Analyzing your own business will help you maximize your strengths, while analyzing the competition will help you find potential weaknesses. A key part of any marketing plan should be the competitive analysis, which can help guide your pricing, distribution, branding and promotional strategies and tactics. Divide your competitive analysis into four sections to cover the basics of comparing you to your competition.


The first step in analyzing your competition is to compare your product or service against theirs. A key to successful sales is to tout the benefits you offer, not just your product features. Look at how your product or service offers a solution or opportunity compared to your competitor’s, rather than just listing how your features differ. Look for weaknesses your competitor has you can use to differentiate your product in your marketing.


Pricing your product based solely on your cost of production and desired profit misses threats and opportunities posed by your competition. For example, you can increase the perceived value of your product by pricing it higher than the competition. You can make it difficult for competitors to enter or succeed in the marketplace by keeping your prices lower than you have to. Use an analysis of your competitors to set your pricing strategies to maximize your chances of success.


Make it easier for people to buy from you than from your competition by creating a distribution strategy that puts you where customers want to buy. For example, if your marketplace demographic is trending younger, add online sales. If your competition is selling in big-box stores, under-price him there, or sell your product in boutique retail stores to create a more desirable brand. Look at where your competitors are and aren’t selling and consider why.


If your competition is outselling you, analyze where he’s advertising, the demographic profile of that publication’s readers and if you might benefit from running ads in the publication. Track your competition’s promotional efforts by time of year to determine if he targets more business during certain times of the year. Knocking your competition in your ads, even if what you say is true, can turn off consumers. You can still use comparative marketing without using your competitor, making the same point. For example, if your painting service comes with a guarantee your competitor doesn’t offer, warn your consumers, “Don’t risk your money on a bad paint job -- hire a contractor who offers a guarantee.”


In addition to your internal competitive analysis, contact customers or hold focus groups to learn what consumers think of your product and your competition. Ask them what benefits they’re seeking and how they believe you and your competition deliver them. Ask what they like about each product or company and what suggestions they give to both. Avoid giving customers or focus group attendees an either/or scenario, which will help you generate more unsolicited ideas and feedback.