Key Learning Outcomes

  • Understand that a competitive analysis looks at your own business and your competition against a standard set of criteria.
  • Recognise that valuable insights and opportunities can be identified through a competitive analysis.
  • Learn how to objectively analyse the data and use it to gain a competitive advantage.
  • Apply the Absolute Best template when conducting an analysis.


While we will always recommend that you do not spend valuable time worrying about the competition in the general course of your business, it is an essential component of the business planning process. The key is to think about it strategically and objectively, basing your research and analysis on facts rather than on the rumour mill. We are great believers that good competitors are valuable as they push you to do better and often bring additional customers to a market.

For your business plan, you need to think about all of your direct and indirect competitors. First identify businesses that are offering the same product or service as you, these are your direct competitors.  Next, identify those businesses that may be offering a slightly different product or service, these are your indirect competitors as they still offer a choice to your potential customer. For The Best Beauty Salon, the competitive analysis looks at other salons that offer a full range of services and also any other business that may offer a reduced range.

When completing the competitive analysis, look at a set list of criteria so that you can make some meaningful comparisons. The key is to identify what points of difference you have or can develop against your competition. On the competitive analysis template, use your business as a reference and then fill in details on the competitors. You can find information on their websites and Facebook pages, and you can use this along with any first-hand experience you, your family, friends or clients may have had.[wlm_ismember]

Case study

Following is the competitive analysis for our case study client. Use this as a reference when completing your own using the template provided. For The Best Beauty Salon, there are no direct competitors in the prime market area. However, there are a number of direct and indirect competitors in the secondary market area.

Competitive-AnalysisAs you can see, the competitive analysis starts to paint a picture of the competitive environment that The Best Beauty Salon operates in. The next step is to look for any areas where a competitive advantage can be gained or built on. Look for any clear points of difference.

In the above example, The Best Beauty Salon is the only salon in the area that can offer a full range of treatments, as it has a shower available for body treatments. Additionally, they have the most luxurious environment with the most number of rooms, allowing for a higher level of service to be offered. The business now needs to look at what opportunities are available to capitalise on these points of difference.

Along with looking for those areas that offer an advantage, you need to look at any areas that offer a potential advantage for your competition and look at how these may be neutralised. For The Best Beauty Salon, there is a limited opportunity for walk-in trade and when looking at the competitors, Jill’s Beauty Salon offers a high level of service to the secondary target area. Additionally, Jill’s Beauty Salon has used the long establishment to build a connection with the community through sponsorship and networking. Further, with the high level of full-time working residents in the Best Beauty Salon prime market area, they could be losing clients to Face Off Salon or the Nail Spa, which are both open on Sunday. Identification of these potential points of difference for the competition allows for further thought and for potential solutions to be found. For the Best Beauty Salon, they may decide that by opening on a Sunday they neutralise an advantage that Face Off Salon has, while also creating a further point of difference over their nearest competitor, Jill’s Beauty Salon.

Once you have completed your competitive analysis, there is some further research to complete concerning the market share, gap and SWOT analysis. Once these are complete, you will have a much clearer picture of the market that you operate in, allowing you to make some well-considered strategic decisions for your business moving forward. Doing this for the first time will take some effort; however, you will find when you are updating the information each year, the task will become less onerous.[/wlm_ismember]

[wlm_nonmember]Would you like to see the whole article?


Would you like to start driving positive changes in your business? Would you like to see increased productivity and profitability? Of course you would!

As part of our commitment to being a low cost yet highly effective service to help owners and managers of small to medium sized business, we are now offering the first month of your membership for just $1! This means you will get full access to all of the learning articles, tools and tips that our website has to offer and with a commitment to upload at least another 150 learning articles through 2015 there is also plenty more learning on the way. On top of this you will also receive our weekly newsletter to keep you updated on new learning for the week and much, much more!

You can cancel at any time, however, if you see the value in what we’re offering (and we’re sure you will!) your membership will automatically continue after your trial at the low cost of just $19.95 per month. So what are you waiting for? For just $1 you are getting full access to all of our content for 30 days risk-free, so come on and join our community today![/wlm_nonmember]


Success is giving it your Absolute Best!