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. At Mum's Garage, we complete this process with the companies we work with on brand development.
Before you start this competitor analysis exercise
We recommend that companies complete competitor analysis once they have done customer discovery to determine whether there is a real opportunity for the business. Customers needs should be the first focus for assessing the opportunity.
Competitor analysis helps to refine the positioning of a brand and product, to enhance the unique value proposition based on learnings from market validation and the founder's experiences. We don't recommend that companies define their company based on their competitors. Competitor analysis is more an exercise for refinement.
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. Researching emerging trends in the industry your company is solving a problem for, 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.
The competitor analysis exercise
We've put together a free competitor analysis template to help you with the process.
We don't recommend that you spend 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 your customers.
You will also develop this document over time as you learn more about what currently exists in the market and what the unique value of your product is.
Step 1: List all your direct competitors and any relevant indirect ones
Direct competition means they are offering a product or service that is essentially the same as you.
Indirect competition means their products or services are not the same but could satisfy the same customer need.
Future competition means existing companies that may enter into the same market as you (e.g. Amazon, if you are selling consumer products in New Zealand).
Include your direct competitors in this exercise. You can also include indirect or future competition if you see fit.
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
Next you want to identify and understand the factors that are important for defining each of your competitors.
Points of differentiation may include the market they serve, the problems they solve, the benefits and features of their product and,or their target market.
You'll see in the competitor analysis template that I have columns set up for 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.
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 you can compare yourself to the options that currently exist for your customers.
Step 3: Turn your research into a diagram that can be used in a slide deck
It can be easier for people to understand an idea if they have some reference points to compare it to.
Describing your company relative to what already exists in the market provides the reference points.
In a pitch deck, it also shows that you have done the work to figure out what else exists in your market and you have 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 your business.
Here are some examples of how you could set out a competitor analysis slide.
Competitor analysis based on two key metrics:
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.
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.