competition and competitive advantage in business plan

How to Write a Competitive Analysis for Your Business Plan

11 min. read

Updated January 3, 2024

Do you know who your competitors are? If you do, have you taken the time to conduct a thorough competitor analysis?

Knowing your competitors, how they operate, and the necessary benchmarks you need to hit are crucial to positioning your business for success. Investors will also want to see an analysis of the competition in your business plan.

In this guide, we’ll explore the significance of competitive analysis and guide you through the essential steps to conduct and write your own. 

You’ll learn how to identify and evaluate competitors to better understand the opportunities and threats to your business. And you’ll be given a four-step process to describe and visualize how your business fits within the competitive landscape.

• What is a competitive analysis?

A competitive analysis is the process of gathering information about your competitors and using it to identify their strengths and weaknesses. This information can then be used to develop strategies to improve your own business and gain a competitive advantage.

• How to conduct a competitive analysis

Before you start writing about the competition, you need to conduct your analysis. Here are the steps you need to take:

1. Identify your competitors

The first step in conducting a comprehensive competitive analysis is to identify your competitors. 

Start by creating a list of both direct and indirect competitors within your industry or market segment. Direct competitors offer similar products or services, while indirect competitors solve the same problems your company does, but with different products or services.

Keep in mind that this list may change over time. It’s crucial to revisit it regularly to keep track of any new entrants or changes to your current competitors. For instance, a new competitor may enter the market, or an existing competitor may change their product offerings.

2. Analyze the market

Once you’ve identified your competitors, you need to study the overall market. 

This includes the market size , growth rate, trends, and customer preferences. Be sure that you understand the key drivers of demand, demographic and psychographic profiles of your target audience , and any potential market gaps or opportunities.

Conducting a market analysis can require a significant amount of research and data collection. Luckily, if you’re writing a business plan you’ll follow this process to complete the market analysis section . So, doing this research has value for multiple parts of your plan.

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3. Create a competitive framework

You’ll need to establish criteria for comparing your business with competitors. You want the metrics and information you choose to provide answers to specific questions. (“Do we have the same customers?” “What features are offered?” “How many customers are being served?”)

Here are some common factors to consider including: 

• Market share
• Product/service offerings or features
• Distribution channels
• Target markets
• Marketing strategies
• Customer service

4. Research your competitors

You can now begin gathering information about your competitors. Because you spent the time to explore the market and set up a comparison framework—your research will be far more focused and easier to complete.

There’s no perfect research process, so start by exploring sources such as competitor websites, social media, customer reviews, industry reports, press releases, and public financial statements. You may also want to conduct primary research by interviewing customers, suppliers, or industry experts.

You can check out our full guide on conducting market research for more specific steps.

5. Assess their strengths and weaknesses

Evaluate each competitor based on the criteria you’ve established in the competitive framework. Identify their key strengths (competitive advantages) and weaknesses (areas where they underperform).

6. Identify opportunities and threats

Based on the strengths and weaknesses of your competitors, identify opportunities (areas where you can outperform them) and threats (areas where they may outperform you) for your business. 

You can check out our full guide to conducting a SWOT analysis for more specific questions that you should ask as part of each step. 

• How to write your competitive analysis

Once you’ve done your research, it’s time to present your findings in your business plan. Here are the steps you need to take:

1. Determine who your audience is

Who you are writing a business plan for (investors, partners, employees, etc.) may require you to format your competitive analysis differently. 

For an internal business plan you’ll use with your team, the competition section should help them better understand the competition. You and your team will use it to look at comparative strengths and weaknesses to help you develop strategies to gain a competitive advantage.

For fundraising, your plan will be shared with potential investors or as part of a bank loan. In this case, you’re describing the competition to reassure your target reader. You are showing awareness and a firm understanding of the competition, and are positioned to take advantage of opportunities while avoiding the pitfalls.

2. Describe your competitive position

You need to know how your business stacks up, based on the values it offers to your chosen target market. To run this comparison, you’ll be using the same criteria from the competitive framework you completed earlier. You need to identify your competitive advantages and weaknesses, and any areas where you can improve.

The goal is positioning (setting your business up against the background of other offerings), and making that position clear to the target market. Here are a few questions to ask yourself in order to define your competitive position:

• How are you going to take advantage of your distinctive differences, in your customers’ eyes? 
• What are you doing better? 
• How do you work toward strengths and away from weaknesses?
• What do you want the world to think and say about you and how you compare to others?

3. Visualize your competitive position

There are a few different ways to present your competitive framework in your business plan. The first is a “positioning map” and the second is a “competitive matrix”. Depending on your needs, you can use one or both of these to communicate the information that you gathered during your competitive analysis:

Positioning map

The positioning map plots two product or business benefits across a horizontal and vertical axis. The furthest points of each represent opposite extremes (Hot and cold for example) that intersect in the middle. With this simple chart, you can drop your own business and the competition into the zone that best represents the combination of both factors.

I often refer to marketing expert Philip Kohler’s simple strategic positioning map of breakfast, shown here. You can easily draw your own map with any two factors of competition to see how a market stacks up.

It’s quite common to see the price on one axis and some important qualitative factor on the other, with the assumption that there should be a rough relationship between price and quality.

Competitive matrix

It’s pretty common for most business plans to also include a competitive matrix. It shows how different competitors stack up according to the factors identified in your competitive framework. 

How do you stack up against the others? Here’s what a typical competitive matrix looks like:

For the record, I’ve seen dozens of competitive matrices in plans and pitches. I’ve never seen a single one that didn’t show that this company does more of what the market wants than all others. So maybe that tells you something about credibility and how to increase it. Still, the ones I see are all in the context of seeking investment, so maybe that’s the nature of the game.

4. Explain your strategies for gaining a competitive edge

Your business plan should also explain the strategies your business will use to capitalize on the opportunities you’ve identified while mitigating any threats from competition. This may involve improving your product/service offerings, targeting underserved market segments, offering more attractive price points, focusing on better customer service, or developing innovative marketing strategies.

While you should cover these strategies in the competition section, this information should be expanded on further in other areas of your business plan. 

For example, based on your competitive analysis you show that most competitors have the same feature set. As part of your strategy, you see a few obvious ways to better serve your target market with additional product features. This information should be referenced within your products and services section to back up your problem and solution statement. 

• Why competition is a good thing

Business owners often wish that they had no competition. They think that with no competition, the entire market for their product or service will be theirs. That is simply not the case—especially for new startups that have truly innovative products and services. Here’s why:

Competition validates your idea

You know you have a good idea when other people are coming up with similar products or services. Competition validates the market and the fact that there are most likely customers for your new product. This also means that the costs of marketing and educating your market go down (see my next point).

Competition helps educate your target market

Being first-to-market can be a huge advantage. It also means that you will have to spend way more than the next player to educate customers about your new widget, your new solution to a problem, and your new approach to services. 

This is especially true for businesses that are extremely innovative. These first-to-market businesses will be facing customers that didn’t know that there was a solution to their problem . These potential customers might not even know that they have a problem that can be solved in a better way. 

If you’re a first-to-market company, you will have an uphill battle to educate consumers—an often expensive and time-consuming process. The 2nd-to-market will enjoy all the benefits of an educated marketplace without the large marketing expense.

Competition pushes you

Businesses that have little or no competition become stagnant. Customers have few alternatives to choose from, so there is no incentive to innovate. Constant competition ensures that your marketplace continues to evolve and that your product offering continues to evolve with it.

Competition forces focus & differentiation

Without competition, it’s easy to lose focus on your core business and your core customers and start expanding into areas that don’t serve your best customers. Competition forces you and your business to figure out how to be different than your competition while focusing on your customers. In the long term, competition will help you build a better business.

• What if there is no competition?

One mistake many new businesses make is thinking that just because nobody else is doing exactly what they’re doing, their business is a sure thing. If you’re struggling to find competitors, ask yourself these questions.

Is there a good reason why no one else is doing it?

The smart thing to do is ask yourself,  “Why isn’t anyone else doing it?”

It’s possible that nobody’s selling cod-liver frozen yogurt in your area because there’s simply no market for it. Ask around, talk to people, and do your market research. If you determine that you’ve got customers out there, you’re in good shape.

But that still doesn’t mean there’s no competition.

How are customers getting their needs met?

There may not be another cod-liver frozen yogurt shop within 500 miles. But maybe an online distributor sells cod-liver oil to do-it-yourselfers who make their own fro-yo at home. Or maybe your potential customers are eating frozen salmon pops right now. 

Are there any businesses that are indirect competitors?

Don’t think of competition as only other businesses that do exactly what you do. Think about what currently exists on the market that your product would displace.

It’s the difference between direct competition and indirect competition. When Henry Ford started successfully mass-producing automobiles in the U.S., he didn’t have other automakers to compete with. His competition was horse-and-buggy makers, bicycles, and railroads.

Do a competitive analysis, but don’t let it derail your planning

While it’s important that you know the competition, don’t get too caught up in the research. 

If all you do is track your competition and do endless competitive analyses, you won’t be able to come up with original ideas. You will end up looking and acting just like your competition. Instead, make a habit of NOT visiting your competition’s website, NOT going into their store, and NOT calling their sales office. 

Focus instead on how you can provide the best service possible and spend your time talking to your customers. Figure out how you can better serve the next person that walks in the door so that they become a lifetime customer, a reference, or a referral source.

If you focus too much on the competition, you will become a copycat. When that happens, it won’t matter to a customer if they walk into your store or the competition’s because you will both be the same.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

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How to Write the Competitive Analysis of a Business Plan

Written by Dave Lavinsky

If you are writing a business plan, hopefully by this point you’ve conducted thorough market research to identify industry trends and identified the target market for your business. Now it’s time to conduct a competitor analysis. This section is included in virtually every simple business plan template , and the information you include will depend on several factors such as how many competitors there are, what they offer, and how large they are in comparison to your company.

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What is a Competitive Analysis?

A competitive analysis is a type of market research that identifies your competitors, their strengths and weaknesses, the strategies they are using to compete with you, and what makes your business unique. Before writing this section it’s important to have all the information you collected during your market research phase. This may include market data such as revenue figures, cost trends, and the size of the industry.

Why Do You Need the Competitive Analysis?

If you are planning to raise capital, the investor will require a business plan that includes the competitive analysis section. This section will also come in handy while writing a business plan template , if your company is considering increasing prices or adding new products and services. You can use the information you find to determine how well-positioned your business is to perform in the competitive landscape.

3 Steps to Writing a Competitive Analysis

The steps to developing the competitive analysis section of your business plan include:

• Identify your competition.
• Select the appropriate competitors to analyze.
• Determine your competitive advantage.

1. Identify Your Competition

To start, you must align your definition of competition with that of investors. Investors define competition as to any service or product that a customer can use to fulfill the same need(s) as the company fulfills. This includes companies that offer similar products, substitute products, and other customer options (such as performing the service or building the product themselves). Under this broad definition, any business plan that claims there are no competitors greatly undermines the credibility of the management team.

When identifying competitors, companies often find themselves in a difficult position. On one hand, you may want to show that the business is unique (even under the investors’ broad definition) and list few or no competitors. However, this has a negative connotation. If no or few companies are in a market space, it implies that there may not be a large enough base of potential customers to support the company’s products and/or services.

2. Select the Appropriate Competitors to Analyze

Once your competition has been identified, you want to consider selecting the most appropriate competitors to analyze. Investors will expect that not all competitors are “apples-to-apples” (i.e., they do not offer identical products or services) and therefore will understand if you chose only companies that are closest in nature. So, you must detail both direct and, when applicable, indirect competitors.

Direct competitors are those that serve the same potential customers with similar products and services. If you sell your products or services online, your direct competitors would also include companies whose website ranks in the top 5 positions for your same target keyword on Google Search.

For example, if you are a home-based candle-making company , you would consider direct competitors to be other candle makers that offer similar products at similar prices. Online competitors would also include companies who rank for the following keywords: “homemade candles”, “handmade candles”, or “custom candles.”

Indirect competitors are those that serve the same target market with different products and services or a different target market with similar products and services.

In some cases, you can identify indirect competitors by looking at alternative channels of distribution. For example, a small business selling a product online may compete with a big-box retailer that sells similar products at a lower price.

After selecting the appropriate competitors, you must describe them. In doing so, you must also objectively analyze each of their strengths and weaknesses and the key drivers of competitive differentiation in the same market.

For each competitor, perform a SWOT Analysis and include the following information:

• Competitor’s Name
• Overview of Competitor (where are they located; how long have they been operating)
• Competitor’s Product or Service
• Competitor’s Pricing
• Estimated Market Share
• Location(s)
• Potential Customers (Geographies & Segments)
• Competitor’s Strengths
• Competitor’s Weaknesses

By understanding what your competitors offer and how customers perceive them, you can determine your company’s competitive advantage against each competitor.

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3. Determine Your Competitive Advantage

Perhaps most importantly, you must describe your company’s competitive advantages over the other companies in the space, and ideally how the company’s business model creates barriers to entry. “Barriers to entry” are reasons why it would be difficult for new companies to enter into or compete in the same market.

For instance, you may have a patent that provides value to your customers and makes them less likely to switch suppliers, which protects your business from potential competitors. Or, you may have more resources than the competition and thus be able to provide superior customer service.

Below is a list of areas in which you might have a competitive advantage:

• Size of the Company – Large companies have more resources and can usually offer lower prices than smaller businesses. This is a significant barrier to entry, as starting a small business and competing with a larger company may be difficult.
• Product or Service Differentiation – If your product or service is unique in some way, this will make it less likely that customers will switch to a competitor.
• Experience & Expertise – Experience and knowledge are valuable attributes that can help differentiate you from the competition.
• Location – If you are located in an area where there is high demand for your product or service, this can be a barrier to entry because competitors will not want to open new locations.
• Patents & Copyrights – Protecting intellectual property can prevent others from entering the same market and competing with your company.
• Brand Recognition – Customers are loyal to brands they have come to trust, which protects the company from new competitors.
• Customer Service – Providing excellent customer service can help you retain customers and prevent them from switching suppliers.
• Lowest Cost Offerings – If you can offer a lower price than your competitors, this makes it more difficult for them to compete with you.
• Technology – New technology that enables you to provide a better product or service than your competitors can be an advantage.
• Strategic Partnerships & Alliances – Collaborating with a company that your customers want to work with can help keep them from switching.
• Human Resources – If you have a highly skilled and talented workforce, it can be difficult for competitors to find and employ the same skills.
• Operational Systems – Strong operational systems that lead to greater efficiencies can protect your business from the competition.
• Marketing Strategy – Investing in strong marketing campaigns can make your business difficult to compete with.

For instance, you could say that your [enter any of the bullets from above] is better than your competitors because [insert reason].

The competitive landscape is one of the most important considerations in developing a business plan since it sets the stage by providing information on past and current competitors and their respective strengths and weaknesses. A strong understanding of the competitive landscape is needed before you can develop a strategy for differentiating your company from the competition. Follow the above competitive analysis example and you will be well-prepared to create a winning competitor analysis section of your business plan.

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The Management Team Section of Your Business Plan

Financial Assumptions and Your Business Plan

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Everything You Need to Know about the Business Plan Appendix

Business Plan Conclusion: Summary & Recap

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What Is a Competitive Advantage?

• How It Works
• How To Build It
• Competitive vs. Comparative Advantage

The Bottom Line

• Business Essentials

Competitive Advantage Definition With Types and Examples

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

Competitive advantage refers to factors that allow a company to produce goods or services better or more cheaply than its rivals. These factors allow the productive entity to generate more sales or superior margins compared to its market rivals. Competitive advantages are attributed to a variety of factors including cost structure, branding , the quality of product offerings, the  distribution network , intellectual property, and customer service.

Key Takeaways

• Competitive advantage is what makes an entity's products or services more desirable to customers than that of any other rival.
• Competitive advantages can be broken down into comparative advantages and differential advantages.
• Comparative advantage is a company's ability to produce something more efficiently than a rival, which leads to greater profit margins.
• A differential advantage is when a company's products are seen as both unique and of higher quality, relative to those of a competitor.

Investopedia / Michela Buttignol

Understanding Competitive Advantage

Competitive advantages generate greater value for a firm and its shareholders because of certain strengths or conditions. The more sustainable the competitive advantage, the more difficult it is for competitors to neutralize the advantage. The two main types of competitive advantages are comparative advantage and differential advantage.

A comparative advantage is when a firm can produce products more efficiently and at a lower cost than its competitors.

A differential advantage is when a firm's products or services differ from its competitors' offerings and are seen as superior. Advanced technology, patent-protected products or processes, superior personnel, and strong brand identity are all drivers of differential advantage. These factors support wide margins and large market shares.

For example, Apple is famous for creating innovative products, such as the iPhone, and supporting its market leadership with savvy marketing campaigns to build an elite brand. Another example is major drug companies. They can market branded drugs at high price points because they are protected by patents.

The term "competitive advantage" traditionally refers to the business world, but can also be applied to a country, organization, or even a person who is competing for something.

How To Build a Competitive Advantage

To build a competitive advantage, a company can use one of three main methods:

• Cost: Provide offerings at the lowest price
• Differentiation: Provide offerings that are superior in quality, service, or features
• Specialization: Provide offerings narrowly tailored to a focused market

Competing on price can be effective, but if you slash prices too much you risk decreasing profit margins to an untenable level. Many firms opt instead to differentiate themselves in other ways, which helps preserve or expand their profit margin.

Benefits of a Competitive Advantage

When a company creates a durable competitive advantage, it sets itself apart from the competition and provides value to customers as well as stakeholders. By producing a desirable product or service that is better or more cost-effective than its competitors,' the company can make more sales, generate more revenue, and enjoy greater profits.

Strategies to Build a Competitive Advantage

To build a competitive advantage, a company must know what sets it apart from its competitors and then focus its message, service, and products with that difference in mind. Here are several strategies companies use to build a competitive advantage:

• Research the market : Market research helps a company identify and define its target market, which can guide it in developing the most effective advantage.
• Identify strengths : A company can find its unique strengths, especially relative to competitors, by reviewing products, services, features, positioning, and branding.
• Evaluate finances : Companies can take a close look at their financial performance to spot profit centers and areas of stability, using financial statements and ratios.
• Review operations : How efficient is a company's operations? Where is it effective, and where is there room for improvement? Consider customer service as well as production and supply chain management.
• Consider human resources : The talent a company can attract as employees and leadership can make an important difference in the success of the business. Evaluating company culture, hiring, and staffing practices can help.

Competitive Advantage vs. Comparative Advantage

A firm's ability to produce a good or service more efficiently than its competitors, which leads to greater profit margins, creates a comparative advantage. Rational consumers will choose the cheaper of any two perfect substitutes offered. For example, a car owner will buy gasoline from a gas station that is 5 cents cheaper than other stations in the area. For imperfect substitutes, like Pepsi versus Coke, higher margins for the lowest-cost producers can eventually bring superior returns.

Economies of scale , efficient internal systems, and geographic location can also create a comparative advantage.

Comparative advantage does not imply a better product or service. It only shows the firm can offer a product or service of the same value at a lower price.

For example, a firm that manufactures a product in China may have lower labor costs than a company that manufactures in the U.S., so it can offer an equal product at a lower price. In the context of international trade economics, opportunity cost determines comparative advantages. 

Amazon ( AMZN ) is an example of a company focused on building and maintaining a comparative advantage. The e-commerce platform has a level of scale and efficiency that is difficult for retail competitors to replicate, allowing it to rise to prominence largely through price competition.

How Do I Know If a Company Has a Competitive Advantage?

If a business can increase its market share through increased efficiency or productivity, it would have a competitive advantage over its competitors.

How Can a Company Increase Its Competitive Advantage?

Lasting competitive advantages tend to be things competitors cannot easily replicate or imitate. Warren Buffet calls sustainable competitive advantages economic moats , which businesses can figuratively dig around themselves to entrench competitive advantages. This can include strengthening one's brand, raising barriers to new entrants (such as through regulations), and the defense of intellectual property.

Why Do Larger Companies Often Have Competitive Advantages?

Competitive advantages that accrue from economies of scale typically refer to supply-side advantages, such as the purchasing power of a large restaurant or retail chain. But advantages of scale also exist on the demand side—they are commonly referred to as  network effects . This happens when a service becomes more valuable to all of its users as the service adds more users. The result can often be a winner-take-all dynamic in the industry.

How Is Competitive Advantage Different From Comparative Advantage?

Comparative advantage mostly refers to international trade. It posits that a country should focus on what it can produce and export relatively the cheapest—thus if one country has a competitive advantage in producing both products A & B, it should only produce product A if it can do it better than B and import B from some other country.

A company's competitive advantage is the way it excels compared to its rivals. This advantage may be through cost leadership, differentiation, or focus. Identifying a company's competitive advantage helps show how it is positioned to be more successful than its competitors, creating more revenue and generating greater profits.

Young African Leaders Initiative. " Action Your Business Growth: The Importance of Knowing Your Competitive Advantage ."

U.S. Small Business Administration. " Market Research and Competitive Analysis ."

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What Is Competitive Advantage and How to Find Your Strategic Edge

Competitive advantage is an important tool for developing business strategy. Explore different sources of competitive advantage and determine what gives your company an edge over your competition.

Competitive advantage is why your product, service, or company is better than similar offerings in your market. It can come from various sources, such as product quality or innovation, proprietary technology, or excellent customer service. Established brands may have a competitive advantage based on customer loyalty alone or by their connections to markets of potential customers. For example, if a big company like PepsiCo wanted to release a new soda flavor, it would have a competitive advantage over a small indie brand releasing the same flavor because of its existing reach.

In this article, you’ll learn about developing different strategies for competitive advantage and how to determine the competitive advantage of your products or services. 

Read more: What Is Strategic Management? Benefits, Process, and Careers

What is competitive advantage?

Your competitive advantage makes your product or brand more attractive to customers than your direct competition. Think about why your product or brand is a natural choice for customers. Your competitive advantage is the deciding factor that closes sales.

For example, you might offer your product at a lower price than your competition. Customers who are conscious about saving money will be more inclined to purchase your product on that basis. Or, you may offer the fastest shipping available, drawing in customers who are in a rush to receive their order. 

Types of competitive advantage strategies

Your competitive strategy is how you'll use or develop an advantage. This type of insight can help you set goals and direction for the future, such as developing new products or services. The type of competitive strategy you need depends on the value you offer your customers. 

Three examples of competitive advantage strategy include cost, differentiation, and focused niche. Let’s take a closer look at these strategies.

One common competitive strategy focuses on the cost of your product or service. This may mean finding a way to offer your product for a lower cost compared to your competitors, such as streamlining processes or successfully negotiating lower prices with your vendors. When you can offer your product for the lowest price, you’ll attract customers who are looking for the best deal, developing cost leadership. 

On the other hand, having the lowest price isn’t the only way to employ a cost-based competitive strategy. Luxury and name-brand products use a higher price point to signal to customers that their offerings are more elite than other choices. Although the object's price is part of the competitive advantage, luxury brands use a different strategy called differentiation to highlight what makes their products superior.

2. Differentiation

Differentiation is a strategy brands use to demonstrate how their product or service is unique and unlike competitors' offerings. Offering a product that customers perceive as more valuable will help you build a loyal customer base willing to spend more money to purchase your product. When they compare your product to similiar ones, they understand the added value represented by a higher price.

You can position yourself as different from your competitors either in a broad way—building a company that operates fundamentally differently than others in their niche—or in a more focused way by developing superior products with new technology, specialized features, or higher-quality materials. For example, Apple consistently offers new cell phone models at higher and higher prices by touting its enhanced technological abilities with each new iteration.

Example. Despite the higher price of Apple phones, 48.7 percent of cell phone users in the US owned Apple phones in 2022 [ 1 ]. Although Apple positions itself as different and better than its competition, it still offers a product nearly half the market can access. If Apple were to continue differentiating itself into a smaller core group of users, it would employ a similar competitive advantage called a focused niche. 

3. Focused niche

A focused niche competitive advantage strategy means offering a product custom-tailored to a certain use or group of people. When you have a smaller, focused core of potential clients, you can further explore their pain points and deliver a product designed to address their needs. Designing a product or service with your end customer in mind can help you delight your customers and create customer loyalty. 

Example. While other automakers may sell millions of vehicles annually, Ferrari shipped a mere 11,155 vehicles in 2021 [ 2 ]. With a price tag that starts at nearly a quarter of a million dollars, Ferrari targets a core group of wealthy car enthusiasts shopping for a new car.

Other types of competitive advantage

You can develop a strategy around the advantage whenever you can find an edge over your competition. More examples of competitive strategy include:

Geographic competitive advantage : You may have access to resources others don’t have due to your location. For example, you might have a more strategic location that draws in more customers, more accessible access to suppliers, or access to trade routes through rail lines, shipping ports, or airports. 

Customer service competitive advantage : By providing the best customer service experience, you can stand out from others in your market and build a loyal base of customers who appreciate the help you’ve offered. 

Skilled workforce competitive advantage : If you can attract the most talented employees to your company, you can build a competitive advantage based on their advanced set of skills. 

Why is competitive advantage important?

A competitive advantage is important because it helps you define your positioning in the market and explain to customers why your product or service should be their natural first choice. After identifying your competitive advantage, you can drive a higher profit margin by prioritizing activities that help you earn a bigger or more precise market share. When you demonstrate the value of your product to customers—for example, by using price, marketing, or quality cues—you can attract a group of loyal customers who will want to buy your product repeatedly. 

Who decides on a competitive advantage strategy? 

Senior-level executives, such as the chief executive officer or director of strategy, sometimes decide strategies involving competitive advantage. While managers and other supporting staff may not directly set strategy, they facilitate activities supporting those goals. Let’s take a closer look at these careers. 

1. Chief executive officer (CEO)

Average annual base salary (US) : $204,424 [ 3 ]

Job outlook (projected growth from 2022 to 2032) : 3 percent [ 4 ]

Requirements : You'll likely need a bachelor’s degree, typically in business or public administration. Sometimes, you must earn a Master of Business Administration (MBA). Typically, you'll also need to acquire experience in management positions in your industry. 

As CEO, you can help guide your company's overall direction and strategy. You might also direct other senior leaders, manage overall company operations, and answer to a board of directors. In this role, you'll establish company goals, oversee financial activities, negotiate contracts, and provide overall leadership. 

Read more: What Are Leadership Skills, and Why Are They Important?

2. Director of strategy 

Average annual base salary (US) : $169,969 [ 5 ]

Requirements : At least a bachelor’s degree, although a master’s degree is also common. Typical areas of study include business, marketing, finance , or communication.

As the director of strategy, you'll be responsible for developing initiatives to help the company reach its goals. You might assess industry and market trends, perform competitive analysis, evaluate partnerships, and look for new business opportunities. In this role, you'll report to senior leadership and may have a staff of professionals on your team. 

3. Product managers

Average annual base salary (US) : $121,160 [ 6 ]

Job outlook (projected growth from 2022 to 2032) : 6 percent [ 7 ]

Requirements : A bachelor’s degree in business management or supply chain operation management. In some cases, you may need to earn your MBA.

As a product manager, you may oversee a product from development to final sales. In this role, you can conduct market research and develop products based on feedback. You can also develop strategies for positioning your product in the market and manage staff to oversee the product’s creation and packaging.

Read more: What Does a Product Manager Do? And How to Become One

How to determine your competitive advantage

Although each company will develop its own process of setting competitive advantage strategies, you should be aware of two frameworks for considering competitive strategy. The five forces and VRIN are two ways of determining what makes you different from your competition. 

Five forces 

The five forces that impact your company’s competitive advantage include:

Competitors

Similar products customers might choose

Threat of new competition

According to Michael Porter, an economist and Harvard Business School professor, these five forces restrict how much profit a company can make. 

Your product or company can gain value by maintaining supplier relationships, drawing in new customers, and differentiating from similar products. Your company can be constrained by market competition, emerging threats, the total market size, and difficulties in obtaining needed supplies. Understanding how these factors interplay can help you see the strengths and weaknesses of your positioning. 

Jay Barney, a professor of strategic management at the University of Utah, developed the acronym VRIN—value, rarity, imitability, and nonsubstitutability—to describe four qualities company resources can have that add to the company's competitive advantage. If a company's resources, such as products, technologies, or brand, have a high level of these four qualities, they have the potential to form the basis of competitive advantage.

Value : If your product or service offers value to your customers, they may be willing to pay more for your brand than others. Conversely, you may offer value to customers in the form of a lower price point. 

Rarity : Rarity helps differentiate your product from others. If the factor that provides your customers with value is something that your competition isn’t doing or isn’t doing well, you may have a rare resource you can use to your advantage. 

Imitability : Imitability speaks to how easily it would be for your competitors to imitate the rare value you’ve identified. For example, your competition might release a similar product to yours, but they might have a harder time imitating your brand name and reputation.

Nonsubstitutability : Lastly, nonsubstitutability refers to how easily customers can swap in another product to meet the demand your product fills. The best competitive advantage will be one where no true substitute exists. 

Learn more with Coursera.

If you’re ready to take the next step, consider earning your Strategic Leadership and Management Specialization from the University of Illinois at Urbana-Champaign. You can complete this series in two months with only 10 weekly study hours. This program covers leading teams, managing an organization, corporate strategy, and more. Upon completion, gain a shareable Professional Certificate to include in your resume, CV, or LinkedIn profile.

Article sources

Statista. “ US iPhone User Share 2014-2022, https://www.statista.com/statistics/236550/percentage-of-us-population-that-own-a-iphone-smartphone/.” Accessed November 9, 2023. 

Statista. “ Ferrari: Number of Cars Delivered 2011-2012 , https://www.statista.com/statistics/695882/number-of-car-shipments-made-by-the-italian-sports-car-company-ferrari/.” Accessed November 9, 2023. 

Glassdoor. “ Salary: CEO in United States , https://www.glassdoor.com/Salaries/ceo-salary-SRCH_KO0,3.htm.” Accessed February 27, 2024.

US Bureau of Labor Statistics. “ Top Executives: Occupational Outlook Handbook , https://www.bls.gov/ooh/management/top-executives.htm.” Accessed February 27, 2024.

Glassdoor. “ Salary: Director of Strategy in the United States , https://www.glassdoor.com/Salaries/director-of-strategy-salary-SRCH_KO0,20.htm.” Accessed February 27, 2024.

Glassdoor. “ Salary: Product Manager in the United States , https://www.glassdoor.com/Salaries/product-manager-salary-SRCH_KO0,15.htm.” Accessed February 27, 2024.

US Bureau of Labor Statistics. “ Advertising, Promotions, and Marketing Managers: Occupational Outlook Handbook . https://www.bls.gov/ooh/management/advertising-promotions-and-marketing-managers.htm.” Accessed February 27, 2024.

Keep reading

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Coursera’s editorial team is comprised of highly experienced professional editors, writers, and fact...

This content has been made available for informational purposes only. Learners are advised to conduct additional research to ensure that courses and other credentials pursued meet their personal, professional, and financial goals.

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How to Identify and Research Your Competition Emphasizing your competitive advantage is an essential part of any business plan.

By Eric Butow • Oct 27, 2023

Key Takeaways

• Why competitive analysis matters
• Questions to ask about your industry
• How to find similar companies

Opinions expressed by Entrepreneur contributors are their own.

This is part 2 / 8 of Write Your Business Plan: Section 4: Marketing Your Business Plan series.

Successful entrepreneurs are renowned for intuitively feeling a market's pulse, project trends before anyone else detects them, and identifying needs that even customers are unaware of. After you are famous, perhaps you can claim a similar psychic connection to the market. But for now, you'll need to reinforce your claims to market insight by presenting solid research in your plan.

Market research aims to understand the reasons consumers will buy your product. It studies consumer behavior, specifically how cultural, societal, and personal factors influence that behavior. For instance, market research aiming to understand consumers who buy in-line skates might study the cultural importance of fitness, the societal acceptability of marketing directed toward children and teens, and the effect of personal influences such as age, occupation, and lifestyle in directing a skate purchase.

Related: 4 Effective Ways To Accomplish This Missing Step That Most Entrepreneurs Overlook

Market research is often split into two varieties: primary and secondary. Primary research studies customers directly, whereas secondary research studies information others have gathered about customers. Primary research might be telephone interviews or online polls with randomly selected target group members. You can also study your own sales records to gather primary research. Secondary research might come from reports on other organizations' websites or blogs about the industry.

Conducting market research provides answers to those unknown elements. It will greatly reduce risk as you start your business. It will help you understand your competitive position and the strengths and weaknesses of your competitors. And it will improve your marketing and sales process."

Related: You Need Consumer Insights To Ensure The Success Of Your Business. Here Are Five Ways To Find Them.

Questions to Ask About Your Industry

To start preparing your industry analysis and outlook, dig up the following facts about your field:

• What is your total industry-wide sales volume? In dollars? In units?
• What are the trends in sales volume within your industry?
• Who are the major players and your key competitors? What are they like?
• What does it take to compete? What are the barriers to entry?
• What technological trends affect your industry?
• What are the main modes of marketing?
• How does government regulation affect the industry?
• In what ways are changing consumer tastes affecting your industry?
• What are recent demographic trends affecting the industry?
• How sensitive is the industry to seasons and economic cycles?
• What are key financial measures in your industry (average profit margins, sales commissions, etc.)?

Related: 5 Essential Elements of Your Industry Trends Plan

How to Find Similar Companies

Find a close match when looking at comparable businesses (and their data). For comparative purposes, consider:

• Companies of relative size.
• Companies serving the same geographic area could be global if you plan to be a web-based business.
• Companies with a similar ownership structure. If you are two partners, look for businesses run by a couple of partners rather than an advisory board of twelve.
• Relatively new companies. While you can learn from long-standing businesses, they may be successful today because of their twenty-five-year business history and reputation.

You will want to use the data you have gathered to determine how much business you could do and to figure out how you will fit into and adapt to the marketplace.

Related: How to Make Your Business Stand Out

How To Do Original Research

One limitation of in-house market information is that it may not include exactly what you're looking for. For instance, if you'd like to consider offering consumers financing for their purchases, it's hard to tell how they'd like it since you don't already offer it.

You can get around this limitation by conducting original research—interviewing customers who enter your store, for example, or counting cars that pass the intersection where you plan to open a new location—and combining it with existing data. Follow these steps to spending your market research dollars wisely:

Determine what you need to know about your market. The more focused the research, the more valuable it will be.

• Prioritize the results of the first step. You can't research everything, so concentrate on the information that will give you the best (or quickest) payback.
• Review less expensive research alternatives. Small Business Development Centers and the Small Business Administration can help you develop customer surveys. Your trade association will have good secondary research. Be creative.
• Estimate the cost of performing the research yourself. Keep in mind that with the internet you should not have to spend a ton of money. If you're considering hiring a consultant or a researcher, remember this is your dream, these are your goals, and this is your business.
• Don't pay for what you don't need.

Related: The One Simple Task That Will Help Your Startup Succeed

More in Write Your Business Plan

Section 1: the foundation of a business plan, section 2: putting your business plan to work, section 3: selling your product and team, section 4: marketing your business plan, section 5: organizing operations and finances, section 6: getting your business plan to investors.

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• How to create a competitive analysis (w ...

How to create a competitive analysis (with examples)

Competitive analysis involves identifying your direct and indirect competitors using research to reveal their strengths and weaknesses in relation to your own. In this guide, we’ll outline how to do a competitive analysis and explain how you can use this marketing strategy to improve your business.

Whether you’re running a business or playing in a football game, understanding your competition is crucial for success. While you may not be scoring touchdowns in the office, your goal is to score business deals with clients or win customers with your products. The method of preparation for athletes and business owners is similar—once you understand your strengths and weaknesses versus your competitors’, you can level up. 

What is a competitive analysis?

Competitive analysis involves identifying your direct and indirect competitors using research to reveal their strengths and weaknesses in relation to your own. 

Direct competitors market the same product to the same audience as you, while indirect competitors market the same product to a different audience. After identifying your competitors, you can use the information you gather to see where you stand in the market landscape. 

What to include in a competitive analysis

The purpose of this type of analysis is to get a competitive advantage in the market and improve your business strategy. Without a competitive analysis, it’s difficult to know what others are doing to win clients or customers in your target market. A competitive analysis report may include:

A description of your company’s target market

Details about your product or service versus the competitors’

Current and projected market share, sales, and revenues

Pricing comparison

Marketing and social media strategy analysis

Differences in customer ratings

You’ll compare each detail of your product or service versus the competition to assess strategy efficacy. By comparing success metrics across companies, you can make data-driven decisions.

How to do a competitive analysis

Follow these five steps to create your competitive analysis report and get a broad view of where you fit in the market. This process can help you analyze a handful of competitors at one time and better approach your target customers.

1. Create a competitor overview

In step one, select between five and 10 competitors to compare against your company. The competitors you choose should have similar product or service offerings and a similar business model to you. You should also choose a mix of both direct and indirect competitors so you can see how new markets might affect your company. Choosing both startup and seasoned competitors will further diversify your analysis.

Tip: To find competitors in your industry, use Google or Amazon to search for your product or service. The top results that emerge are likely your competitors. If you’re a startup or you serve a niche market, you may need to dive deeper into the rankings to find your direct competitors.

2. Conduct market research

Once you know the competitors you want to analyze, you’ll begin in-depth market research. This will be a mixture of primary and secondary research. Primary research comes directly from customers or the product itself, while secondary research is information that’s already compiled. Then, keep track of the data you collect in a user research template .

Primary market research may include: 

Purchasing competitors’ products or services

Interviewing customers

Conducting online surveys of customers 

Holding in-person focus groups

Secondary market research may include:

Examining competitors’ websites

Assessing the current economic situation

Identifying technological developments 

Reading company records

Tip: Search engine analysis tools like Ahrefs and SEMrush can help you examine competitors’ websites and obtain crucial SEO information such as the keywords they’re targeting, the number of backlinks they have, and the overall health of their website. 

3. Compare product features

The next step in your analysis involves a comparison of your product to your competitors’ products. This comparison should break down the products feature by feature. While every product has its own unique features, most products will likely include:

Service offered

Age of audience served

Number of features

Style and design

Ease of use

Type and number of warranties

Customer support offered

Product quality

Tip: If your features table gets too long, abbreviate this step by listing the features you believe are of most importance to your analysis. Important features may include cost, product benefits, and ease of use.

4. Compare product marketing

The next step in your analysis will look similar to the one before, except you’ll compare the marketing efforts of your competitors instead of the product features. Unlike the product features matrix you created, you’ll need to go deeper to unveil each company’s marketing plan . 

Areas you’ll want to analyze include:

Social media

Website copy

Press releases

Product copy

As you analyze the above, ask questions to dig deeper into each company’s marketing strategies. The questions you should ask will vary by industry, but may include:

What story are they trying to tell?

What value do they bring to their customers?

What’s their company mission?

What’s their brand voice?

Tip: You can identify your competitors’ target demographic in this step by referencing their customer base, either from their website or from testimonials. This information can help you build customer personas. When you can picture who your competitor actively targets, you can better understand their marketing tactics. 

5. Use a SWOT analysis

Competitive intelligence will make up a significant part of your competitor analysis framework, but once you’ve gathered your information, you can turn the focus back to your company. A SWOT analysis helps you identify your company’s strengths and weaknesses. It also helps turn weaknesses into opportunities and assess threats you face based on your competition.

During a SWOT analysis, ask yourself:

What do we do well?

What could we improve?

Are there market gaps in our services?

What new market trends are on the horizon?

Tip: Your research from the previous steps in the competitive analysis will help you answer these questions and fill in your SWOT analysis. You can visually present your findings in a SWOT matrix, which is a four-box chart divided by category.

6. Identify your place in the market landscape

The last step in your competitive analysis is to understand where you stand in the market landscape. To do this, you’ll create a graph with an X and Y axis. The two axes should represent the most important factors for being competitive in your market. 

For example, the X-axis may represent customer satisfaction, while the Y-axis may represent presence in the market. You’ll then plot each competitor on the graph according to their (x,y) coordinates. You’ll also plot your company on this chart, which will give you an idea of where you stand in relation to your competitors. 

This graph is included for informational purposes and does not represent Asana’s market landscape or any specific industry’s market landscape. 

Tip: In this example, you’ll see three companies that have a greater market presence and greater customer satisfaction than yours, while two companies have a similar market presence but higher customer satisfaction. This data should jumpstart the problem-solving process because you now know which competitors are the biggest threats and you can see where you fall short. 

Competitive analysis example

Imagine you work at a marketing startup that provides SEO for dentists, which is a niche industry and only has a few competitors. You decide to conduct a market analysis for your business. To do so, you would:

Step 1: Use Google to compile a list of your competitors. 

Steps 2, 3, and 4: Use your competitors’ websites, as well as SEO analysis tools like Ahrefs, to deep-dive into the service offerings and marketing strategies of each company. 

Step 5: Focusing back on your own company, you conduct a SWOT analysis to assess your own strategic goals and get a visual of your strengths and weaknesses. 

Step 6: Finally, you create a graph of the market landscape and conclude that there are two companies beating your company in customer satisfaction and market presence. 

After compiling this information into a table like the one below, you consider a unique strategy. To beat out your competitors, you can use localization. Instead of marketing to dentists nationwide like your competitors are doing, you decide to focus your marketing strategy on one region, state, or city. Once you’ve become the known SEO company for dentists in that city, you’ll branch out. 

You won’t know what conclusions you can draw from your competitive analysis until you do the work and see the results. Whether you decide on a new pricing strategy, a way to level up your marketing, or a revamp of your product, understanding your competition can provide significant insight.

Drawbacks of competitive analysis

There are some drawbacks to competitive analysis you should consider before moving forward with your report. While these drawbacks are minor, understanding them can make you an even better manager or business owner. 

Don’t forget to take action

You don’t just want to gather the information from your competitive analysis—you also want to take action on that information. The data itself will only show you where you fit into the market landscape. The key to competitive analysis is using it to problem solve and improve your company’s strategic plan .

Be wary of confirmation bias

Confirmation bias means interpreting information based on the beliefs you already hold. This is bad because it can cause you to hold on to false beliefs. To avoid bias, you should rely on all the data available to back up your decisions. In the example above, the business owner may believe they’re the best in the SEO dental market at social media. Because of this belief, when they do market research for social media, they may only collect enough information to confirm their own bias—even if their competitors are statistically better at social media. However, if they were to rely on all the data available, they could eliminate this bias.

Update your analysis regularly

A competitive analysis report represents a snapshot of the market landscape as it currently stands. This report can help you gain enough information to make changes to your company, but you shouldn’t refer to the document again unless you update the information regularly. Market trends are always changing, and although it’s tedious to update your report, doing so will ensure you get accurate insight into your competitors at all times. 

Boost your marketing strategy with competitive analysis

Learning your competitors’ strengths and weaknesses will make you a better marketer. If you don’t know the competition you’re up against, you can’t beat them. Using competitive analysis can boost your marketing strategy and allow you to capture your target audience faster.

Competitive analysis must lead to action, which means following up on your findings with clear business goals and a strong business plan. Once you do your competitive analysis, you can use the templates below to put your plan into action.

Related resources

Unmanaged business goals don’t work. Here’s what does.

How Asana uses work management to drive product development

How Asana uses work management to streamline project intake processes

How Asana uses work management for smoother creative production

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5 Sources of Competitive Advantage to Drive Growth

• 10 Nov 2020

From chariot races and jousting tournaments to playground games and professional sports, competition is an age-old force that drives humans to evolve and outpace their competitors.

Competition in business is no exception, and it can make or break your organization. While it's often uncomfortable and scary to witness another business profit from your company's weaknesses, competition can also push your business to evolve into a better version of itself.

How do you gain an edge to drive growth for your organization? Here are five sources of competitive advantage to leverage for your business strategy.

Access your free e-book today.

Sources of Competitive Advantage

1. product attribute differentiation.

One way to gain an advantage over competitors is by differentiating your product from theirs. Ask yourself: What makes my offering unique? Why would consumers want to purchase my product instead of my competitors’?

Countless attributes can set your product apart. Here are some to consider:

• Better customer service
• More variety
• Faster or cheaper shipping
• Color and aesthetics
• Brand identity
• Atmosphere of brick-and-mortar locations
• Source of goods

Whole Foods Market is one example of a company that differentiates its products using brand identity, atmosphere, and sourcing. Whole Foods’ competitors are other natural food chains, such as Trader Joe’s and Sprouts Farmers Market, along with big names in the grocery space, including Stop & Shop and Wegman’s.

Whole Foods stands out in the crowded natural foods market as the first and only certified organic national grocery store in the United States. Its brand identity centers on the integrity of its natural and organically sourced foods. It also cultivates an in-store atmosphere that makes grocery shopping feel purposeful and is a step up from some of its competitors' traditional grab-and-go shopping experience.

Like Whole Foods, find the attributes that differentiate your product from others and make them central to your brand’s identity.

2. Customers’ Willingness to Pay

The way you price your products or services can set you apart from your competitors. When doing so, it’s vital to understand your customers’ willingness to pay .

Willingness to pay (WTP) is the maximum price a customer is willing to pay for a product or service. It can be a specific dollar amount or a price range.

By determining your customers’ WTP, you can ensure you’re maximizing profit without turning away customers.

In the context of competition, it’s important to view willingness to pay as a strategic tool. If your customers are willing to pay the same amount for your and your competitors’ products, consider what can be shifted to increase their willingness to pay for yours.

For example, business support system company CSG reports that 47 percent of consumers are willing to pay more for products that are sustainably sourced. Among those consumers, five percent are willing to pay double the price for a sustainable product over a non-sustainable one.

With the knowledge that certain factors could cause your customers’ willingness to pay to increase, you can strategically implement changes that give your business a competitive edge.

Alternatively, if your competitor provides a product at the very top of customers’ willingness to pay, you can gain a competitive advantage by offering a lower price. Tread cautiously, because doing so could start a price war in which you both continue to drop prices to win customers.

3. Price Discrimination

With an understanding of your customers’ willingness to pay, you may find that different types of customers are willing to pay different amounts for your products. In such cases, it can be useful to employ price discrimination, which can be a valuable tool for expanding your company’s reach when competing with others.

“Price discrimination is one of the most common and powerful price strategies for companies,” says Harvard Business School Professor Bharat Anand in the online course Economics for Managers .

In the course, Anand presents several examples of price discrimination, including reduced prices for students, seniors, and veterans. These “special case” prices present an opportunity for your company to earn customers whose willingness to pay may be lower than that of its typical customers.

It’s worth noting that a lower price doesn’t always win consumers over—selecting a strategic price is crucial, but it’s just one factor they consider when determining which product to buy.

4. Bundled Pricing

Another pricing strategy that can prove to be advantageous is bundled pricing.

Bundled pricing is the practice of selling two or more products together in a “bundle,” for which the cost is different than that of purchasing all of the items separately.

Cable companies often leverage bundling. Purchasing voice, video, and data services together often grants the customer a lower price than if they were to purchase the services individually.

“How you think about the logic of pricing should depend on willingness to pay,” Anand says in Economics for Managers . He presents the example of bundling childcare and theater tickets.

“Put two products together that, when consumed jointly, increase consumers’ willingness to pay,” he says. “You might be able to increase the price for both just because it has so much more value for consumers.”

The way you price your products should be strategic, purposeful, and give your business a leg up over its competitors.

5. Human Capital

A company is only as strong as its people. As such, hiring, training, and retaining a team of skilled employees is a competitive advantage for any business.

Putting in the time and care to select outstanding candidates for open positions, train current employees, offer professional development opportunities, and create a culture wherein people feel supported and challenged can pay off.

Gallup reports that business units with highly engaged employees see a 21 percent increase in profit over their less-engaged counterparts.

Employee engagement has been especially important during the coronavirus (COVID-19) pandemic , as many businesses have closed physical offices and transitioned to remote work. By finding ways to effectively engage your team in a virtual setting , you can make them feel supported and empowered from afar.

Positioning Your Business for Success

Differentiating your product, creating a pricing strategy, and investing in your employees can be the difference between rising to the top of your market and being driven out by a competitor.

By taking a strategy course , such as Economics for Managers , you can bolster your skills in these areas and see competition not as a looming threat, but as a catalyst for growth.

Do you want to learn more about positioning your business for success in a competitive market? Explore our eight-week Economics for Managers course and other online strategy courses to hone your skills.

About the Author

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How to Write the Competitive Analysis for Your Business Plan

Back to Business Plans

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on February 19, 2023 Updated on December 12, 2023

Starting a business usually involves countless tasks, and one of the most important early hurdles is writing a business plan . Many entrepreneurs who aren’t looking for funding think they can skip this step, but that’s never a good idea. 

A crucial element of the business plan is the competitive analysis, mainly because only by understanding your competition will your company be able to beat them.

Fortunately for you, this handy guide lays out all you need to know to whip up an excellent competitive analysis that’s sure to give you a serious advantage. 

• What is a Competitive Analysis?

A competitive analysis describes your competitors and their products or services and identifies their strengths and weaknesses and competitive advantages. Writing the analysis involves detailed research and an examination of your competitors, their strategies, and their customers.

The goal is to identify how your business can gain a competitive advantage, usually by capitalizing on competitors’ weaknesses or beating them in a particular area, such as price or customer service.

A competitive advantage is critical to the success of your business, and something investors tend to focus on, so be sure to do your homework to determine yours.

• Steps to Write a Competitive Analysis

Writing a competitive analysis involves several steps.

1. Identify your top competitors

First, identify 5-10 competitors. They can be direct or indirect competitors. Direct competitors sell the same or similar products, while indirect competitors sell different products that solve the same problem. Burger King is McDonald’s direct competitor, for instance, while Chipotle is an indirect competitor.  

A good competitive analysis begins with a brief overview of each competitor.

2. Research your competitors

Next, research those competitors to find out more about what they offer, how they offer it, and to whom. You can get this info on the company’s websites, social media, marketing, and any news and financial reporting.  

Their marketing should help you to identify their value proposition and their target market . It may help to study their marketing through the eyes of a consumer. 

What need do they fill? Who would find their marketing appealing? Where do they advertise? If their ads appear on TikTok, they’re looking to attract a younger market. 

Read customer reviews to learn more about what they’re doing right, and more importantly, areas in which they fall short. You might even want to buy some of your competitors’ products, which would certainly help you with the next section of the plan. 

3. Compare products

Now it’s time to thoroughly compare your competitors’ products to your own, examining the features and uses, as well as pricing, quality, and market placement.  

This should show you how your product stacks up and give you ideas about how to improve it, perhaps with new features or added options.  

4. Identify competitor strengths and weaknesses

By now you should be able to identify the strengths and weaknesses of your competitors. What do they do well? Where do they fall short? In your competitor summaries, list the strengths and weaknesses of each. 

5. Identify competitor competitive advantages

At this point you should know each competitor’s competitive advantage. What is their key differentiator? How does their product stand out? A competitive advantage is usually one of the following:

• Customer service
• Brand awareness
• Technology 
• Convenience
• Rapid innovation
• Unique features
• High quality 
• Corporate social responsibility
• Empathetic marketing
• Eco-friendliness
• Employee expertise

6. Determine your competitive advantage

Now we get to the whole point the competitive analysis – figuring out where your business can gain an advantage. What does your company offer that they don’t? What can you do better than they do? Review the above list of competitive advantages – does any of them jump out to you? 

It could be something your business already does or has, or something you need to implement to gain an edge. Either way, it’s critical that you identify at least one differentiator that’s likely to persuade customers to choose your business. 

• Structure Your Competitive Analysis

As previously mentioned, your competitive analysis should be structured as a series of summaries about each competitor and how your company compares. It might help to create a chart or table to illustrate your main points and findings. 

Each summary should mention the key product features as well as strengths, weaknesses, and competitive advantage. Conclude the plan by explaining your competitive advantage, as well as how you will leverage it and sustain it. 

Sounds like a lot of work, right? And this is just one part of your business plan! 

A great deal of effort and research goes into a good competitive analysis, which highlights the complexity, and the importance, of writing a business plan. It’s a lot of work, but also a fantastic learning opportunity that will help develop informed strategies that shape your business. 

Even if you’re not seeking funding, take the time to write a solid business plan and be sure to dig into the competitive analysis. After all, finding and embracing your business’ competitive advantage is likely to be one of the keys to your success. 

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How to Write Competitive Analysis in a Business Plan (w/ Examples)

Free Competitive Analysis Kit

• Vinay Kevadia
• January 9, 2024

13 Min Read

Every business wants to outperform its competitors, but do you know the right approach to gather information and analyze your competitors?

That’s where competitive analysis steps in. It’s the tool that helps you know your competition’s pricing strategies, strengths, product details, marketing strategies, target audience, and more.

If you want to know more about competitor analysis, this guide is all you need. It spills all the details on how to conduct and write a competitor analysis in a business plan , with examples.

Let’s get started and first understand the meaning of competitive analysis.

What is Competitive Analysis?

A competitive analysis involves collecting information about what other businesses in your industry are doing with their products, sales, and marketing.

Businesses use this data to find out what they are good at, where they can do better, and what opportunities they might have. It is like checking out the competition to see how and where you can improve.

This kind of analysis helps you get a clear picture of the market, allowing you to make smart decisions to make your business stand out and do well in the industry.

After having a brief knowledge of what a competitive analysis is, let’s understand how to conduct it:

How to Conduct a Competitive Analysis?

• Identify your direct and indirect competitors
• Study the overall market space
• Prepare a competitive framework
• Take note of your competition’s strategies
• Perform a SWOT Analysis of your competitors

1. Identify Your Direct and Indirect Competitors

First things first — identify all your business competitors and list them. You can make the final list later, but right now jot down all the competitors including new competitors.

Explore your competitors using Google, social media platforms, or local markets. Then differentiate them into direct or indirect competitors. And then distinguish them into direct or indirect competitors.

Direct competitors

Businesses offering the same products or services, targeting a similar target market , are your direct competitors.

These competitors operate in the same industry and are often competing for the same market share.

Indirect competitors

On the other hand, indirect competitors are businesses that offer different products or services but cater to the same target customers.

While they may not offer identical solutions, they compete for the same customer budget or attention. Indirect competitors can pose a threat by providing alternatives that customers might consider instead of your offerings.

2. Study the Overall Market

Now that you know your business competitors, deep dive into the market research. The research should be a combination of both primary and secondary research methods.

Primary research

It means being involved in getting the information directly from customers or by buying the product itself. Some examples of primary market research methods include:

• Purchasing competitors’ products or services
• Conducting interviews with customers
• Administering online surveys to gather customer insights

Secondary research

The secondary research involves utilizing pre-existing gathered information from some relevant sources. Some of its examples include:

• Scrutinizing competitors’ websites
• Assessing the current economic landscape
• Identifying technological advancements

Have a good understanding of the market at this point before you proceed with the next step.

3. Prepare a Competitive Framework

Creating a competitive framework is like charting a strategic roadmap for your business in the competitive landscape. It includes defining your USPs, market positioning, and various strategies.

Establishing your competitive positioning clarifies where your business stands among competitors.

Plan how to make your product or service stand out by figuring out ways to make it different to stand out, whether it’s through new features, better quality, or excellent customer service.

Craft unique value propositions that resonate with your target audience, communicating the benefits of choosing your offerings. This framework serves as a compass for crucial business decisions, ensuring alignment with your strategic positioning.

By consistently referencing this framework, your business can effectively meet customer needs, fostering satisfaction and loyalty through tailored products, services, and interactions.

4. Take Note of Your Competition’s Strategies

By stepping into your competitors’ research, you will learn what strategies they use to market their products or services and how they engage with their customers.

This will motivate you to do something more for customers and give you an idea of what your consumers like.

Start by analyzing their marketing strategies, such as sales and marketing channels, promotional activities, and branding strategies. Understand how they position themselves in the market and what USPs they emphasize.

Evaluate their pricing strategies and offerings, and keep an eye on their distribution channel to better understand your competitors. For example, here are the pricing strategies of a barber shop and its competitors:

This information allows you to make informed decisions about your strategies, helping you identify opportunities for differentiation and improvement.

5. Perform a SWOT Analysis of Your Competitors

You would love to know the opportunities and threats of your business, right? To be prepared for it when the time comes.

Well, conducting a SWOT analysis is like the same, it is more about getting to know about your strengths, weaknesses, opportunities, and threats. It also helps you understand your competitive edge in the market.

Whereas strengths and weaknesses focus on internal aspects of your company — opportunities and threats examine the external factors related to the industry and market.

Things to include in your SWOT analysis are:

It includes the positive features of your internal business operations. For example, it might include a strong brand, skilled workforce, innovative products/services, loyal customer base, etc.

It includes all the hindrances of your internal business operations. For example, it might include limited resources, outdated technology, weak brand recognition, inefficient processes, etc.

Opportunities

As the name says, it is all about the opportunities that will come your way in the near or far future. It is mainly about the external factors related to the market or industry trends.

For example, it might include emerging markets, technological advancements, changing consumer trends, profitable partnerships in the future, etc.

You should include any external factor that poses a challenge or any risk for your business in this section. For example, it might include intense competition, economic downturns, regulatory changes, or any advanced technology disruption.

These were the elements to help you conduct the competitive market analysis. Let us now go through how to write it in a business plan.

Want to Perform Competitive Analysis for your Business?

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How to Write Competitive Analysis in a Business Plan

1. determine who your readers are.

Know your audience first, because that will change the whole context of your competitor analysis business plan.

The competitive analysis section will vary depending on the intended audience is the team or investors.

Consider the following things about your audience before you start writing this section:

Internal competitor plan (employees or partners)

Objective: The internal competitor plan is to provide your team with an understanding of the competitive landscape.

Focus: The focus should be on the comparison of the strengths and weaknesses of competitors to boost strategic discussions within your team.

Use: It is to leverage the above information to develop strategies that highlight your strengths and address your weaknesses.

Competitor plan for funding (bank or investors)

Objective: Here, the objective is to reassure the potential and viability of your business to investors or lenders.

Focus: This section should focus on awareness and deep understanding of the competitive landscape to persuade the readers about the future of your business.

Use: It is to showcase your market position and the opportunities that are on the way to your business.

This differentiation is solely to ensure that the competitive analysis serves its purpose effectively based on the specific needs and expectations of the respective audience.

2. Describe Competitive Advantage

One of the most important things in the competitive analysis is to know your competitive advantage and gain insight into how you are a better option than competitors.

Your competitive analysis should pinpoint the competitive advantage based on the competitors’ product line or service and market segment, pricing, and other such situations. Some of the points you might include in this section are:

• Product/service differentiation in terms of quality or innovation
• Cost leadership or competitive pricing
• Brand reputation
• Customer service excellence
• Diverse and effective marketing strategy

3. Explain your strategies

Your competitor analysis section should not only highlight what opportunities or threats your business has. It should also mention that what will be the strategies to overcome those threats or capitalize on the opportunities.

It could be for taking a top-notch quality for your products or services, exploring the unexplored market segment, or having creative marketing strategies.

4. Know the pricing strategy

To understand the pricing strategy of your competitors, there are various aspects you need to have information about. It involves knowing their pricing model, evaluating their price points, and considering the additional costs, if any.

One way to understand this in a better way is to compare features and value offered at different price points and identify the gaps in competitors’ offerings.

Once you know the pricing structure of your competitors, compare it with yours and get to know the competitive advantage of your business from a pricing point of view.

Competitive analysis example

Need help writing the competitive analysis section of your business plan? Here’s the barbershop competitive analysis example to help you get started.

1. List of competitors

Direct & indirect competitors.

The following retailers are located within a 5-mile radius of J&S, thus providing either direct or indirect competition for customers:

Joe’s Beauty Salon

Joe’s Beauty Salon is the town’s most popular beauty salon and has been in business for 32 years. Joe’s offers a wide array of services that you would expect from a beauty salon.

Besides offering haircuts, Joe’s also offers nail services such as manicures and pedicures. In fact, over 60% of Joe’s revenue comes from services targeted at women outside of hair services. In addition, Joe’s does not offer its customers premium salon products.

For example, they only offer 2 types of regular hair gels and 4 types of shampoos. This puts Joe’s in direct competition with the local pharmacy and grocery stores that also carry these mainstream products. J&S, on the other hand, offers numerous options for exclusive products that are not yet available in West Palm Beach, Florida.

LUX CUTS has been in business for 5 years. LUX CUTS offers an extremely high-end hair service, with introductory prices of $120 per haircut.

However, LUX CUTS will primarily be targeting a different customer segment from J&S, focusing on households with an income in the top 10% of the city.

Furthermore, J&S offers many of the services and products that LUX CUTS offers, but at a fraction of the price, such as:

• Hairstyle suggestions & hair care consultation
• Hair extensions & coloring
• Premium hair products from industry leaders

Freddie’s Fast Hair Salon

Freddie’s Fast Hair Salon is located four stores down the road from J&S. Freddy’s has been in business for the past 3 years and enjoys great success, primarily due to its prime location.

Freddy’s business offers inexpensive haircuts and focuses on volume over quality. It also has a large customer base comprised of children between the ages of 5 to 13.

J&S has several advantages over Freddy’s Fast Hair Salon including:

• An entertainment-focused waiting room, with TVs and board games to make the wait for service more pleasurable. Especially great for parents who bring their children.
• A focus on service quality rather than speed alone to ensure repeat visits. J&S will spend on average 20 more minutes with its clients than Freddy’s.

While we expect that Freddy’s Fast Hair Salon will continue to thrive based on its location and customer relationships, we expect that more and more customers will frequent J&S based on the high-quality service it provides.

2. Competitive Pricing

John and Sons Barbing Salon will work towards ensuring that all our services are offered at highly competitive prices compared to what is obtainable in The United States of America.

We know the importance of gaining entrance into the market by lowering our pricing to attract all and sundry that is why we have consulted with experts and they have given us the best insights on how to do this and effectively gain more clients soon.

Our pricing system is going to be based on what is obtainable in the industry, we don’t intend to charge more (except for premium and customized services) and we don’t intend to charge less than our competitors are offering in West Palm Beach – Florida.

3. Our pricing

• Payment by cash
• Payment via Point of Sale (POS) Machine
• Payment via online bank transfer (online payment portal)
• Payment via Mobile money
• Check (only from loyal customers)

Given the above, we have chosen banking platforms that will help us achieve our payment plans without any itches.

4. Competitive advantage

5. SWOT analysis

Advantages of a Competitive Environment

Somewhere we all think, “What if we had no competition?” “What if we were the monopoly?” It would be great, right? Well, this is not the reality, and have to accept the competition sooner or later.

However, competition is healthy for businesses to thrive and survive, let’s see how:

1. It pushes you to innovation and improvement

In the competitive environment, a businessperson might get a new idea to bring innovation to the market to keep their products and services trending. This way innovation is promoted.

2. Competition validates your idea

Having a good idea becomes valid when others are developing similar products or services. A competitive market confirms that there is a market for your product and service. It also implies that the expenses of marketing and educating your target customers might likely decrease.

3. Efficiency and cost control

Businesses competing with each other get the motivation to operate efficiently to reduce costs and offer competitive prices. This thing for more sales benefits both businesses and customers.

4. Market responsiveness

A competitive environment forces businesses to be quick to adapt to market changes and customer demands. Companies need to adapt quickly to stay relevant and meet consumer preferences.

Competitive Analysis is critical, but don’t go overboard

Whether you are starting a new business or have an experience in the same field, gaining insight from your competitors will always be beneficial for your business.

Remember: Competitive analysis is essential for your business, but you can not assume all things positive on your side. Be realistic and practical while both conducting and writing this section.

Not only competitive analysis, but the whole business plan is necessary for any business to stay on the path. It will be your guide whenever your business is in any problem.

For assistance, you can visit our business plan writing guide . Additionally, we wish you all the luck in your competitive analysis journey.

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Frequently Asked Questions

Is swot analysis a competitive analysis.

SWOT analysis is a component of a competitive analysis, not the whole competitive analysis. Competitive analysis covers a broad topic of analyzing competitors and knowing the competitive advantage.

What Tools Can I Use for Competitor Analysis?

Executing a thorough competitor analysis requires the use of various tools to collect and analyze data. Here are some tools you can consider:

• Google Alerts
• Social media analytics
• Google Trends
• Google Analytics
• Competitors’ website

What are the 5 parts of a competitive analysis?

The main five components to keep in mind while having a competitor analysis are:

• Identifying the competitors
• Analyzing competitor’s strengths and weaknesses
• Assessing market share and trends
• Examining competitors’ strategies and market positioning
• Performing SWOT analysis

What is the difference between market analysis and competitive analysis?

Market analysis involves a comprehensive examination of the overall market dynamics, industry trends, and factors influencing a business’s operating environment.

On the other hand, competitive analysis narrows the focus to specific competitors within the market, delving into their strategies, strengths, weaknesses, and market positioning.

About the Author

Vinay Kevadiya

Vinay Kevadiya is the founder and CEO of Upmetrics, the #1 business planning software. His ultimate goal with Upmetrics is to revolutionize how entrepreneurs create, manage, and execute their business plans. He enjoys sharing his insights on business planning and other relevant topics through his articles and blog posts. Read more

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How to Successfully Achieve and Sustain Competitive Advantage

Updated on: 5 January 2023

Competitive advantage is at the core of an organization’s performance in markets where there is heavy competition. It sets an organization apart from its competitors and paves the way for higher profit margins, greater return on assets, and accumulating valuable resources.  

There are many ways to achieve a competitive advantage but only two basic types of it. In this post, we will be looking at the concept of competitive advantage and the steps an organization can follow to achieve and sustain competitive advantage through cost advantage and differentiation. 

What is Competitive Advantage

Competitive advantage stems from the value an organization is able to create for its customers. It can come in the form of prices lower than what is offered by competitors for the same benefits or in the form of unique benefits that counterbalance a higher price. In the end, the value created for the customer should exceed the organization’s cost of creating it in the first place. 

This creates a sustainable advantage allowing them to succeed in the market. 

According to Michael Porter, there are two types of competitive advantage; 

• Low cost – where an organization is able to produce its products at a lower cost than its competitors.
• Differentiation – where an organization is able to differentiate its products or service in terms of quality, style, customer service, etc. hence creating superior value to the customers over the competition. 

Cost advantage and differentiation stems from industry structure or how well it can cope with the industry forces that influence its profitability (as introduced in Michael Porter’s five forces model ) better than its competition. 

How to Create and Sustain Competitive Advantage 

Creating a sustainable competitive advantage is a laborious process that needs to be continuously attended to. Adhere to the following steps to ensure you get and remain ahead of the field.   

Analyze Competitors 

To successfully compete in an industry, an organization needs to understand its competitive landscape. This means gathering and analyzing information on competitor strengths, weaknesses, strategies, positioning, value proposition, customer perception, and more.  

Equipped with this knowledge, the right strategy can then be developed to achieve a sustainable competitive advantage.  

Learn more about conducting a competitive analysis . 

Map Competitors into Strategic Groups 

A business mainly competes against other businesses that offer similar products or services and follow the same generic competitive strategy. Such businesses that follow the same competitive strategy in an industry belong to the same strategic group. Identifying the other businesses that fall into the same strategic group as it does, is important to an organization in terms of developing a strategy to achieve competitive advantage. 

Learn more about mapping strategic groups .  

Assess the Most Attractive Position in the Industry 

Based on your strategic group analysis, you now know who your direct rivals are and where they stand. Next, you should articulate your position in the industry to succeed in the marketplace. Defining your competitive positioning will help identify areas of opportunity for your business. 

Michael Porter’s five forces analysis helps assess and evaluate the competitive strength and position of an organization. Porter’s five forces model helps organizations understand the intensity of competition in an industry, its attractiveness, and profitability level. It helps identify where power lies in a business situation and hence assess the strength of an organization’s current competitive position and the strength of a position that an organization may look to move into.

The five forces include, 

• The entry of new competitors
• The threat of new substitutes 
• The bargaining power of buyers 
• The bargaining power of suppliers 
• The rivalry among the existing competitors 

Three Generic Strategies for Achieving Competitive Advantage by Michael Porter 

An organization’s relative position in an industry decides whether its profitability is above or below the industry average. Even within an industry structure that is unfavorable, a well-positioned organization may earn high rates of return. 

Michael Porter introduces three generic strategies for achieving above-average performance in an industry and thus creating a competitive advantage. Generic strategies include cost leadership, differentiation, and focus which is divided into cost focus and differentiation focus.   

The idea behind the concept of generic strategies is that competitive advantage is at the core of any strategy. And in order to achieve a competitive advantage, the organization must make a choice about the type of competitive advantage it wants to attain and the scope within which it will attain it. 

Each of the generic strategies highlights different methods competitive advantage can be achieved.  

Cost leadership  

An organization adhering to this strategy aims to become the low-cost producer in its industry. The sources of cost advantage vary here from industry to industry, and may include proprietary technology, preferential access to raw material, increased individual skills, improved organizational routines, location advantages, managerial effectiveness, and more .  

A low-cost producer must find and exploit all these sources of cost advantage. An organization that can achieve and sustain overall cost leadership, can become an above-average performer in its industry given that it can command prices at or near the industry average. 

By offering their products or services for a similar or lower price than their competitors, organizations following this strategy can maintain a low-cost position in their industry which will, in turn, increase their return. 

A cost leader however needs to consider the bases of differentiation, for if the product is not perceived as comparable or acceptable by its buyers, it will be forced to reduce prices well below its competitors to gain sales. This will in turn reverse the benefits of its favorable cost position. 

Differentiation

An organization that follows this strategy aims to become unique in its industry along certain dimensions that are highly valued by buyers. In this strategy, the organization selects specific attributes that are considered important by its buyers and uniquely positions itself to meet those needs. It is then rewarded for its uniqueness with premium prices. 

An organization can achieve differentiation through the product itself (quality, price, durability), its delivery system, marketing approach, customer service, and many other factors. The logic behind the differentiation strategy requires that the attributes an organization chooses to differentiate itself should be different from the attributes used by its rivals. 

An organization that can achieve and sustain differentiation can be an above-average performer in its industry if the premium price they offer can offset the extra costs spent for being unique. An organization aiming to become a differentiator therefore should adhere to ways of differentiating that lead to a price premium greater than the cost of differentiating. 

A differentiator shouldn’t ignore its cost position for there’s a chance of its premium prices being nullified by the inferior cost position of competitors. To overcome this, a differentiator can reduce costs in all areas that don’t affect differentiation. 

Focus 

An organization following this strategy selects a segment of the industry and tailors its strategy to cater specifically to them while excluding the rest of the market. By optimizing its strategy for a selected group of customers, the focuser aims to achieve a competitive advantage in its target segment although it cannot achieve an overall competitive advantage. 

The focus strategy has two variants; 

Cost focus: here, the organization seeks a cost advantage in its target segment by exploiting its cost behavior  

Differentiation Focus: here, the organization seeks differentiation in its target segment by exploiting the special needs of the buyers

How to Measure and Analyze Competitive Advantage 

The value chain model by Michale Porter can be used as a tool to diagnose competitive advantage and find ways to improve it. The value chain divides an organization into the distinct activities it performs in designing, producing, marketing, and distributing its products and helps identify the linkages among the activities that are central to achieving competitive advantage. 

Porter’s value chain model divides these activities into two categories,

• Primary activities are the activities involved in the physical creation of the product, its sale and transfer to the buyers, and after-sale assistance. 
• Support activities ; these are the activities that support the primary activities and each other by providing purchased inputs, technology, human resources, and various organization-wide functions.  

The value chain analysis helps understand the activities that are most valuable and should be optimized to achieve competitive advantage.The firm can then optimize the primary activities that account for the greatest share of production costs and increase profit margins. The analysis can also reveal the support activities that could use more spending to generate better value.

Analyzing competitive advantage 

Here’s how to analyze your organization’s value chain based on how you want to develop a competitive advantage (cost leadership or differentiation). 

Cost leadership 

In order to reduce the cost of internal business activities, 

• First, identify the primary and support activities involved in developing and delivering products and services. 
• Determine the importance of each activity in terms of production cost. Those activities that consume a large percentage of the total cost of production should be addressed first. 
• Identify the cost drivers behind each activity by analyzing how they use the company resources. 
• Map out the connections between the activities to better understand the roles each plays in the overall value chain. This will allow you to detect problems such as how reducing the cost of one activity would cause the cost of a linked activity to increase. 
• Now that you have understood the cost drivers and the inefficient processes in the value chain, you can make informed decisions on how to improve them and reduce production cost.

Differentiation   

An organization following a differentiation strategy can effectively create more value for the buyer by adding product features and improving customer satisfaction by following the steps below.

• Identify the activities in the value chain that contribute the most to creating customer value.  
• Evaluate the differentiation strategies for improving customer value. Strategies like adding more product features , improving customer service and responsiveness, and offering complementary products can be used to increase product differentiation and product value.
• Identify the best sustainable differentiation. Creating superior differentiation and customer value requires the use of many interrelated activities and strategies. Use the best combination of them to pursue a sustainable differentiation advantage.  

Now It’s Your Turn to Develop a Competitive Advantage Strategy 

To gain a competitive advantage is to attract more customers, make more profit, return more value to shareholders than rival organizations do. A company can effectively gain a competitive advantage in one of two ways; by reducing its own costs and by adding more value to its products or services hence differentiating itself from competitors. 

We hope this post will assist you in developing your own strategy to achieve a sustainable competitive advantage. Got anything to add? Let us know in the comments below. 

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What is competitive advantage? Strategy with examples

Creating a competitive advantage is a long process, starting from the very beginning of forming the company’s culture, mission, and vision. You can likely see the advantages you can create while you are creating the company’s mission, aka the summary of why your company/product exists, which customer problem you aim to solve, and your overall goal.

At the end of the day everything is defined for creating customer value, which generates profit for the business 🤑

The role of a competitive advantage is then to make sure that you are creating and delivering the customer value as you planned.

In this article, we will learn the story of competitive advantage. We will understand the process to analyze our product and market, how we can state our strategy inside the market, and how we can test our options. By the end, we will learn how to sustain a competitive advantage with best practices and real-life examples.

What do we mean by competitive advantage?

Competitive advantage is the capability you have over competitors to create value for customers. The advantage creation process starts from the mission, which usually coincides with the inception of the company in the first place:

The strategy of your company may be different, but each decision you make and feature you define aims to achieve a competitive advantage. If I still can’t emphasize how important competitive advantage is, think about it like this: every goal we want to achieve in our daily lives as product manager serves to create a competitive advantage.

You can say you achieved a competitive advantage if:

• You are offering something different than your competitors
• Your company’s strategy is different than other companies
• You can create more economic value with your product than your competitors

As product managers, our role requires us to carry the company’s mission and objectives into our product. To do this, we have to analyze the market, external competitors, our product, and internal company capabilities. According to our analysis, we create options and select our strategy.

The type of choices we make shapes our goals and how we want to compete with our rivals. The decision we make puts our product into one of two categories and helps shape our competitive advantage:

• Niche product
• Cost advantage product

1. Niche product

When you have a niche product, users prefer your product because it creates a unique output — something they can’t get elsewhere. Users will often pay extra for this.

I love to provide Apple examples in these cases. Apple products offer you premium features and users don’t mind paying the required amount. Think of new iPhones or Mac laptops — the experience they provide isn’t easily replicated by competitors. With a niche product, however, don’t forget there is always a risk of being copied. The challenge for this method is protecting your uniqueness.

To continue with modern examples, think of how Instagram creates a unique platform for sharing photos, the same way that Twitter does with small posts and that Facebook does for longer posts and videos.

When we think of a niche product, I can’t skip the classic example of Coca-Cola. With its unique recipe, no one has been able to replicate or get close to it.

2. Cost advantage product

While making the product, your company should have a production or distribution advantage over rivals. With a cost advantage, you can sell your products at competitive prices.

We can think of big brands for this — because of their high production amounts, they catch a cost advantage opportunity. Walmart can be one of the best examples of this strategy. They offer very low prices and for that reason, people choose to shop there over other stores.

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How to identify and analyze your product’s competitive advantage

Competitive advantage can only be created after a strategic management process. As product managers, we identify the differentiator points and amplify them to create a competitive advantage:

The decision we will make will be between the type of advantage we seek and the target market. I recommend you start with your target market.

If you still haven’t read Start with Why: How Great Leaders Inspire Everyone to Take Action by Simon Sinek, I recommend that you start asking why 🧐 For example, why will users pay for your product and why you are producing this product in the first place?

The second big decision is what kind of an advantage you seek. This is the time to bring your analysis and every input you have to the table. Lower cost or differentiation has its levels like in the picture above. You don’t have to focus on a pure version of these, though, you can mix the customer need and market situation and create an in-between.

As we discussed earlier, to be able to create a competitive advantage, you should select one of the strategies from your analysis. How can you decide which strategy is the best? Your winner which will become your advantage should pass at least three tests:

• The fit test
• The competitive advantage test
• The performance test

1. The fit test

For the first test, we go over the company’s vision, mission, objectives, and company structure. We may know the problem, but our approach to solving it should fit our company culture and internal dynamics. We search for the best fit according to our internal and external analysis.

2. The competitive advantage test

You may find a good competitive advantage, but it is not enough if you can’t sustain it . We mentioned finding an advantage, but now we will test if it is likely to sustain our strategy (like Coca-Cola).

The competitive advantage can be easy to imitate and we may only have a first-mover advantage . This option has a risk if you are investing more and competitors will be able to access the technology behind your product easily. They may even beat you with lower-cost strategies. For these reasons, you should have a good plan to sustain the advantage you created.

3. The performance test

Performance is the profit you will generate with this advantage. At the end of the day, we are seeking profit and the higher value advantage will most likely be our winner. You need to create a value proposition model for each option.

Additionally, you should check the product’s performance, strengths, and the market around it. Use product metrics to see how it’s doing. The performance of the product can be determined with all of those components.

What does it mean to have a sustainable competitive advantage?

In the competitive advantage test, we are checking if the strategy is sustainable or not. Do not worry if you think your advantage will be imitated by your rivals. Most competitive advantages are brilliant ideas and most of them will be copied in a way. Your rivals will find a way to offer a better solution by using your idea.

Sustainable competitive advantage means you earn high profits with this strategy and the money keeps coming in the long term. However, as you can imagine, the more profit you get, the more competition you will create. And that’s not all, this competition will decrease your sustainability in most cases.

If you succeed in creating an advantage that’s hard to imitate and competitors are unable to find your source, you can say that you have a sustainable advantage. In some product markets, competitors may not imitate your product directly — they may offer a better solution and attract your customers. This example can be seen mostly in the service industry.

Coca-Cola has a sustained product strategy as they kept their formula impossible to imitate. They’ve updated their recipe but still have never had a competitor that copied their recipe or flavor exactly. There are other components supporting this success, such as marketing and sales teams.

When you create a good strategy and opportunity, sustaining the success can be done through all sources of the company. However, do not forget that even sustainable competitive advantages may expire in time.

How to strengthen your product’s competitive advantage over time

As a product manager, finding our own (as well as our competitors’) product strengths and weaknesses is our main duty. However, creating a competitive advantage requires a good strategy. You need a strategy to succeed.

What makes a good product manager is the agile modifications in your strategy over time. If you are persistent to continue in the same strategy, know that your advantage is going to go away.

The below list is variables that you need to be aware of to avoid being beaten by your rivals:

• Following the needs shift in the market conditions
• Using the latest technology
• Following the trends and market opportunities
• Knowing every move your competitors take
• Knowing customer needs and changing tastes
• Creating continuous ideas for the product and the strategy improvement

Time is crucial for even the best things. When the time comes, you should be able to point out the elements or strategies that should be abandoned. A product’s strategy includes everything from abandoned features, new planned initiatives, ongoing strategy, and new elements to adapt to changing circumstances.

The company’s strategy acts as a roadmap to our competitive advantage, along with the long-term plan to beat competitors in the market. And to be able to call yourself a good product manager, you should have a good strategy and good execution capability.

As the product manager, you should be able to address the solutions to possible obstacles the company may face. You should have the answers below for long-term success:

• How can we beat our new rivals?
• How can we sustain product growth if our user count decreases?
• How can we adapt if our customer base changes?
• Should we reduce costs and compete using discounting?
• Should we partner with a rival that has a capability we don’t have?
• Should we expand our business into different countries/demographics?
• Should we find new product lines or substitute products?

This continuous questioning process will help you to maintain and strengthen your product’s competitive advantage.

Best practices for leveraging competitive advantage in product development

There are a few practices and tools to help you land your competitive advantage through research and market analysis, including value chain analysis, SWOT analysis, and weighted competitive strength assessment.

Value chain analysis

Product value chain analysis is an effective method to convert your company’s activities into a competitive advantage. This method helps companies understand their own processes better and, with the help of that knowledge, create an awareness of the company’s strengths.

Analysis starts with dividing a company’s process into primary and secondary activities. Primary activities show us what to focus more on the processes that create higher costs and analyze more to decrease them. Primary activities are most likely competitive advantages that we have over our rivals. Secondary activities show us the unnecessary processes so that we can eliminate them to create a cost advantage.

SWOT analysis

Strength, weaknesses, opportunities, and threats are the key elements of this analysis. You can use SWOT analysis to find your company’s competitive advantage options:

• Strengths — Internal strengths are the basis for our strategies
• Weaknesses — Internal weaknesses are our deficient capabilities
• Opportunities — Market opportunities are our objectives that will become the strategy
• Threats — External threats help us create defensive points in our strategies

SWOT helps you to find a new strategy or recommend a new strategic action. You will have the opportunity to use your strengths while you are seizing opportunities and preventing external threats. The created strategic actions will strengthen your competitive advantage or create a shiny new one.

Weighted competitive strength assessment

Weighted competitive strength assessment is different from the other methods and helps decide which strategy to use, rather than helping find options. Each possible competitive advantage gets scored and the one with the most points dictates which creates the most value and helps us beat rivals.

To do this, follow the steps below:

• Prepare a SWOT analysis or make a list of the competitive strengths and weaknesses
• Prepare the market’s key success factors and assign importance and weight to each strength
• Add your competitors to the list and add scores on each competitive strength for all of them
• Multiply the scores with importance weight and sum the weighted strength for each competitor. The overall measure will be the competitive strength of each competitor
• Analyze the result ratings and create a concussion document
• List the competitive advantages and disadvantages of the company
• Create a strengths and weaknesses list for future strategy processes

The company with a higher weighted score will have an overall advantage within the market. The scores will help you to decide what strategy will be better for you and which will not.

Examples of products with strong competitive advantages and how they achieved them

We earlier talked about Coca-Cola and its competitive advantage. The formula of their drink is not their only competitive strength, however. They also have big, successful marketing strategies that help them to achieve being a market leader.

The Coca-Cola happiness machine and Christmas balloons can be some examples. These kinds of marketing campaigns are called guerilla marketing. The purpose is to increase market share with hit-and-run techniques. It may be a big risk for such a big company but reaps a big reward for its strategy. Coca-Cola takes these kinds of risks and collects the rewards.

Another example is WeChat in China, which created a blue ocean strategy with a next-generation product. Their mobile payment application was using QR codes on smartphones. This strategy is called first-to-market or leapfrogging. They found an opportunity and turned it into a competitive advantage. First movers always have the biggest share in the market so they have a strong competitive advantage.

Another strategy to keep your competitive advantage is an investment in R&D. Technology companies are in a red ocean, and to be able to keep their market share, they should be constantly on alert. Apple’s strongest advantage is its continuous product innovation. They are beating their less-innovative rivals with this advantage and increasing their sales and market share.

Google invested $6.8 billion in 2012 to keep its market share and acquisitions. When other companies gain an advantage, they acquire a competitor company into their organization. They have been acquiring new companies since 2010, such as YouTube, DoubleClick, and Waze. There are hundreds of companies they have done this with and the number continues to increase.

Timing is important for strategic moves and competitive strategies. Sometimes, when to make a move can be more challenging than creating new competitive advantages.

I know I said that being a first-mover has a great effect on creating a strong competitive advantage, but there is no guarantee of success in any market. There are always risks when implementing something new.

Let’s do our best to check the data, and know the product and market. Additionally, we should be careful to only implement strategies that are compatible with our company culture. No need to force our team members to do something different than they believe in. After you implement everything I recommended, I can only send my best wishes to you while waiting for your product to become successful 🫶

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Business plan tips: how to identify your competitive advantage

Morgan Beall October 23, 2017

                        Morgan Beall October 23, 2017

At Vancity, we see hundreds of business plans each year from new and aspiring entrepreneurs. And from that experience, we know there are five areas in the business plan that entrepreneurs may not spend enough time on: business objective , SWOT analysis , cash flow projection , competitive advantage and market potential .

In this series, I’m going to share some tips on each of these five areas to get your business plan in top shape. In this post, I’ll cover ways to identify your competitive advantage.

Competitive advantage

What makes your business special? What are you doing differently than your competitors? Why should customers choose your product or service? These are the questions you should ask yourself when determining your competitive advantage. It’s something that often gets overlooked in many business plan s , but understanding your competitive advantage is a huge factor in starting and running a successful business.

https://youtube.com/watch?v=Nid9Frjiz3w

These three steps will help you realize what sets you apart from the rest:

1. Identify your competitors

Start by making a list of your direct and indirect competitors. Not sure who they are? Direct competitors are businesses that satisfy a similar need that you fulfill. Try Google searches and check online business listings in your area. If you are planning on setting up a physical location, walk the community around where your business will be. Even if there don’t appear to be other businesses directly competing with you, there are always other businesses competing for your customer’s time and money. Ask yourself who they are and what products or services are they selling?

2. Find their strengths and weaknesses

Identify what your competitors are doing right. Do a little research to determine what hooks people on their product or service. Next, identify what they’re doing wrong. What’s keeping people from shopping with them? What turns customers off? Make time in your calendar to observe and take notes, or go online and check out website, product and service reviews and see what past customers have had to say.

3. Figure out your “special ingredient”

Lastly, use the information you learned about your competitors to determine your own “special ingredient.” What makes your business stand out? Think about how your values align with your audience, your branding, story, and who you are as a business owner. Consider your customer service, the quality of your products, and where you source your materials from. You may have one very obvious special ingredient, or you may find you have a few special ingredients.

In essence, your competitive advantage is a compelling argument for why a customer should buy your product or service over someone else’s. It’s a vital part of your business plan that helps a financial institution, and your future customers, decide to invest in YOU.

Looking for more support?

Looking for more support to help you complete your business plan? Find out when our next Each One, Grow One small business workshop is happening. The workshop is offered free for members and non-members, and are a great starting place to create your perfect business plan.

Related posts

Business plan tips: how to clarify your business objective, business plan tips: why you need a swot analysis.

• Business plan tips: how to plan a cash flow projection
• Business plan tips: how to figure out your market potential

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Business plan tips: how to figure our your market potential

• Market Research

How to create a competitive business plan

• January 3, 2023

When starting up a business, there are various building blocks you need to have in place for a strong foundation. A profitable idea is one, as is procuring the necessary finances to get everything up and running. Another key element is a well-researched, competitive business plan.

For new entrepreneurs, it can be easy to overlook the importance of a business plan. It might seem like a time-consuming, redundant document, particularly if they feel their idea is foolproof and ready to go.

However, there are many reasons to put together a business plan.

Some will simply see it as a gateway to the funding they require from a bank or other financial institution. In reality, a quality business plan supplies an accurate roadmap, one that points you in the right direction across every stage of running and managing a new business.

One such stage is analyzing the competition .

A competitive business plan is a great educational platform for your entrepreneurial adventure. You can learn more about your competitors, the current market opportunity, where your business fits in, and much more. This guide will explain how to create a competitive business plan, including what areas to focus on and which tools are best for gathering and analyzing data.

What is a competitive business plan?

A competitive business plan is about learning the type of competition your prospective business will face. The other businesses that are vying for the same customers.

Never assume you are out there alone and focus on solely your own path, that is a sure way to fail. Every solid business has to deal with some form of competition. You may not experience this directly during your company’s formative months, but it will always be there, dictating everything from sales numbers to the employees you can attract.

By putting together a competitive business plan, you gain a full understanding of the rivals in your sector. These rivals can take on various forms. For example, a new Italian restaurant could see their main competitor being the long-established pizza joint down the road. An online retail business, however, may be up against multinational organizations, including the likes of Amazon.

The knowledge gained by analyzing the competition assists with constructing a marketing sales strategy . It makes it possible to define how your business will fit into your chosen industry, including available opportunities and how to gain a competitive advantage.

Dive deep enough, and you will also discover the products and services your customer base enjoys, those they avoid, and the types of features they desire in future releases.

Related: 5 Examples of Market Research Branding Done Right

How do you identify competitors?

You cannot create a competitive business plan without knowing your competitors, that part is obvious. What is less obvious is how to identify the competitors you need to focus on.

When operating online, your planned business could be up against a wide assortment of competitors. It is not just local entities that might be on your radar, it may also be national or even global enterprises you are fighting for a market share. A small company might be battling against hundreds, possibly even thousands of competitors.

If you are in that position, trying to analyze all of these is, well, pretty much impossible for a newcomer to the market with minimal resources. Not only that, but it is also not necessary for a competitive business plan.

With that in mind, it is recommended you place the spotlight on 5-10 relevant competitors, both direct and indirect, to produce an accurate, diverse analysis.

What makes a competitor relevant? Of course, they need to operate in the same sector, yet they should also offer similar products and services to what you plan to feature.

With the power of the internet, finding competitors is a breeze. Simply head to Google or Amazon, input keywords that represent your product/service, and see which organizations appear at the top of the search results. These will typically be your main competitors, and not just from a search engine optimization (SEO) point of view!

Related: 3 Ways to do Market Research with Google

What do you include in a competitive business plan ?

You have found a major competitor. They sell products and services that are similar – or even identical – to what you will offer. Yet, simply comparing this aspect is only one step in truly analyzing the competition. You also must focus on elements such as:

• Estimated market share, including sales numbers and revenue.
• The target market you are focusing on.
• Price comparison between your products/services and the competition.
• Customer reviews rivals have received.
• Marketing strategies used by competitors.

Covering aspects like these are essential for getting the most out of your business plan.

Take a product price comparison. If your competitors are, by and large, selling a similar product at a much lower price than you envisioned, you have a few points to consider. Does your product have the added quality to justify the bump in price?

In terms of researching the marketing strategies your competitors use, this can help save your business a lot of time, effort, and finances. You are able to discover the promotional channels that are effective, the ones to put on the back burner, and those which are ripe for experimentation.

The steps to creating your competitive business plan .

You know what a competitive business plan is, how to find competitors, and the type of information to include in this document. However, ample work is necessary to craft a high-quality, effective competitive business plan that will help your company both in the present and future.

To make it a reality, here are the steps you need to take to produce a competitive business plan:

1. Overview of your competitors .

As mentioned above, it is recommended to cover up to ten relevant competitors for your business plan. As well as direct and indirect competitors, a mixture of long-established organizations and fellow startups is advised for a truly diversified analysis.

As the title of this section suggests, it should not delve too deep into the details of each business. This is only an overview of each competitor – the hard work is done later on in the process.

2. Market research .

Now it is time to put in the effort that will ultimately make your competitive business plan worthwhile. In-depth market research comprises numerous components. You need a healthy combination of primary and secondary research. Then with all the information and data collected, this has to be combined and measured accurately.

As for primary market research methods, try out the following:

• Sample the products and services of your competitors
• Perform in-person focus groups
• Get customers to complete an online survey
• Interview customers to gain more insight into their experience

Secondary market research methods can cover the following:

• A study of company records
• Assess the content and structure of competitor websites
• Identify technology and trend developments in your industry
• Factor in the current economic situation
• Read customer reviews

It is true: market research is not something you can do successfully with minimal effort and in just an hour or two. With that said, various tools can help make the task a much more straightforward – and ultimately effective – one. Here are some of our recommendations:

GapScout : It is not all about looking at star ratings. The analysis of customer reviews can reveal a goldmine of information about a company’s products and services. However, discovering the gold within these reviews is time-consuming and tricky. GapScout is the solution.

Our tool, thanks to its specialist AI technology, accelerates the process considerably. It also can identify specific trends, ensuring it uncovers all the valuable data pertaining to a competitor’s product or service.

SEMrush : There are many search engine analysis tools available. One of the best, however, is SEMrush . This can be vital for obtaining SEO-related information like the keywords they use, the backlinks they have pointing back to their website, their most popular web pages, and much more. With this information, you can strengthen your marketing efforts.

SurveyMonkey : If you are on the search for an online survey tool, one of the most popular is SurveyMonkey , and for good reason. With SurveyMonkey, you can create surveys with ease and send these to customers. Once customers complete these surveys, all the data is collated in an easy-to-consume way.

Google Trends : Again, there are countless tools available for discovering the latest trends. Yet if you desire something that combines effectiveness with a price tag that does not go beyond 0, Google Trends is a no-brainer. This free tool allows you to effortlessly find out what users are currently searching for in your industry or topic of choice.

3. Compare and assess .

You have a general viewpoint of the products and services that are offered by the competition. Yet, you cannot simply take a broad approach with such a key element. You need to delve deeper, learning more about each feature and how this compares against what you offer.

With a product, here are the aspects to keep in mind:

• The value it offers
• Number of features
• Ease of use
• Product age range
• Style and design
• Customer support offered

You may not necessarily have to go through all of the above points. You can abbreviate and zone in on the most important features for your competitive business plan. Key aspects are price, features, and overall quality.

It is not just the products or services you want to compare. Another essential factor for any business is marketing, and you should analyze your competitor’s marketing efforts. This includes evaluating their social media, paid ads, email campaigns, product sales copy, and website content.

Again, you want to avoid just a surface analysis of these marketing efforts. You have to dig deep into the promotional strategies of your competitors, answering questions such as these:

• What value are these marketing strategies providing to customers?
• What brand voice are they using?
• What story are they telling with their marketing materials?
• What is the overall mission of the company?
• How successful are they in currently achieving this mission?

Related: 7 Tips when Branding for a Small Business

4. Perform a SWOT analysis .

The nature of a competitive business plan is to study and gather information about your competitors. Nevertheless, you should never lose focus or forget that the plan is built around your business.

This is why a SWOT – Strengths, Weaknesses, Opportunities, and Threats – analysis should be part of your business plan.

With a SWOT analysis, you can uncover your strengths and weaknesses, assess threats, discover possible market gaps, turn any weaknesses into potential opportunities, and more.

Ultimately, it supplies you with a different viewpoint to evaluate your business, giving you additional points to fine-tune your business plan.

The good news: the research you conducted in the previous steps will help significantly with your SWOT analysis.

Related: How to Identify Business Opportunities

5. Understand your competitive position .

With all the work done for your competitive business plan so far, it is time to figure out exactly how your company stacks up against the rest. This is done by understanding your competitive position.

Understanding your position in the competitive landscape gives your business the launch pad to carve out a presence within your target market. This is because it helps you to identify:

• The distinctive differences that make your business different from the rest.
• How you can take advantage of these differences to stand out.
• Your strengths and weaknesses, and how you will work towards the former and hide away the latter.
• The general approach of your business, along with how this will appear to the world.

Position yourself behind a competitor, and you will fail to stand out – which means a lot of lost attention and sales. By recognizing what your business does better than those rivals, you have a selling point, something that will get potential customers to stand up and take notice.

In Conclusion…

Creating a competitive business plan demands a lot of effort on your part. That effort, however, is rewarded in numerous ways. You learn about the competition, you understand what makes them tick, and you can use this information to improve your company’s own standing and long-term future.

A competitive business plan is the best way forward if you want to be successful.

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How to Write a Competitor Analysis for a Business Plan (with AI in 2023)

Competitor analysis is a critical component of any business plan. It helps you understand the landscape of your industry, identify opportunities for growth and differentiation, and craft strategies that take advantage of your competitors' weaknesses.

Here's a step-by-step guide on how to conduct a comprehensive competitor analysis, including how to leverage AI tools like Bizway to make the process more efficient and effective.

Step-by-Step Guide to Performing a Competitor Analysis

1. identify your competitors.

Understanding your competitive landscape begins with pinpointing who your direct and indirect competitors are.

Points to Consider

• Direct Competitors : Those who offer similar products/services in the same market.
• Indirect Competitors : Businesses targeting your customer base with different offerings.
• Utilize market research and customer feedback to list competitors.
• Identify geographical considerations - local, regional, or global competitors.

2. Analyze Their Products/Services

A thorough examination of competitors’ offerings unveils potential areas for differentiation and enhancement in your product/service line.

• Feature comparisons.
• Pricing structures.
• Unique Selling Propositions (USPs).
• Adopt a customer-centric approach to understand how consumers perceive competitors’ offerings.
• Identify gaps in their product/service lines that you could explore.

3. Assess Their Marketing Strategy

Understanding competitors’ marketing approaches aids in crafting a superior, data-driven marketing strategy.

• Target audience.
• Key messages and value propositions.
• Channel effectiveness and presence.
• Use social listening tools to gauge their social media effectiveness.
• Analyze the SEO performance of competitors’ websites.

4. Examine Their Sales Strategy

Investigating sales channels and tactics employed by competitors reveals market penetration strategies and potential areas for diversification.

• Distribution channels.
• Pricing and sales tactics.
• Customer relationship management.
• Secret shop to observe sales tactics and customer experiences.
• Review customer feedback on their purchasing experience.

5. Analyze Their Strengths and Weaknesses

Identifying what competitors excel in and fall short on enables strategic decision-making in exploiting market opportunities.

• Operational efficiency.
• Customer service quality.
• Brand reputation and loyalty.
• Conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) for each competitor.
• Leverage customer reviews and testimonials to gauge reputation.

Using AI for Competitor Analysis

Automated data collection.

AI automates the harvesting of data from myriad sources, ensuring robust research while saving time.

• Use AI tools to scrape and aggregate data from competitors' websites, social media, and customer review platforms.
• Ensure the data is categorized and stored systematically for easy analysis.

Real-Time Updates

AI provides a competitive edge by monitoring and reporting real-time updates on competitor activities.

• Set up AI monitoring for specific competitor activity: product launches, PR releases, or marketing campaigns.
• Ensure to leverage real-time data to inform swift strategic adjustments.

Predictive Analytics

Predictive analytics via AI deciphers patterns and anticipates future competitor moves, positioning your business proactively.

• Leverage AI to analyze historical data for predicting future trends.
• Utilize these insights to anticipate and formulate preemptive strategies.

Using Bizway for Competitor Analysis and Business Planning

One such AI tool that can revolutionize your competitor analysis process is Bizway . Bizway is an AI-powered business planning and research app that can help you research your competitors and write your entire competitor analysis with just a few clicks. Moreover, Bizway can assist you in writing your entire business plan, saving you time and providing you with expert-level planning documents.

With Bizway, you can automate the process of generating clear, concise planning docs across all areas of business, from an SEO Content Plan to User Onboarding Plan. It also helps fill knowledge gaps in areas of business you're not well-versed in.

So, whether you're a solopreneur, a small business owner, or an aspiring entrepreneur still in school, Bizway is the AI assistant you need to take your business planning to the next level.

Gerrard + Bizway AI Assistant

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Bizway is brought to you by Landmark Labs Ltd.

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Home > Business Plan > Competitive Advantage in a Business Plan

Competitive Advantage in a Business Plan

… but we have the following advantages …

A business is creating competitive advantage over its competitors when it can achieve higher the industry average profit margins on its products. This can happen due to a number of factors including cost advantages, and superior product offerings. The main objective of the business is the make the competitive advantage sustainable.

Superior product offerings or differential advantages occur when the business has a product which is perceived by the customers as substantially better than the competitors products.

Even if a competitor were able to make an almost identical product, your competitive advantages should enable the business to win, build and maintain market share in the chosen target market.

Competitive Advantage Examples

Examples of things which might give your business a competitive or unfair advantage include the following:

• First to market
• Barriers to entry
• Available funds and working capital
• Key partnerships and relationships
• Access to expertise, special skills and talents
• Distribution rights

Competitive Advantage Presentation

An investor will look to see if there is a sustained competitive edge, capable of further development, which will allow the business to build and hold market share.

This is part of the financial projections and Contents of a Business Plan Guide , a series of posts on what each section of a simple business plan should include. The next post in this series sets out details of the market share the business plans to win using its competitive edge.

About the Author

Chartered accountant Michael Brown is the founder and CEO of Plan Projections. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.

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