Who competes with you for your customers’ time and money? Are they directly selling competitive products and services, substitutes, or possible substitutes? What are their strengths and weaknesses? How are they positioned in the market? A good competitive analysis varies according to what industry you’re in and your specific marketing plan and situation. A comprehensive competitive analysis does have some common themes. Begin by explaining the general nature of competition in your type of business, and how customers seem to choose one provider over another. What might make customers decide? Price or billing rates, reputation, or image and visibility? Are brand names important? How influential is word of mouth in providing long-term satisfied customers?
For many professional service practices, the nature of competition depends on word of mouth because advertising is not completely accepted and therefore not as influential. Is there price competition between accountants, doctors, and lawyers? How do people choose travel agencies or florists for weddings? Why does someone hire one landscape architect over another? Why would a customer choose Starbucks, a national brand, over the local coffee house? Why select a Dell computer instead of one from Compaq or Gateway? What factors make the most difference for your business? Why? This type of information is invaluable in understanding the nature of competition.
In other words, in this case, you should discuss how you are positioned in the market. Why do people buy your product or services instead of the others offered in the same general categories? What benefits do you offer at what price, to whom, and how does your mix compare to others? Think about specific kinds of benefits, features, and market groups, comparing where you think you can show the difference.