Competition

The following is the list of questions that will help you analyze your competition. Answer these questions and you shall know much more about your competitors and how they are going to affect your business.

(Make sure that you do not define your competition too narrowly. For E.g. when you are staring a movie theater, your competition is not only other movie theaters, but also VCD rent places etc.)

Who are your potential competitors?

What are their strengths and what are their weaknesses?

Who are the customers of each competitor?

Why might a customer buy from them instead of you?

What is the approximate sales volume of each competitor? Are there significant trends in sales?

What is market share of each competitor?

What is the pricing structure of each competitor?

Do your competitors enjoy the support of a strong franchise or parent company?

How is each competitor positioned? This means what is the mental image that comes in your consumers mind when he/she thinks about your competitor?

How do your competitors promote their products and services?

What are the distribution arrangements of the competitors?

Who are the suppliers of each competitor?

Are there any new competitors that are going to come up in the industry?

What are the management strengths and weaknesses of each major competitor?

Are the competitors well financed?

How committed is each competitor? Will they fight hard for market share?

Will the future technological developments affect your competitor? Are they better equipped to handle the change than you?

How do the competing products rate in terms of quality, size, appearance etc.?

What are the credit terms of the major competitors?

How much warrantee do the competitors give for their products?

Do the competitors own any exclusive distribution rights that would affect your market entry?

What are their hours of operation?

How saturated is the competition? Is there room for a new business?

Before you go ahead, you must try to find out the answers to all the questions on this page. This will give you a good understanding of your own business. During the process of finding the answers you may realize that there are certain flaws in your thinking and your business idea. Go back and correct these flaws.

All this information will have to be documented into the business plan. Having information about your customers, competitors etc. tells you how you should run and set up your business so that you can cater to the needs of the market. Having all this is essential if you intend to approach a bank, financial institution or a venture capitalist with your idea.