![]() ![]() ![]() It’s good business practice to conduct a full competitive analysis at least once a year. “You always want to stay on top of what your competitors are doing and where you stand,” Kazim says. “It’s something to make part of your organizational discipline, like keeping good books.” What is the purpose of a competitive analysis?Ī competitive analysis will help you see your own unique advantages as well as any potential barriers to growth so you can strengthen your marketing and business strategies. It also keeps your business proactive instead of reactive. Many entrepreneurs operate based on preconceived ideas about their competitors and market landscape, but those ideas may not be accurate or may be out of date. “Challenge your assumptions because the data changes all the time,” Kazim says. “Don’t wait until a competitor launches a new product before changing your strategy, otherwise you might end up in a reactive position to market changes. You want to be proactive-and it’s easier to be proactive if you do this exercise regularly.” How to conduct a competitive analysis in 5 stepsĪ competitive analysis involves four key steps: 1. Substitute competitors: These are businesses that offer different products and services but target the same customers in your geographic area.Secondary/indirect competitors: These are the businesses that offer different products and services and target a different clientele, but are in your same general category (e.g., a winery and a brewery are secondary competitors because they both sell alcohol).Direct competitors: These are the businesses that offer similar products and services and target the same customers in the geographic area that your business serves.This sounds straightforward, but in fact there are different kinds of competitors to consider. “For an in-person business like a nail salon, home nail kits are an example of substitute competition,” Kazim explains. That likely encroached on a lot of salons’ business.” “During the pandemic, people got used to doing their nails at home. Sometimes it’s not obvious who your competitors are. ![]() In those cases, Kazim recommends using the North American Industry Classification System (NAICS). With NAICS, every kind of business in Canada is given a six-digit code-from toy stores (NAICS 451120) to tax preparation services (NAICS 541213). You can search the NAICS website by keyword to find the code for your business type. Then you can search for Statistics Canada data tables related to your NAICS code to find information such as average company size, operating expenses and employee wages for your industry. That helps paint a picture of how your business stacks up relative to the rest of your field. “Those benchmarks can give you some interesting insights,” says Kazim. How is the quality? What features do you like or dislike? Product: Compare their products to your own, ideally by purchasing and trying them out yourself.Once you’ve identified your competitors, evaluate them in terms of the “four Ps” of the marketing mix: Gather information about your competitors “You might realize you’re not investing as much in marketing as others in your industry, for example, or your wage costs are way above average.” 2.
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