Presenting your business to a potential investor is not an easy task. However, it helps you to improve the idea you have of it, forcing you to think about and analyze what your competitors are doing. In investor presentations you should never overlook talking about your competitors and, therefore, you should focus on doing a good competitive analysis. Do you want to learn how to do it, stay and find out!
Never tell your investors that you have no competition.
Never say that you have no competition, because, you can give your potential investor two things to understand:
- Your market is not interesting and therefore there is no one inside.
- You have not done your research homework well, which is most likely the case.
You will always have competition, even if they don’t do exactly what you do. To give you an example, if you offer an innovative form of financing for companies, your competition will be the banks that do it in the traditional way. These, because they have been doing it for more years and are a reliable entity can, to a certain extent, prevent your client portfolio from growing.
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What is competitive analysis?
The truth is very simple to explain: it is nothing more than the action of identifying your main competitors through research. They can be indirect or direct competitors, which you will know as you develop your research and inquire about their strengths and weaknesses compared to yours.
The ultimate goal is to contrast the final state of these brands with yours and improve your offer.
What is the purpose of analyzing your competitors?
Competitive analysis will allow you to know and understand the strengths and weaknesses of your competitors compared to yours. That way, you will be able to find a gap in your favor in the market.
However, this is not the only reason to do so. Some other reasons are:
Types of competitors
Before explaining how to analyze your competition, you should understand how to classify competitors within your market segment. In that sense, there are three types of competitors:
Direct competitors
This refers to companies that target exactly the same market segment, the same audience and are even located in the same area as you. Generally, the prices of their products or services will be similar to yours and respond to the same problem or demand.
Indirect competitors
These are companies with products or services similar to yours -they may even be the same product- but belong to a different range, either higher or lower.
Indirect competition is also understood as those companies that, even if they sell much more types of products than yours, include the sale of products very similar to the one you offer.
Tertiary or potential competitors
These are organizations that, although they do not sell the same type of product as you do, target the same audience as you or sell complementary products or services that, at some point, could become direct competitors or, perhaps, partners.
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6 steps to analyze your company’s competition
Now that you know what type of competitor you may encounter, you are probably wondering what are the steps to analyze them and prepare a complete report that will help you successfully execute your business strategy.
To help you, we have established 6 essential steps that will help you achieve your goal of thoroughly analyzing the competition and gaining a complete perspective of your market share:
1. Create an overview of your competitors
In this first step, you should select five to ten competitors to compare with your company. Ideally, they should offer the same products or services as yours and have a similar business model.
You can choose either emerging competitors or competitors with a long experience in the market, so that your analysis is diversified.
2. Make a market analysis
Once you know which competitors you want to analyze, conduct in-depth market research. This will be a mix of private and secondary research. The first comes directly from customers or from the product itself; and the secondary research corresponds to the information gathered.
Primary market research may include:
- Purchase of products or services from competitors.
- Interview your customers.
- Offer online surveys for customers.
- Organize face-to-face focus groups.
On the other hand, secondary may include:
- Examine competitors’ websites and their performance.
- Evaluate the current economic reality.
- Identify technological developments.
- Read documentation about the companies.
3. Compares the functions of the products and/or services
This step consists of comparing your product with those offered by the competition. You will have to separate function by function of each product. While it is true that each has its own particular characteristics, most of these analyses will include these aspects:
- Price.
- The service offered.
- The age of your customer audience.
- The number of functions.
- Style and design.
- Ease of use.
- The type and amount of guarantees.
- Customer service.
- Product quality.
4. Compares product marketing
The next step for the analysis of your company’s competition is quite similar to the previous one, only here you will compare the marketing work done by your competitors.
Unlike the product function matrix you created, in this case you will have to dig a little deeper to uncover the marketing plan of your competitor’s company.
In this regard, you will want to analyze the following areas:
- Social networks.
- Content shared on your website.
- Paid advertisements.
- Press releases.
- Texts about your products.
5. Use the SWOT analysis
Competitive intelligence will become a fundamental part of your competitive analysis framework. Once you have gathered all the necessary information, you can focus on your business.
With the help of a SWOT analysis you will be able to identify your company’s strengths and weaknesses. It can also help you transform your weaknesses into opportunities and evaluate the possible threats generated by the competition.
As you work on your SWOT analysis, you can ask yourself the following questions:
- What does your company do well?
- What can you improve?
- Are there market gaps in your service that others could detect?
- What are the new trends that can be glimpsed in the market?
6. Identify your place in the market
To understand your place in the market you will need to create a graph with X’s and Y’s. Both should represent the most important and necessary factors to gain competitiveness in your industry. Both should represent the most important and necessary factors to gain competitiveness in your market sector.
For example, the X-axis may represent customer satisfaction, while the Y-axis may be market presence. Then, plot each competitor on the graph according to its X or Y coordinates. You will want to include your company in the graph to get an idea of where you rank among the rest of them.
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Now that you know how to do your own competitive analysis, what are you waiting for to put it into practice and give the best presentation to your potential investor? From TAS Consulting we offer you the most complete advice, always committed to the success of your company, contact us through the email tasconsultoria@tas-sl.es and our professionals will be happy to assist you!
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