The first step of the competitive analysis is to determine who is your local competition whether offline or online. This can be done quite simply by driving around and observing and by searching through a telephone directory or searching in Google for similar businesses.
The main question will be one of range and determining just how far customers are prepared to travel to obtain your competitors goods and services. As well as local competitors some businesses also have non-local competitors such as in the form of mail order companies for example.
To analyze the competition, it is necessary to determine what market or market segments they serve and what benefits they offer. It is necessary to determine why customers buy from them and also to gather information about their products and or services, their pricing and promotion.
Gathering information could be done by physically visiting a business or checking their website. Several physical visits to a business will enable a person to determine information about their product and the company’s treatment of customers. Invest in a course or product of your competition to see how they deliver their goods and how is their customer service.
Good sources of information about a company come from the company’s vendors, suppliers and employees. Attending a trade fair where the competitors are exhibiting is another excellent way of gathering information.
Once the information has been gathered it needs to be analyzed. By analyzing what a competitor does offer it is then possible to determine a niche market that can be targeted by offering something that the competitor does not.
The goal of the analysis is to identify and expand your competitive advantage by focusing on the benefits your business can offer that the competitor can’t or won’t offer.