The bottom line of a competitor analysis is a forecast of their likely future strategies.

In most cases, it is impossible to know what the competitors in your market will do in the future. However, the purpose of this part of the situation analysis is to force you to be proactive in the marketplace, anticipating where competitors are headed and to develop appropriate strategies. Without the forecasting aspect of competitor analysis, you are always reacting to where competitors have been rather than where they are going. The main parts of a competitor analysis are:

■ Determination of the competitors’ major objectives. It is useful to know whether they are pursuing growth (sales volume, market share) objectives or profit-related objectives.

■ Assessment of their current marketing strategies. This includes the segments pursued, how they are positioning the products or services, their value propositions, and the marketing mix.

■ Assessment of their strengths and weaknesses. These can be evaluated on a number of dimensions, particularly the key success factors in the market.

■ Internal analysis of your firm’s strengths and weaknesses relative to the competitors. In other words, how do you match up against them?

 
Source: Pearson Education, Inc., Publishing as Prentice Hall.