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Discover the steps to follow to ask yourself the right questions before carrying out your market research. You can read our initial advice about competitor analysis on this blog and download the complete guide in .pdf format

Market research : 4 stages of competitor analysis to carry out successful market research


Episode #4/9 – In this episode we are going to tackle step 10 of market research – competitor analysis

“I have no competitors”.

We’ve heard this a thousand times. A thousand times, entrepreneurs have assured us that their idea didn’t face any competition and we have contradicted them a thousand times.

Competition is not necessarily on your doorstep. Nowadays it is worldwide, globalised, and can sometimes be hidden within complex value chains whose mysteries are difficult to penetrate.

Step A: Identifying direct and indirect competitors

Market research : Identifying direct and indirect competitors
At this stage, reasoning in terms of needs can be useful. Your product may well be innovative and have no exact match, but it definitely has indirect competitors. Competition with a substantially different product or service, but one that responds to the same need.

Let’s take a trivial example: people can quench their thirst with any number of drinks. An entrepreneur who is launching a new drink will therefore be up against all other drinks manufacturers, even if his or her drink is unique (we encountered exactly this kind of case in 2015).

Step B: Defining the competitor analysis criteria for your market research

Starting with the data you collected, it can be useful to draw some first conclusions: who are your main competitors, the ones who could make your life difficult on your immediate market?

At this point, an analysis of Porter’s Five Forces will be necessary, allowing you to clinically identify the competitive forces acting on the market.

Read more information about the Porter’s Five Forces Framework

In order to fully understand your competitors’ strengths and weaknesses, you may want to have a mystery shopping phase.

You pretend to be a customer and gather valuable information about the quality of the service, the price (which may be different to official prices as we recently saw during an operation about retirement homes), etc. All this information will allow you to better position your offer and better match consumer expectations.

Step C: Looking for and finding information about your competitors

To perform market research, you will obviously need information about your future competitors.
Fortunately, in the Internet age, this kind of information is much more easily accessible than it was 20 years ago. Your competitors’ websites will be the perfect place to start and you can gather a great deal of information there.

Next, it is essential to check their financial health on the basis of official information (commercial courts, national data banks…).

A third method is to pretend to be a client in order to collect information. This is what is known as mystery shopping.

Step D: Benchmarking (comparison with the competition)

The best way to analyse the competition is to create a large Excel table and enter your analysis into it.
You can specify the different factors to be analysed in the different columns (turnover, price, number of associates, type of customers, employees, geographical markets served, as well as all other, more specific criteria relevant to your research). Assign one line to each competitor you have identified and now all you have to do is fill in the cells in the table.

An important criterion for retail businesses and in a general way for any market research that involves physical points of sale is what is called the catchment area. This is the geographic zone in which the majority of customers can be found. The area can be more or less large depending on the type of point of sale: a radius of a few hundred metres for a fast food outlet, or hundreds of kilometres for destination businesses.

Our market research for the N5 wine bar in Toulouse demonstrated that customers were sometimes willing to travel 500 km to visit what was voted in 2017 the best wine bar in the world.

Read our article about qualitative market analysis

The next episode will deal with a truly vital stage of market research. Read our advice about qualitative market analysis.

We will begin by laying the groundwork and answering some frequently asked questions (in Episode 5) before getting into more detail about performing a qualitative interview (in episode 6).