Making a competitive analysis: this is what you need to know
April 2024 - A competitive analysis is an essential part of the business plan and an indispensable policy tool for managers and entrepreneurs. At least, if it is clearly and insightfully prepared. But how do you get started? And where do you get the right data?
Competitive analysis is part of the business or business plan. The aim is to paint a clear picture of a company's competitors (who are they? How do they handle their business activities? Who are their customers?) in order to arrive at a strategic insight on which to adjust your own policy. If you know the weaknesses and strengths of your competitors, you will be able to determine your market position and adjust it if necessary.
Making a competition analysis is a time-consuming task. You need to collect the necessary data and put everything into a clear report. If you operate in a dynamic sector, you also run the risk that your analysis will quickly become outdated. So thorough preparation is a must. If you know what data you need and where to find them, you are on the right track.
Direct and indirect competitors
We distinguish two types of competitors: direct and indirect. A direct competitor offers more or less identical products and/or services, while an indirect competitor offers an alternative to a product category. For example, a seller of lenses is an indirect competitor of the eyewear seller.
Both types should be included in the competitive analysis to gain maximum insight. When operating in a market with many competitors, it is best to limit yourself to the largest competitors: a sample of 20% of the largest competitors is representative and does not compromise the integrity of your research. Select these based on market share.
What questions does the competitive analysis answer?
· Who are my three main competitors?
· In what ways can I compete with them?
· What products and services do my competitors offer?
· Do my competitors make a profit, and if so, how much?
· How many employees do my competitors have?
· How long have my competitors been in the industry?
· What do customers find positive about my competitors?
· What do customers find negative about me competitors?
· How do customers compare us to competitors?
· How can we further differentiate ourselves?
· What pricing strategy do competitors use?
This list is obviously not exhaustive. Depending on your situation and the business you are in, some questions are more important than others. This list does indicate how thorough your research needs to be to lead to in-depth insights.
What sources will you consult for your competitive analysis?
A lot of information about your competitors is just up for grabs in newspaper articles, specialised trade magazines, annual reports and the like. Below, we list the main sources you can use. We distinguish between strategic and financial sources.
1. Strategic sources
Advertisements
Prices, promotions, product range, USPs, ? A lot can be deduced from your competitors' ads and advertising messages.
Sales brochures
Your competitors' sales brochures contain a wealth of information. Try to get hold of each new publication and read it carefully. Do you suddenly see new products popping up? Then perhaps your competitor is looking to tap into a new market segment.
Internal sales team
Don't forget your own employees, either. Sales people, for example, very often get access to confidential documents such as contracts, offers and invoices via customers and prospects. They contain a wealth of information.
2. Financial sources
The National Bank of Belgium, the Belgian Official Gazette, Crossroads Bank for Enterprises For access to the annual reports and balance sheets of all Belgian companies since 1992, you can consult the National Bank of Belgium. The database contains a wealth of data and is therefore an absolute must. The Belgian Official Gazette and the Crossroads Bank for Enterprises (CBE) also collect a lot of basic data on Belgian companies.
