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Competitor Analysis

Competitor analysis in marketing and strategic management is an assessment of the strengths and weaknesses of current and potential competitors. This analysis provides both an offensive and defensive strategic context to identify opportunities and threats. Profiling combines all of the relevant sources of competitor analysis into one framework in the support of efficient and effective strategy formulation, implementation, monitoring and adjustment.

Competitor analysis is an essential component of corporate strategy. It is argued that most firms do not conduct this type of analysis systematically enough. Instead, many enterprises operate on what is called “informal impressions, conjectures, and intuition gained through the tidbits of information about competitors every manager continually receives.” As a result, traditional environmental scanning places many firms at risk of dangerous competitive blindspots due to a lack of robust competitor analysis.

One common and useful technique is constructing a competitor array. The steps may include:

Define the industry – scope and nature of the industry.
Determine who the competitors are.
Determine who the customers are and what benefits they expect.
Determine the key strengths – for example price, service, convenience, inventory, etc.
Rank the key success factors by giving each one a weighting – The sum of all the weightings must add up to one.
Rate each competitor on each of the key success factors.
Multiply each cell in the matrix by the factor weighting.

Competitor Analysis

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