to improve your competitive advantage.

In a competitive analysis, there are many areas to look at and examine. In this list, we have covered how to do a competitive analysis using several competitive analysis techniques that you can use during each phase of your competitor research and competitive analysis.

A competitive analysis is a central part of a marketing plan. Information gathered from a competitive analysis helps you identify what makes your product or service unique from that of your competitors. Using that data you can develop strategies to attract your target market.

Competitive analysis is the process of identifying and evaluating the strengths and weaknesses of a business’s competitors to understand the marketing landscape and improve one’s strategy. This involves analyzing the competitors' products, pricing, marketing strategies, customer base, and other relevant factors. Businesses can adapt and develop in ways that set them apart from their competitors and appeal to customers in new ways by studying how their competitors operate and what differentiates them. The main objective of a competitive analysis is to identify opportunities and threats within a particular market or industry and to use the information to make informed decisions to gain a competitive edge in the market.

There are several reasons a business would opt to conduct a competitive analysis. They are,

• To identify market opportunities: Businesses can identify gaps and opportunities for market growth by understanding competitors' strengths and weaknesses. This can help businesses develop new products/services that target unmet customer needs or find new ways of differentiating themselves in the market.
• To gain a competitive advantage: Businesses can identify ways to differentiate themselves from their competitors and gain a competitive advantage. This can include offering better pricing, improving product features, or developing more effective marketing strategies.
• To better understand the market and customers: By analyzing the competitors, businesses can understand and gain insight into customer preferences, market trends, and emerging technologies or products.
• To anticipate and mitigate potential threats: By analyzing the competitors and the market, businesses can forecast potential threats to their market position and take steps to mitigate them. For example, if a competitor is known to lower prices, a competing business can focus on offering a high-quality product.
• To benchmark performance: Businesses can also benchmark their performance against competitors through a competitive analysis. By comparing metrics such as market share, revenue growth, and customer satisfaction, businesses can identify areas where they are outperforming their competitors and areas where they may need to improve.
• To improve decision-making: A competitive analysis can provide valuable insights to inform business decisions, including product development, pricing, marketing, and sales. Businesses can enhance their performance by using this information to make informed decisions.

A competitive analysis depends on competitor information about several areas. You can use the following competitor analysis techniques to gather and analyze the different types of data.

• Identify and categorize top competitors
• Analyze competitive landscape
• Analyze competitors’ market positioning
• Conduct a competitive intelligence analysis
• Compare competitor products and prices

Before you start comparing your product to those out there, you need to know who you are competing with. There are several methods you can use to research and identify your competitors.

• Search on Google, Bing etc. for your product name, product idea or related keywords
• Search on social media channels and online communities
• Ask your colleagues or other experts in the field
• Ask from your potential customers via emails, surveys etc.

Once your research is done, you may have a pretty long list of the names of direct, indirect, potential etc. competitors.

It’s important to categorize them, so you know which competitors to prioritize. A simple mind map like the one below can help you with that.

You can also categorize them as primary competitors, secondary competitors and tertiary competitors on the mind map.

You can further expand the mind map to include their location, website URLs ( click the relevant shape and add link ) and other necessary information as well.

Next step is to analyze the competitive landscape. Here you should focus on understanding the strengths and weaknesses or your competitors and threats and opportunities in the industry and find opportunities for growth.

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Use it first to analyze your own product.

Look into what your strengths and weaknesses are. These are your product’s positive attributes like resources, unique product features etc. and negative attributes like inefficient processes, lack of resources etc. These are within your control.

Opportunities are technological advancement, growing market demand etc. And threats could be negative economic and political change. These are external and therefore are out of your control.

You can do a SWOT analysis for your competitors as well to learn how they are surviving in the market.

The PEST analysis looks at external factors that affect a product or service. Namely, they are Political factors, Economic factors, Social factors, and Technological factors.

By gathering this information you can determine how your competitors will behave in the face of changes occurring in these areas. You can alter or develop your strategies accordingly.

PESTLE is the extended version of PEST, as it takes Legal and Environmental factors into consideration as well.

Porter’s five forces analysis examines the environment in which a product operates. It helps to understand the level of competitive intensity in the industry. It primarily examines five factors in the industry

• Entry/Exit Barriers
• Substitutes

By examining these factors you can determine the profitability and the attractiveness of an industry. Refer to our List of Marketing Strategy Planning Tools to learn how to use Porter’s five forces analysis along with 13 other tools to plan your marketing strategy.

This is where you try to evaluate the ability of your competitors to influence the perception of their consumers (who also belong in your target audience). In other words, here you’ll be looking at how your customers perceive the products of your competitors as well as that of yours.

Value proposition canvas is a tool used to develop products that match the needs of customers. It is made up of the customer profile and value proposition of the business.

Customer profile consists of

• Gains: the gains the customers expect and wish to attain
• Pains: the negative experiences the customer has to go through when doing their job
• Customer jobs: the tasks the customers are trying to perform or the problems they are trying to solve

Value map consists of

• Gain creators: how the product offers added value to the customer
• Reliever: how the product can relive the pain of the customer
• Products and services: the products and services that create gain and relieve the pain of the customer

Value proposition canvases based on your competitors will help you figure out how they are offering value to their customers.

Refer to our Guide on Launching a New Product to learn how to use the value proposition canvas step-by-step.

The perceptual map helps you identify where your competitors are positioned in relation to your product’s position. It helps you understand what the average target market consumer thinks of your product and those of your competitors.

How to do it

Step 1: Select two determinant attributes you want to compare your competitors against. These determinants are the attributes consumers depend on to make decisions. For example, it could be the quality of the product and the price of it.

Step 2: Gather your list of competitors in the product category. From the mind map of competitors, you created earlier, pick 5 to 10 players in the first category.

Step 3: Based on a 1 to 5 rating scale, give scores to each selected competitor using the two determinant attributes.

Step 4: Using the grid, assign a place for each competitor. This will help you get a quick overview of where each and every competitor stand compared to one another.

Competitive intelligence analysis is the process of gathering and examining data on competitors, their products and customers, and target markets.

The synthesized data you generate through the analysis can be used by internal sales and marketing teams to make better decisions and develop strategies.

Step 1: Conduct research to gather data on your competitors. You can rely on resources like the customers, websites, social media, analyst reports, press releases, demo videos etc. to find information on your competitors, their customers etc.

Step 2: Use a mind map like the one below to organize and categorize the data you’ve gathered

Step 3:  Sort through and analyze all the data and create a competitor profile that covers aspects such as products, market, sales, partners, etc.

Step 4:  You can use a competitor profile like the one below to organize information and save them for later use and share it with your internal teams that need to come up with strategies to counter your competitors.

When developing new product features or outlining your pricing strategy, you need to take into consideration your competitors and how they have managed to deliver to their customers so far.

A radar chart is a tool that you can use to compare the products of your competitors based on different characteristics. It will help you identify which competitors are scoring high or low within the characteristics you’ve selected.

Step 1: Select the competitors you want to compare and assign them an axis that starts from the center.

Step 2: You can either select one characteristic and compare several competitors to evaluate their performance, or you can take one competitor and evaluate how they score under several characteristics.

Compare and contrast charts are a great visual tool to compare products. It will offer a quick overview of the capabilities of competitor products and that of yours when you are planning strategies or new developments.

Whether you want to compare product features, prices, or characteristics of competitor marketing strategies, compare and contrast charts are a great way to organize and analyze information.

With a chart like the one below, you can rate your competitors based on their strengths and whether increasing or reducing your product price is too costly or profitable for you.

Step 1: Research and gather price information of your top competitors

Step 2: Figure out whether reducing or increasing your product’s price to gain a competitive advantage over your competitors would cost you too much or help you make profits

Step 3: Use the grid below to visualize your findings and find which price reaction you should take in order to make a profit.

Read this article to learn how to use a standard competitive price response analysis in detail.

• To assess entering the market: If a business is considering entering a new market, a competitive analysis can help them to understand the competition and determine whether there is an opportunity to differentiate themselves.
• To identify product development opportunities: Competitive analysis can help a business identify gaps in the market and develop products that can fulfill the gaps in customer needs or offer unique features that set them apart.
• To determine the pricing strategy: By analyzing the competitors’ pricing strategies, businesses can develop more effective pricing strategies that reflect the market and offer competitive value to customers.
• To determine the marketing strategy: By conducting a competitive analysis, businesses can develop more effective marketing strategies highlighting their unique value proposition and differentiating them from their competitors.
• To determine the sales strategy: By understanding the sales strategies of their competitors, businesses can identify opportunities to improve their sales processes and better serve their customers.
• To create partnerships and collaborate: Competitive analysis can help identify potential partners or collaborators in the market and understand how these relationships can benefit the business.

Try to avoid the below mentioned mistakes when you are conducting a competitive analysis.

Focusing too much on the competition

It’s critical that you remain focused on your own business and not get caught up in what your competitors are doing. It is of course important to understand your competition, but it should not be the only factor influencing your company’s decisions. Rather, a competitive analysis should provide you with insights in the market and actions of your competitors. Make sure to balance your competitive analysis with your own strengths and goals.

Failing to consider indirect competitors

Due to the fact that they provide alternatives or substitutes for your goods or services, indirect competitors can be just as significant as direct ones. Even if they are not direct competitors, make sure you include any relevant competitors in your research.

Relying on inaccurate, outdated or incomplete information

A competitive analysis is only as good as the information it is based on. Make sure you are gathering accurate, up-to-date and complete information from reliable sources. Double-check your data and update your analysis regularly.

Not prioritizing key factors

When conducting a competitive analysis, it is critical to give priority to factors that are most important to your business. For instance, if pricing is an important aspect for your business, make sure you prioritize gathering and analyzing pricing information from your competitors.

Not developing an action plan

A competitive analysis is only useful if you use the insights gained to inform your business decisions. Therefore, make sure to develop an action plan based on the findings of your analysis and to set clear goals and objectives for your business.

Not carrying out keyword research of tracking Google search rank

Keyword research and tracking Google search rank can give you valuable insights into how your competitors are positioning themselves in the market and what keywords they are targeting. Make sure you include this information in your competitive analysis.

Not keeping up to date with industry news or trends

The market can change quickly, so it’s important to stay up to date with industry news and trends. Make sure you regularly check industry publications, news websites and social media for relevant updates.

Not updating the competitive analysis regularly

A competitive analysis is not a one-time event but an ongoing process. Make sure you update your analysis regularly to stay current with changes in the market and your competitors' activities.

Not getting relevant stakeholders involved

Make sure you involve relevant stakeholders, such as marketing, sales, and product development teams, in the analysis process and share the findings with them. This can help to align everyone around a common understanding of the market and competitors, and facilitate collaboration towards shared goals.

In this list, we’ve covered visual techniques that you can use to research competitors, analyze the competitive landscape and competitors’ market position and more.

These visual competitor analysis tools help you organize the data you collect and make effective decisions about how you should position and market your product or service.

Have you got any other competitive analysis techniques to add to the list? Leave your thoughts in the comment section below.

Join over thousands of organizations that use Creately to brainstorm, plan, analyze, and execute their projects successfully.

FAQs About Competitive Analysis

More related articles.

Amanda Athuraliya is the communication specialist/content writer at Creately, online diagramming and collaboration tool. She is an avid reader, a budding writer and a passionate researcher who loves to write about all kinds of topics.

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• How to Use Your Business Plan Most Effectively
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• A Step-by-Step Guide to Presenting Your Business Plan in 10 Slides
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• How to Use Your Business Plan to Track Performance
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• Is This Idea Going to Work? How to Assess the Potential of Your Business.
• When to Update Your Business Plan
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• Use This Worksheet to Write a Product Description That Sells
• What Is Your Unique Selling Proposition? Use This Worksheet to Find Your Greatest Strength.
• How to Raise Money With Your Business Plan
• Customers and Investors Don't Want Products. They Want Solutions.
• 5 Essential Elements of Your Industry Trends Plan
• How to Identify and Research Your Competition
• Who Is Your Ideal Customer? 4 Questions to Ask Yourself.
• How to Identify Market Trends in Your Business Plan
• How to Define Your Product and Set Your Prices
• How to Determine the Barriers to Entry for Your Business
• How to Get Customers in Your Store and Drive Traffic to Your Website
• How to Effectively Promote Your Business to Customers and Investors
• What Equipment and Facilities to Include in Your Business Plan
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• How to Use Financial Ratios to Understand the Health of Your Business
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• The Role of Franchising
• The Best Ways to Follow Up on a Buisiness Plan
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• How to Hire the Right Business Plan Consultant
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• What To Put on the Cover Page of a Business Plan
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• 6 Steps to Getting Your Business Plan In Front of Investors

How to Identify and Research Your Competition Emphasizing your competitive advantage is an essential part of any business plan.

By Eric Butow • Oct 27, 2023

Key Takeaways

• Why competitive analysis matters
• Questions to ask about your industry
• How to find similar companies

Opinions expressed by Entrepreneur contributors are their own.

This is part 2 / 8 of Write Your Business Plan: Section 4: Marketing Your Business Plan series.

Successful entrepreneurs are renowned for intuitively feeling a market's pulse, project trends before anyone else detects them, and identifying needs that even customers are unaware of. After you are famous, perhaps you can claim a similar psychic connection to the market. But for now, you'll need to reinforce your claims to market insight by presenting solid research in your plan.

Market research aims to understand the reasons consumers will buy your product. It studies consumer behavior, specifically how cultural, societal, and personal factors influence that behavior. For instance, market research aiming to understand consumers who buy in-line skates might study the cultural importance of fitness, the societal acceptability of marketing directed toward children and teens, and the effect of personal influences such as age, occupation, and lifestyle in directing a skate purchase.

Related: 4 Effective Ways To Accomplish This Missing Step That Most Entrepreneurs Overlook

Market research is often split into two varieties: primary and secondary. Primary research studies customers directly, whereas secondary research studies information others have gathered about customers. Primary research might be telephone interviews or online polls with randomly selected target group members. You can also study your own sales records to gather primary research. Secondary research might come from reports on other organizations' websites or blogs about the industry.

Conducting market research provides answers to those unknown elements. It will greatly reduce risk as you start your business. It will help you understand your competitive position and the strengths and weaknesses of your competitors. And it will improve your marketing and sales process."

Related: You Need Consumer Insights To Ensure The Success Of Your Business. Here Are Five Ways To Find Them.

Questions to Ask About Your Industry

To start preparing your industry analysis and outlook, dig up the following facts about your field:

• What is your total industry-wide sales volume? In dollars? In units?
• What are the trends in sales volume within your industry?
• Who are the major players and your key competitors? What are they like?
• What does it take to compete? What are the barriers to entry?
• What technological trends affect your industry?
• What are the main modes of marketing?
• How does government regulation affect the industry?
• In what ways are changing consumer tastes affecting your industry?
• What are recent demographic trends affecting the industry?
• How sensitive is the industry to seasons and economic cycles?
• What are key financial measures in your industry (average profit margins, sales commissions, etc.)?

Related: 5 Essential Elements of Your Industry Trends Plan

How to Find Similar Companies

Find a close match when looking at comparable businesses (and their data). For comparative purposes, consider:

• Companies of relative size.
• Companies serving the same geographic area could be global if you plan to be a web-based business.
• Companies with a similar ownership structure. If you are two partners, look for businesses run by a couple of partners rather than an advisory board of twelve.
• Relatively new companies. While you can learn from long-standing businesses, they may be successful today because of their twenty-five-year business history and reputation.

You will want to use the data you have gathered to determine how much business you could do and to figure out how you will fit into and adapt to the marketplace.

Related: How to Make Your Business Stand Out

How To Do Original Research

One limitation of in-house market information is that it may not include exactly what you're looking for. For instance, if you'd like to consider offering consumers financing for their purchases, it's hard to tell how they'd like it since you don't already offer it.

You can get around this limitation by conducting original research—interviewing customers who enter your store, for example, or counting cars that pass the intersection where you plan to open a new location—and combining it with existing data. Follow these steps to spending your market research dollars wisely:

Determine what you need to know about your market. The more focused the research, the more valuable it will be.

• Prioritize the results of the first step. You can't research everything, so concentrate on the information that will give you the best (or quickest) payback.
• Review less expensive research alternatives. Small Business Development Centers and the Small Business Administration can help you develop customer surveys. Your trade association will have good secondary research. Be creative.
• Estimate the cost of performing the research yourself. Keep in mind that with the internet you should not have to spend a ton of money. If you're considering hiring a consultant or a researcher, remember this is your dream, these are your goals, and this is your business.
• Don't pay for what you don't need.

Related: The One Simple Task That Will Help Your Startup Succeed

More in Write Your Business Plan

Section 1: the foundation of a business plan, section 2: putting your business plan to work, section 3: selling your product and team, section 4: marketing your business plan, section 5: organizing operations and finances, section 6: getting your business plan to investors.

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How to Create a Competitor Analysis Report (with Examples)

By Midori Nediger , Nov 09, 2023

Your business will always have competition.

And if you don’t know what that competition is up to, you could be missing out on huge opportunities.

That’s why a competitive analysis is so crucial to your success as a business. It gives you the tools to quickly adapt to any changes in the competitive landscape and potentially capitalize on industry trends that your competitors haven’t even noticed.

So let’s get some basics out of the way…

What is a competitive analysis report?

A competitive analysis report outlines the strengths and weaknesses of your competitors compared to those of your own business.

Typically, a competitive analysis report will contain:

• A description of your business’s target market
• Details about the features of your product compared to your competitors’ products
• A breakdown of current and projected market share, sales, and revenues
• Comparisons of pricing models
• An analysis of marketing strategy and social media strategy
• A description of customer ratings of the features of each competitor

Whether you’re a startup trying to break into the marketplace , a consultant trying to get results for your client, or an established company looking to cement your foothold against the competition, a well-researched competitive analysis gives you the tools you need to make strategic decisions.

Your competitive analysis should inform your marketing plan , your business plan , your consultant report and every part of your high-level business strategy.

But how do you actually create a competitive analysis report?

How to make competitor analysis report :

• Start with a competitor overview
• Conduct market research to uncover customer personas and industry trends
• Compare product features in a feature comparison matrix
• Summarize your strengths and weaknesses with a SWOT analysis
• Show where you fit in the competitive landscape
• Use a competitor analysis template for a professional look and feel

The level of detail you include in each section of your competitive analysis report will vary depending on the stage of your business growth and your goals. For example, a startup might create a report that focuses on market research, while an established business might dive into detail on an emerging competitor.

But let’s talk about the parts of a competitive analysis that every report should include.

1. Start with a competitor overview

A strong report shows exactly what a company must out-compete to be successful.

Meaning you must audit any product or service that currently solves the problem your business is trying to solve for customers and write a quick profile for each competitor.

Like the template below, each competitor profile might include:

• The company’s revenue and market share
• The company’s size and information about their management team
• A broad description of the company’s strengths and weaknesses
• An overview of how the company is perceived by customers

This overview will help your readers get a big-picture view of the market landscape.

2. Conduct market research to uncover customer personas and industry trends

You can’t create a competitive analysis report without doing extensive market research , which is all about gathering information to understand your customers, identify opportunities to grow, and recognize trends in the industry.

This research can help you put together the customer personas that will guide business and marketing decisions down the line, and allow you to plan for any shifts that might disrupt the marketplace.

You can conduct primary market research, with:

• Customer interviews
• Online surveys or questionnaires
• In-person focus groups
• Purchasing a competitor product to study packaging and delivery experience

Or secondary market research, by:

• Reading company records
• Examining the current economic conditions
• Researching relevant technological developments

When assembling your market research you may just want provide a high-level summary of the industry trends, like this competitor analysis example shows:

Or you may want to dive into detail on the demographics of a particular consumer segment, like this:

But if you’re a consultant or advisor struggling to get buy-in from skeptical stakeholders, the report below would be ideal. Covering everything from market forecasts to consumer profiles, it can help you get clients and decision-makers on board.

3. Compare product features in a feature comparison matrix

The feature comparison is arguably the most important part of the competitive analysis. Breaking down your product and your competitors’ products feature-by-feature will allow you to see what really sets everyone apart.

In addition to specific product features, here are some attributes that you might include in a feature comparison matrix:

• Product quality
• Number of features
• Ease of use
• Customer support
• Brand/style/image

The most common format for a features analysis is a simple matrix with you and your competitors along one side and all of the relevant features along the other. You can check off or rate how you perform in each area:

But these tables can get pretty long. Another approach is to focus on the things that provide the most value to the user, like in this competitor analysis example from Mint. It only includes ease of use, costs, and benefits:

If you want to visualize your comparisons in an engaging way, you could use a comparison infographic . 

Great resources for this section of your competitive analysis report are product rating sites like Capterra and G2Crowd . They’ll give you an unbiased view of your company and your competitors.

And as with any market research, it’s critical that you speak with real people who use your product and your competitors’ products. That’s the only way to get an accurate picture of how your target customers rate the competition .

4. Summarize your strengths and weaknesses in a SWOT analysis

When you’re conducting research for your competitive analysis, it’s going to be messy. You’ll have a lot of data and it’ll be hard for an outsider to understand.

That’s what makes the SWOT analysis so essential.

A SWOT analysis is a framework for evaluating your competitive position by listing your key strengths, weaknesses, opportunities, and threats.

It can act like a short summary of the rest of your competitive analysis report for anyone who doesn’t have time to dig into the details.

Click the template above to enter our online SWOT analysis maker tool. Customize the template to your liking–no design no-how required.

Here are some questions to kickstart your SWOT analysis:

• Strengths: What are we doing really well (in terms of marketing, products, sales, branding, technology, etc.)?
• Weaknesses: What are we struggling with? What’s holding us back?
• Opportunities: What’s the weakest area for our biggest competitor? Are there any gaps in the market that aren’t current being addressed? What has recently changed in our business or the market?
• Threats: What is our biggest competitor doing much better than us? What new products/features are they working on? What problems aren’t we currently addressing?

In your report, you could arrange your SWOT analysis in a simple list, but it can be helpful to use color-coded quadrants, like the competitor analysis example below. Note how each quadrant is paired with an icon:

5. Show where you fit in the competitive landscape

After summarizing your strengths, weaknesses, opportunities, and threats, it’s time to look at the bigger picture. It’s time to figure out where every major competitor currently fits into the competitive landscape.

The most popular way of doing this is to identify the two dimensions that are most important for being competitive in your industry and plot them on a matrix, like this one from the Boston Consulting Group:

And this one from G2 Crowd (which looks at market presence and customer satisfaction):

You may want to focus on where you fit in the market landscape based on your own biggest strengths and weaknesses, or the biggest threats and opportunities you identified in the SWOT analysis.

Or, it may be enough just to summarize in words the features and benefits that set your apart from your competitors (which is a great way to end your report on a high note).

Competitor analysis examples for strategic planning

Let’s delve into some competitor analysis examples that can empower your organization to navigate the market effectively.

1. Competitor analysis example for marketing specialists

Imagine this: You are a Marketing Specialist and your goal is to establish a strong online presence and attract a diverse user base. However, you face stiff competition from established players in the market. Here are some things you should look into when doing your competitor analysis:

Competitor analysis focus:

• SEO strategies: Analyze competitors’ websites to understand their SEO strategies. Identify high-ranking keywords, backlink strategies, and content optimization techniques . Alternatively, if you’re running a local business, you might want to analyze and scrape Google Maps listings to better assess how companies are optimizing Google My Business to generate leads.
• Social media engagement: Examine competitors’ social media presence. Evaluate the type of content that garners engagement, the frequency of posts, and audience interactions.
• Online advertising: Investigate competitors’ online advertising campaigns. Are they leveraging Google Ads, social media ads, or other platforms? Assess the messaging, visuals, and targeting criteria.
• Content marketing: Scrutinize competitors’ content marketing efforts. Identify the topics that resonate with their audience, the formats they use (blogs, videos, infographics), and the platforms they prioritize.

Here’s a SWOT analysis template to help you get started:

2. Competitor analysis example for SME business development managers

Imagine this: As the business development manager for a medium sized start up, you are tasked with expanding the client base. The market is crowded with similar service providers, and differentiation is key. When doing your competitor analysis report, look into:

• Client testimonials and case studies: Explore competitors’ websites for client testimonials and case studies. Identify success stories and areas where clients express satisfaction or dissatisfaction.
• Service offerings: Analyze the range of services offered by competitors. Identify gaps in their offerings or areas where you can provide additional value to clients.
• Pricing models: Investigate competitors’ pricing structures. Are they offering packages, subscription models, or customized solutions? Determine whether there’s room for a more competitive pricing strategy .
• Partnerships and collaborations: Explore potential partnerships or collaborations that competitors have formed. This can provide insights into untapped markets or innovative service delivery methods.

Here’s a competitor analysis comparison chart template that you could use:

3. Competitor analysis example for product managers

Imagine this: You are a Product Manager for a consumer electronics company tasked with improving your company’s products and services. The market is buzzing with innovation, and staying ahead requires a deep understanding of competitor products.

• Feature comparison: Conduct a detailed feature-by-feature comparison of your product with competitors. Identify unique features that set your product apart and areas where you can enhance or differentiate.
• User experience (UX): Evaluate the user experience of competitors’ products. Analyze customer reviews, app ratings, and usability feedback to understand pain points and areas for improvement.
• Technological advancements: Investigate the technological capabilities of competitors. Are they integrating AI, IoT, or other cutting-edge technologies? Assess whether there are emerging technologies you can leverage.
• Product lifecycle management: Examine competitors’ product release cycles. Identify patterns in their product launches and assess whether there are opportunities for strategic timing or gap exploitation.

To help you get started, use this competitive analysis report template to identify the strengths, weaknesses, opportunities and threats of the product or service

How to present a competitor analysis

Presenting a competitor analysis effectively involves organizing and communicating information about your competitors in a clear and concise manner. Here’s a step-by-step guide on how to present a competitor analysis:

• Introduction: Start with a brief introduction to set the stage. Outline the purpose of the competitor analysis and its significance in the current market context.
• Competitor identification: Clearly list and identify the main competitors. Include both direct and indirect competitors. Briefly describe each competitor’s core business and market presence.
• Key metrics and performance: Present key metrics and performance indicators for each competitor. This may include market share, revenue, growth rate, and any other relevant quantitative data.
• SWOT analysis: Conduct a concise SWOT analysis for each competitor. Summarize their strengths, weaknesses, opportunities, and threats. Use a simple visual representation if possible.
• Market positioning: Discuss how each competitor is positioned in the market. This could include their target audience, unique selling propositions, and any specific market niches they occupy. Also, focus on finding keywords , as your competitor’s targeted keywords are the main source of information on their online market performance.
• Strategic moves: Highlight recent strategic moves made by your competitors. This could include product launches, partnerships, mergers, acquisitions, or changes in pricing strategy. Discuss how these moves impact the competitive landscape.
• Recommendations and implications: Based on the analysis, provide recommendations and implications for your company. Identify opportunities to capitalize on competitors’ weaknesses and outline potential threats that need to be addressed. Discuss any adjustments to your own strategy that may be necessary in response to the competitive landscape.

3 tips to improve your competitive analysis report design

How you design your competitive analysis report can have a significant impact on your business success. The right report design can inspire stakeholders to take action based on your findings, while a mediocre design may reflect poorly on your hard work.

Here are a few report design best practices to keep in mind when designing your competitive analysis report:

• Start with a competitive analysis report template
• Keep core design elements like colors and fonts consistent
• Use visuals to summarize important information and keep your audience engaged

1. Start with a competitor analysis template

The quickest way to lose the confidence of your stakeholders is to present a messy, amateur report design. Besides distracting from the content of the report, it might even put your credibility at risk.

Starting with a pre-designed competitor analysis template, like the one below, takes almost all of the design work out of the mix so you can focus on the content (while still impressing your stakeholders).

And if you’re a consultant competing for a project, a pre-designed template may just give you the edge you need to land that client.

Click on any of our templates; you’ll enter our online drag and drop report maker tool. No design know-how required.

2. Keep core design elements like colors and fonts consistent

If you take a look at the competitor analysis template below, you might notice that the designer has switched up the layout from page to page, but many of the other design elements are kept consistent.

That consistency helps the report design feel cohesive while making it easier for readers to quickly skim for key pieces of information.

Here are a few quick guidelines for keeping important design elements consistent:

• Use the same color scheme throughout your report (with one highlight color to draw attention to key takeaways and important numbers)
• Use the same font styles for your headers, subheaders, and body text (with no more than 2-3 font styles per report)
• Use the same style of visuals throughout your report (like flat icons or illustrated icons… but not both)

3. Use visuals to summarize important information and keep your audience engaged

The challenge with a competitive analysis report is that you collect heaps of background research, and you have to condense it into a brief report that your client will actually read.

And written summaries will only get you so far.

Visuals like charts and tables are a much better way to communicate a lot of research quickly and concisely, as seen in the market research summary below.

Even lists can be made more engaging and informative by spacing out list items and giving more emphasis to headers:

The more you can replace descriptive paragraphs and long lists with thoughtful visuals, the more your readers will thank you.

A competitive analysis will allow you to think up effective strategies to battle your competition and establish yourself in your target market.

And a report that communicates the findings of your competitive analysis will ensure stakeholders are on board and in the know.

Now that you know how to design a competitive analysis report, you’re ready to get started:

How to Write a Competitor Analysis for a Business Plan (with AI in 2023)

Competitor analysis is a critical component of any business plan. It helps you understand the landscape of your industry, identify opportunities for growth and differentiation, and craft strategies that take advantage of your competitors' weaknesses.

Here's a step-by-step guide on how to conduct a comprehensive competitor analysis, including how to leverage AI tools like Bizway to make the process more efficient and effective.

Step-by-Step Guide to Performing a Competitor Analysis

1. identify your competitors.

Understanding your competitive landscape begins with pinpointing who your direct and indirect competitors are.

Points to Consider

• Direct Competitors : Those who offer similar products/services in the same market.
• Indirect Competitors : Businesses targeting your customer base with different offerings.
• Utilize market research and customer feedback to list competitors.
• Identify geographical considerations - local, regional, or global competitors.

2. Analyze Their Products/Services

A thorough examination of competitors’ offerings unveils potential areas for differentiation and enhancement in your product/service line.

• Feature comparisons.
• Pricing structures.
• Unique Selling Propositions (USPs).
• Adopt a customer-centric approach to understand how consumers perceive competitors’ offerings.
• Identify gaps in their product/service lines that you could explore.

3. Assess Their Marketing Strategy

Understanding competitors’ marketing approaches aids in crafting a superior, data-driven marketing strategy.

• Target audience.
• Key messages and value propositions.
• Channel effectiveness and presence.
• Use social listening tools to gauge their social media effectiveness.
• Analyze the SEO performance of competitors’ websites.

4. Examine Their Sales Strategy

Investigating sales channels and tactics employed by competitors reveals market penetration strategies and potential areas for diversification.

• Distribution channels.
• Pricing and sales tactics.
• Customer relationship management.
• Secret shop to observe sales tactics and customer experiences.
• Review customer feedback on their purchasing experience.

5. Analyze Their Strengths and Weaknesses

Identifying what competitors excel in and fall short on enables strategic decision-making in exploiting market opportunities.

• Operational efficiency.
• Customer service quality.
• Brand reputation and loyalty.
• Conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) for each competitor.
• Leverage customer reviews and testimonials to gauge reputation.

Using AI for Competitor Analysis

Automated data collection.

AI automates the harvesting of data from myriad sources, ensuring robust research while saving time.

• Use AI tools to scrape and aggregate data from competitors' websites, social media, and customer review platforms.
• Ensure the data is categorized and stored systematically for easy analysis.

Real-Time Updates

AI provides a competitive edge by monitoring and reporting real-time updates on competitor activities.

• Set up AI monitoring for specific competitor activity: product launches, PR releases, or marketing campaigns.
• Ensure to leverage real-time data to inform swift strategic adjustments.

Predictive Analytics

Predictive analytics via AI deciphers patterns and anticipates future competitor moves, positioning your business proactively.

• Leverage AI to analyze historical data for predicting future trends.
• Utilize these insights to anticipate and formulate preemptive strategies.

Using Bizway for Competitor Analysis and Business Planning

One such AI tool that can revolutionize your competitor analysis process is Bizway . Bizway is an AI-powered business planning and research app that can help you research your competitors and write your entire competitor analysis with just a few clicks. Moreover, Bizway can assist you in writing your entire business plan, saving you time and providing you with expert-level planning documents.

With Bizway, you can automate the process of generating clear, concise planning docs across all areas of business, from an SEO Content Plan to User Onboarding Plan. It also helps fill knowledge gaps in areas of business you're not well-versed in.

So, whether you're a solopreneur, a small business owner, or an aspiring entrepreneur still in school, Bizway is the AI assistant you need to take your business planning to the next level.

Gerrard + Bizway AI Assistant

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Bizway is brought to you by Landmark Labs Ltd.

©2024 Bizway Labs

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How to Write a Market Analysis for a Business Plan

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A lot of preparation goes into starting a business before you can open your doors to the public or launch your online store. One of your first steps should be to write a business plan . A business plan will serve as your roadmap when building your business.

Within your business plan, there’s an important section you should pay careful attention to: your market analysis. Your market analysis helps you understand your target market and how you can thrive within it.

Simply put, your market analysis shows that you’ve done your research. It also contributes to your marketing strategy by defining your target customer and researching their buying habits. Overall, a market analysis will yield invaluable data if you have limited knowledge about your market, the market has fierce competition, and if you require a business loan. In this guide, we'll explore how to conduct your own market analysis.

How to conduct a market analysis: A step-by-step guide

In your market analysis, you can expect to cover the following:

Industry outlook

Target market

Market value

Competition

Barriers to entry

Let’s dive into an in-depth look into each section:

Step 1: Define your objective

Before you begin your market analysis, it’s important to define your objective for writing a market analysis. Are you writing it for internal purposes or for external purposes?

If you were doing a market analysis for internal purposes, you might be brainstorming new products to launch or adjusting your marketing tactics. An example of an external purpose might be that you need a market analysis to get approved for a business loan .

The comprehensiveness of your market analysis will depend on your objective. If you’re preparing for a new product launch, you might focus more heavily on researching the competition. A market analysis for a loan approval would require heavy data and research into market size and growth, share potential, and pricing.

Step 2: Provide an industry outlook

An industry outlook is a general direction of where your industry is heading. Lenders want to know whether you’re targeting a growing industry or declining industry. For example, if you’re looking to sell VCRs in 2020, it’s unlikely that your business will succeed.

Starting your market analysis with an industry outlook offers a preliminary view of the market and what to expect in your market analysis. When writing this section, you'll want to include:

Market size

Are you chasing big markets or are you targeting very niche markets? If you’re targeting a niche market, are there enough customers to support your business and buy your product?

Product life cycle

If you develop a product, what will its life cycle look like? Lenders want an overview of how your product will come into fruition after it’s developed and launched. In this section, you can discuss your product’s:

Research and development

Projected growth

How do you see your company performing over time? Calculating your year-over-year growth will help you and lenders see how your business has grown thus far. Calculating your projected growth shows how your business will fare in future projected market conditions.

Step 3: Determine your target market

This section of your market analysis is dedicated to your potential customer. Who is your ideal target customer? How can you cater your product to serve them specifically?

Don’t make the mistake of wanting to sell your product to everybody. Your target customer should be specific. For example, if you’re selling mittens, you wouldn’t want to market to warmer climates like Hawaii. You should target customers who live in colder regions. The more nuanced your target market is, the more information you’ll have to inform your business and marketing strategy.

With that in mind, your target market section should include the following points:

Demographics

This is where you leave nothing to mystery about your ideal customer. You want to know every aspect of your customer so you can best serve them. Dedicate time to researching the following demographics:

Income level

Create a customer persona

Creating a customer persona can help you better understand your customer. It can be easier to market to a person than data on paper. You can give this persona a name, background, and job. Mold this persona into your target customer.

What are your customer’s pain points? How do these pain points influence how they buy products? What matters most to them? Why do they choose one brand over another?

Research and supporting material

Information without data are just claims. To add credibility to your market analysis, you need to include data. Some methods for collecting data include:

Target group surveys

Focus groups

Reading reviews

Feedback surveys

You can also consult resources online. For example, the U.S. Census Bureau can help you find demographics in calculating your market share. The U.S. Department of Commerce and the U.S. Small Business Administration also offer general data that can help you research your target industry.

Step 4: Calculate market value

You can use either top-down analysis or bottom-up analysis to calculate an estimate of your market value.

A top-down analysis tends to be the easier option of the two. It requires for you to calculate the entire market and then estimate how much of a share you expect your business to get. For example, let’s assume your target market consists of 100,000 people. If you’re optimistic and manage to get 1% of that market, you can expect to make 1,000 sales.

A bottom-up analysis is more data-driven and requires more research. You calculate the individual factors of your business and then estimate how high you can scale them to arrive at a projected market share. Some factors to consider when doing a bottom-up analysis include:

Where products are sold

Who your competition is

The price per unit

How many consumers you expect to reach

The average amount a customer would buy over time

While a bottom-up analysis requires more data than a top-down analysis, you can usually arrive at a more accurate calculation.

Step 5: Get to know your competition

Before you start a business, you need to research the level of competition within your market. Are there certain companies getting the lion’s share of the market? How can you position yourself to stand out from the competition?

There are two types of competitors that you should be aware of: direct competitors and indirect competitors.

Direct competitors are other businesses who sell the same product as you. If you and the company across town both sell apples, you are direct competitors.

An indirect competitor sells a different but similar product to yours. If that company across town sells oranges instead, they are an indirect competitor. Apples and oranges are different but they still target a similar market: people who eat fruits.

Also, here are some questions you want to answer when writing this section of your market analysis:

What are your competitor’s strengths?

What are your competitor’s weaknesses?

How can you cover your competitor’s weaknesses in your own business?

How can you solve the same problems better or differently than your competitors?

How can you leverage technology to better serve your customers?

How big of a threat are your competitors if you open your business?

Step 6: Identify your barriers

Writing a market analysis can help you identify some glaring barriers to starting your business. Researching these barriers will help you avoid any costly legal or business mistakes down the line. Some entry barriers to address in your marketing analysis include:

Technology: How rapid is technology advancing and can it render your product obsolete within the next five years?

Branding: You need to establish your brand identity to stand out in a saturated market.

Cost of entry: Startup costs, like renting a space and hiring employees, are expensive. Also, specialty equipment often comes with hefty price tags. (Consider researching equipment financing to help finance these purchases.)

Location: You need to secure a prime location if you’re opening a physical store.

Competition: A market with fierce competition can be a steep uphill battle (like attempting to go toe-to-toe with Apple or Amazon).

Step 7: Know the regulations

When starting a business, it’s your responsibility to research governmental and state business regulations within your market. Some regulations to keep in mind include (but aren’t limited to):

Employment and labor laws

Advertising

Environmental regulations

If you’re a newer entrepreneur and this is your first business, this part can be daunting so you might want to consult with a business attorney. A legal professional will help you identify the legal requirements specific to your business. You can also check online legal help sites like LegalZoom or Rocket Lawyer.

Tips when writing your market analysis

We wouldn’t be surprised if you feel overwhelmed by the sheer volume of information needed in a market analysis. Keep in mind, though, this research is key to launching a successful business. You don’t want to cut corners, but here are a few tips to help you out when writing your market analysis:

Use visual aids

Nobody likes 30 pages of nothing but text. Using visual aids can break up those text blocks, making your market analysis more visually appealing. When discussing statistics and metrics, charts and graphs will help you better communicate your data.

Include a summary

If you’ve ever read an article from an academic journal, you’ll notice that writers include an abstract that offers the reader a preview.

Use this same tactic when writing your market analysis. It will prime the reader of your market highlights before they dive into the hard data.

Get to the point

It’s better to keep your market analysis concise than to stuff it with fluff and repetition. You’ll want to present your data, analyze it, and then tie it back into how your business can thrive within your target market.

Revisit your market analysis regularly

Markets are always changing and it's important that your business changes with your target market. Revisiting your market analysis ensures that your business operations align with changing market conditions. The best businesses are the ones that can adapt.

Why should you write a market analysis?

Your market analysis helps you look at factors within your market to determine if it’s a good fit for your business model. A market analysis will help you:

1. Learn how to analyze the market need

Markets are always shifting and it’s a good idea to identify current and projected market conditions. These trends will help you understand the size of your market and whether there are paying customers waiting for you. Doing a market analysis helps you confirm that your target market is a lucrative market.

2. Learn about your customers

The best way to serve your customer is to understand them. A market analysis will examine your customer’s buying habits, pain points, and desires. This information will aid you in developing a business that addresses those points.

3. Get approved for a business loan

Starting a business, especially if it’s your first one, requires startup funding. A good first step is to apply for a business loan with your bank or other financial institution.

A thorough market analysis shows that you’re professional, prepared, and worth the investment from lenders. This preparation inspires confidence within the lender that you can build a business and repay the loan.

4. Beat the competition

Your research will offer valuable insight and certain advantages that the competition might not have. For example, thoroughly understanding your customer’s pain points and desires will help you develop a superior product or service than your competitors. If your business is already up and running, an updated market analysis can upgrade your marketing strategy or help you launch a new product.

Final thoughts

There is a saying that the first step to cutting down a tree is to sharpen an axe. In other words, preparation is the key to success. In business, preparation increases the chances that your business will succeed, even in a competitive market.

The market analysis section of your business plan separates the entrepreneurs who have done their homework from those who haven’t. Now that you’ve learned how to write a market analysis, it’s time for you to sharpen your axe and grow a successful business. And keep in mind, if you need help crafting your business plan, you can always turn to business plan software or a free template to help you stay organized.

This article originally appeared on JustBusiness, a subsidiary of NerdWallet.

On a similar note...

How to write a business plan

• April 10, 2024
• Business and Entrepreneurship

Having a business plan is crucial for your business success. Without one, you would not have a clear vision of the business’s future . It is also essential to secure an investment or a loan and work as your pitch for impressing the investors. 

However, drafting a business plan is not that easy. It can take you plenty of time to prepare one, but to help you speed things up, we have created a step-by-step approach on how to write a business plan. 

1) Write your business description 

The business description is the overview of what it is all about. It describes your business and its identity . In this section, you should add the details of when you started your business and your progress so far. But, in the new business case, you should give details about your professional background and the steps you have taken to launch the venture. 

Also, mention the ownership details along with legal structure and key stakeholders. Include your team expertise to highlight a track record of success. 

2) Write your market and competitive analysis

This section of the business plan will explore the nature of market conditions. It will help you identify market trends, challenges, and opportunities in the sector you are targetting. 

You should also include the audience you want to target. You should know what age group your business is targetting and where are they located?

Lastly, it should include the details of your immediate competitors. You should compile a detailed analysis of competitor’s weaknesses, strengths, and their impact on your business. Competitor analysis will help you draft a strategy to capitalize on your competitors’ vulnerabilities and gain market share. 

3) Describe your product or service

Your next section would be to cover the details about what you are selling. Remember that the product is the core of your business and has to be covered in full detail. 

Some of the common questions you should answer are what’s so great about the business? How will your customers benefit from it? And how is it better than other products out there in the market? 

Another important aspect is to include the product lifecycle, which shows where the product currently stands. Is the product still in the development phase? Or is it an established product that needs expansion?

Also, include your pricing. Make sure it is according to the market competition so you can capture some market share. 

4) Sales and marketing strategy

This section of your business plan will explain your strategy moving forward. The first thing will be the details of your target audience and market need. Assure that there is a need for your product or service before launching, as in case of no need, you won’t be able to sell. 

Market growth is another aspect the stakeholders will be interested in. While no one can predict the future, you must make a detailed forecast of sales and revenue for the following years. 

Take into account the market trends as the demographic trends are essential for the business plan. 

5) Funding request

Most small businesses have less capital, and a loan or an investment is required to raise it. The funding request will include the amount you need for the business and how would you use it? For instance, the additional capital can be used on inventory, skilled labor, or advertising. 

Ensure to include all the information an investor or the bank might need, as securing additional capital is essential for business. 

6) Financial plan 

Next, you will have to draft the financial section, which includes historical and prospective data. If you are a startup, you don’t need to show historical data but rather your personal financial information.

Include balance sheets, income statements, cash flow statements, tax, and collaterals. 

7) Make an appendix

Lastly, you can make an appendix to include information about your management team, reference letters, products, and contracts. It is not a core part of a business plan and can be skipped. However, it is recommended that you add it as it looks professional.

Final thoughts 

Before you finalize your plan:

• Make sure it is free of any grammatical and spelling errors.
• Reread and review it multiple times before deciding on the final business plan.
• Add a cover image as well to make it more catchy and appealing.

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Should You Stick to the Business Plan or Change It?

5 min. read

Updated April 9, 2024

Is it time for plan B?

The best and most useful kind of business planning is not just a use-once business plan, but rather a continuous process.

The first business plan is just the first step. For the rest of your business’s life, you review the plan once a month. Compare actual results to what you had planned, determine what steps to take to optimize, and revise the plan.

You’ll find that continuous business planning helps in many ways:

• It helps maintain focus
• You’ll be able to align the team with priorities
• You can address changes in the marketplace as they happen
• It helps you tune strategy and tactics to what’s working and what’s not working
• It starts with knowing what happened

Review means comparing what actually happened to what you expected. Business plans are always wrong, so there will always be a difference between the plan and the actual results.

For the actual business numbers, such as sales, expenses, and such, accountants call the difference between the estimates in the plan and the actual results variance. Variance analysis looks at these differences to determine where the numbers are different, and in what direction.

What’s important here is not the accounting or the calculations, but rather the resulting management. You look for indications of problems or unexpected positives, so you can react.

In the illustration above, revenue is lower than planned and expenses are higher. Operating income is less than planned. Cash and cash flow are improving, which is good news. However, that may be because this company is stretching out its payments, averaging about six months, which is seven times more than in their plan. So accounts payable is 25 percent higher than planned. That’s good because it’s helping with financing and keeping money in the bank, but may also be bad because it could be spoiling reputation and relations with vendors.

The point is the management, not the hard numbers. What should be done, given these results, to make the company better?

• The monthly review meeting

The monthly review meeting is absolutely essential to real business planning— Lean Planning . The real value of business planning is the decisions it causes, and the management that results; and for that, you need not just a plan but a regular monthly review to track results and revise as necessary.

And the toughest part of the review meeting is this crucial question: Do we stick to the plan, or do we change it?

That comes up often because in the real world things never go exactly as planned. Business plans are supposed to set goals, tracking, milestones, and expectations.

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The review meeting is when you ask:

• What happened? What went right and what went wrong?
• If I change the plan, then is my plan (forecast) versus actual result valid?
• Doesn’t it take consistent execution to make strategy work?

You won’t find some set of best practices to make this easy. You’ll end up deciding on a case-by-case basis.

• The arguments for staying the course with your plan

I consider this an awkward, difficult fact about business strategy:

It’s better to have a mediocre strategy consistently applied over three or more years, than a series of brilliant strategies, each applied for six months or so.

Too often, management teams get bored with strategy before it’s had a chance to be effective. I was consulting with Apple Computers during the 1980s when the Macintosh platform became the foundation for what we now call “desktop publishing.” We take it for granted today, but back in 1985 when the first laser printers came out, it was like magic. Suddenly, a single person in a home office could produce documents that looked professional.

What I saw in Apple at that time was smart young managers getting bored with desktop publishing long before the market even understood what it was. They started looking at multimedia instead. They were attracted to new technologies and innovation. As a result, they lost the concentration on desktop publishing and lost a lot of market potential as Windows vendors moved in with competitive products.

That argues for staying the course. Strategy takes time.

• The arguments for revising the plan

On the other hand, this is also true:

There is no virtue in sticking to the plan for its own stake. Nobody wants the futility of trying to implement a flawed plan.

Generally accepted best practices have changed over the three decades I’ve been focusing on business planning.

Back in the 80s, business timeframes stretched longer and many business leaders recommended sticking to the plan. But times have changed. You’ve probably dealt with the problem of people doing something “because that’s the plan” when in fact it just isn’t working. I certainly have. That kind of thinking is one reason why some web companies survived the first dotcom boom and others didn’t. It also explains why some business experts question the value of the business plan.

This is sloppy thinking, in my opinion—confusing the value of the planning with the mistake of implementing a plan without change or review, just because it’s the plan.

• How to decide: Stay the course, or revise the plan?

This consistency versus revision dilemma is one of the best and most obvious reasons for having people—owners and managers—run the business planning, rather than algorithms or artificial intelligence. It takes people to deal with this critical judgment.

One good way to deal with it is by focusing on the assumptions. Identify the key assumptions and whether or not they’ve changed. When assumptions have changed, there is no virtue whatsoever in sticking to the plan you built on top of them.

Use your common sense . Were you wrong about the whole thing, or just about timing? Has something else happened, like market problems, disruptive technology, or new competition, that has changed your basic assumptions?

Do not revise your plan glibly . Remember that some of the best strategies take longer to implement. Remember also that you’re living with it every day; it is naturally going to seem old and boring to you long before the target audience gets it. But do revise your plan if it is out of date, inaccurate, or based on false assumptions.

That’s why you have the plan in the first place: to manage your business better.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

Table of Contents

• You’ll find that continuous business planning helps in many ways:

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