Competitor analysis template and strategy for start up businesses
This article sets out a useful way of conducting competitor analysis before you launch your business, to work out how to best position a brand and product.
When to do competitor analysis
We recommend that people complete competitive analysis to assess whether they have a good idea after doing some initial customer discovery. Customer discovery could be considered the micro assessment process, whereas the competitor analysis process is the macro assessment of the market. By talking to customers directly, a potential business owner can understand their target markets problems in detail, then validate the opportunity within the market from a higher level, by completing market research and competitor analysis.
Competitor analysis helps to refine the positioning of the brand, product and marketing, to enhance the unique value proposition. This unique value proposition based on learnings from market validation and the founder's experiences. Competitor analysis is an exercise to help refine and accentuate this value proposition.
Competitor analysis will be easier and more useful if you have a well-validated view of where the world is heading and how your product fits in. Researching emerging trends in the industry, as well as the relevant technology and behavioural trends, will give you a good understanding of the overall landscape before starting your analysis. If this is not something you have thought about yet, you may find guidance by reading more about Blue Ocean Strategy.
How to do competitor analysis
We've put together a free competitive analysis template to help business owners with this process.
We don't recommend spending too long on this exercise. No more than 3-7hrs for the first version. It's behind the scenes work that is not as important as front line work, such as talking to potential customers.
This document is developed over time over time as a founder learns more about what currently exists in the market and the unique value their product or service offers.
Step 1: Listing competitors
This includes direct competitors and indirect competitors. Direct competition means a company offering a product or service that is essentially the same. Indirect competition means the company's products or services are not the same but could satisfy the same customer need.
You could also include future competition, which includes existing companies that may enter into the same market (e.g. Amazon, if you are selling consumer products in New Zealand).
Searching Google or other search engines is an obvious first port of call for completing competitor research. You can also use social media platforms such as Instagram and Facebook by looking for the relevant hashtags, or SEO analysis tools such as SEMrush or Ahrefs to find companies that rank for relevant keywords.
Add each competitor's name or website link into the first tab of the competitor analysis template.
Step 2: Classify competition based on points of differentiation
The next step is to identify and understand the factors that are important for defining each competitor.
Points of differentiation may include the market they serve (location), the problems they solve, the benefits and features of their product and or their target market (customers).
In the competitor analysis template I have set up columns for the company name, website, markets they sell in (if relevant), key messaging (which I get off their website or social media descriptions), target market, price point, key benefits and features, a picture of their product (if relevant, e.g. for consumer packaged goods companies), anything else that's relevant as a differentiator (it could be customer service or sales and marketing strategies).
I update these factors for each of the relevant competitors I have identified.
After doing this, it becomes easier to see the most relevant points of differentiation for products in the target market.
This helps to provide an axis on which to compare the relevant options that currently exist for a customer trying to solve the problem the new business is trying to address.
Step 3: Turn your research into a diagram that can be used in a slide deck
A competitor analysis diagram is a useful communication tool which can be used in a pitch deck or presentation with the purpose of convincing someone of the merits of the idea.
It can be easier for people to understand an idea if they have some reference points to compare it to. Describing an idea or business relative to what already exists in the market provides reference points.
Having a thorough competitive analysis slide in a pitch deck shows the team has done the work to figure out what else exists in the market and have identified a uniquely valuable proposition.
When choosing how to display this in a diagram, use a method that paints the most accurate picture of the differentiating factors between existing competition and the business.
Here are some examples of how you could set out a competitor analysis slide.
Competitor analysis based on two key metrics:
Airbnb
Mixpanel
Competitor analysis based on more than two metrics:
Slack 'Petal Diagram'
The 'Petal Diagram' is useful if you need more than 2 metrics to show the differentiating factors between you and your competition. This style of competitor analysis was first introduced by Steve Blank. You can read more about it here.
Buffer
Conclusion
Now you know the basis for how to conducting competitor analysis before you launch your business, to work out how to best position a brand and product.
At Mum's Garage, we run programmes to support companies to develop uniquely valuable products and brands. If you think we can help you to launch and grow your company please contact us.