Author: Jim Riley Last updated: Sunday 23 September, 2012
Competitor Analysis is an important part of the strategic
planning process. This revision note outlines the main role of, and steps
in, competitor analysis
Why bother to analyse competitors?
Some businesses think it is best to get on with their own
plans and ignore the competition. Others become obsessed with tracking the
actions of competitors (often using underhand or illegal methods). Many businesses
are happy simply to track the competition, copying their moves and reacting
Competitor analysis has several important roles in strategic planning:
• To help management understand their competitive advantages/disadvantages
relative to competitors
• To generate understanding of competitors’ past, present (and
most importantly) future strategies
• To provide an informed basis to develop strategies to achieve competitive
advantage in the future
• To help forecast the returns that may be made from future investments
(e.g. how will competitors respond to a new product or pricing strategy?
Questions to ask
What questions should be asked when undertaking competitor analysis? The
following is a useful list to bear in mind:
• Who are our competitors? (see the section on identifying competitors
• What threats do they pose?
• What is the profile of our competitors?
• What are the objectives of our competitors?
• What strategies are our competitors pursuing and how successful are
• What are the strengths and weaknesses of our competitors?
• How are our competitors likely to respond to any changes to the way
we do business?
Sources of information for competitor analysis
Davidson (1997) described how the sources of competitor
information can be neatly grouped into three categories:
• Recorded data: this is easily
available in published form either internally or externally. Good examples
include competitor annual reports and product brochures;
• Observable data: this has to be
actively sought and often assembled from several sources. A good example
is competitor pricing;
• Opportunistic data: to get hold
of this kind of data requires a lot of planning and organisation. Much of
it is “anecdotal”, coming from discussions with suppliers, customers
and, perhaps, previous management of competitors.
The table below lists possible sources of competitor data using Davidson’s
Annual report & accounts
Pricing / price lists
Meetings with suppliers
Sales force meetings
Seminars / conferences
Discussion with shared distributors
Presentations / speeches
Social contacts with competitors
In his excellent book [Even More Offensive Marketing], Davidson likens the
process of gathering competitive data to a jigsaw puzzle. Each individual
piece of data does not have much value. The important skill is to collect
as many of the pieces as possible and to assemble them into an overall picture
of the competitor. This enables you to identify any missing pieces and to
take the necessary steps to collect them.
What businesses need to know about their competitors
The tables below lists the kinds of competitor information
that would help businesses complete some good quality competitor analysis.
You can probably think of many more pieces of information
about a competitor that would be useful. However, an important challenge
in competitor analysis is working out how to obtain competitor information
that is reliable, up-to-date and available legally(!).
What businesses probably already know
Overall sales and profits
Sales and profits by market
Sales by main brand
Market shares (revenues and volumes)
Identity / profile of senior management
Advertising strategy and spending
Customer / consumer profile & attitudes
Customer retention levels
What businesses would really like
to know about competitors
Sales and profits by product
Customer satisfaction and service levels
Customer retention levels
New product strategies
Size and quality of customer databases
Future investment strategy
Contractual terms with key suppliers
Terms of strategic partnerships
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