The purpose of the Competitor and Issues Analysis section of your marketing plan is to explain in detail the external challenges and opportunities your business may face. Preparing the analysis will take time, but you must be thorough. You don't want to head down one path, only to find later that you neglected to scope it out properly.

Benefits of preparing a competitor and issues analysis:

• You'll discover your company's competitive advantage-the reason customers do business with you instead of your competition. Then you'll be able to communicate your competitive advantage effectively to win additional customers.
• Analyzing current issues and your competitors' offerings may spur ideas for innovative improvements to your own products and services.
• You might find that there are some categories of customers whose needs are not being met. For example, if you plan to prepare and deliver gourmet meals, you may discover that a particular part of town is not currently being served. If you can satisfy unmet needs, you'll develop a market niche.
• By observing the actions of your competitors, you might learn more about your market. For example, does a successful competitor offer reduced prices during a particular season? If so, what might that tell you about your market's spending habits?
• If you find that your market is saturated with capable competitors, you can avoid the costly mistake of starting a business without adequate demand. You can then redirect your efforts toward something that will pay off instead. (For example, your research may tell you that there's an ample number of thriving gourmet meal services in your targeted market area already.)

Competitor Analysis
Make certain you address the following in your competitor analysis:

• Names of competitors. At first glance, this may seem like an exercise in list-making. Obviously, if you sell ice cream, your competitors include other ice cream vendors. However, you're also competing with other dessert treats offered by grocery stores as well as other items competing for consumers' discretionary funds. So, list all of your competitors and be sure to include information on those that might enter the market during the next year.
• Summary of each competitor's products. This summary should also include their location, quality, advertising, staff, distribution methods, promotional strategies, customer service, and so on.
• Competitors' strengths and weaknesses. It's important to see your competitors' strengths and weaknesses from your customer's viewpoint, not yours. State how you will capitalize on their weaknesses and meet the challenges represented by their strengths.
• Competitors' strategies and objectives. This information might be easily obtained by getting a copy of their annual report. Probably, however, you will need to do some detective work or conduct an analysis of many information sources to understand competitors' strategies and objectives.
• Strength of the market. Is the market for your product growing sufficiently so there are plenty of customers for all market players? Or, is the market so tight you are selling primarily to your competitors' customers? If the latter, you need a strong competitive advantage.

Ideas for gathering competitive information:

• Search the Internet (read Researching on the Internet for more detail about this powerful tool)
• Make personal visits to your competitors' locations. Observe how employees interact with customers. What do their premises look like? How are their products displayed and priced?
• Talk to customers. Your sales staff is in regular contact with customers and prospects. Your competition is also in contact with these people. Learn what your customers and prospects are saying about your competitors-and about you, too!
• Analyze competitors' ads to gain information about their target audience, market position, product features and benefits, prices, and so on.
• Attend speeches or presentations made by representatives of your competitors.
• Visit competitors' trade show displays. View them with a critical eye and from a potential customer's point of view. What does their display communicate about the company? Even observing which trade shows or industry events competitors attend provides information on their marketing strategy and target market.
• Look for print competitive information sources such as:
  • General business publications, marketing and advertising publications
  • Local newspapers and business journals
  • Industry and trade association publications
  • Industry research and surveys
  • Computer databases (available at many public libraries)
  • Annual reports
  • Yellow Pages

Make certain that you keep the information you gather organized. One effective method is to create a file for each competitor. As you run across items like marketing literature, tips from sales people or customers, or articles that mention a competitor, place it in their file. Then, when you're ready to conduct or update your competitor analysis, you will already have some relevant resources gathered and ready to use.

Issue Analysis 
Your business will face obstacles to success in addition to those posed by the competition. Half the battle of overcoming these external obstacles is understanding them. And a major part of the key to benefiting from "lucky breaks" is being on top of developments and events that can be used to your advantage.

Threats and Opportunities (from Outside) 
Identify, and rank by order of importance, the threats or opportunities your business may face from outside influences. Threats and opportunities come from a variety of sources, including:

• The economic outlook of your market's economy. Are you starting your business in a healthy economy? If not, can your product thrive in the current conditions?
• Product innovations. How will changes made to the products of your competitors affect you?  What's happening with products that are complementary to yours? (If you write software that runs on Windows, PCs would be complementary products to you.)
• Technological advancements. What changes in technology will impact you?
• Environmental issues. Is your product, and your method of producing it, earth-friendly?
• Government regulations. What impact does complying with government regulations have on your business? Is there any pending legislation that may impact you?
• Barriers to market entry. Are there high or low barriers to market entry in your field? What would it take for a competitor to start a business in your field? Could a competitor start up overnight (low barrier) or does you business require special knowledge, expensive machinery, etc. (high barrier)?   

Strengths and Weaknesses (inside your company)
Identify internal strengths and weaknesses of your company. For example, your education, experience and reputation in your area of expertise are most likely strengths. A weakness, if you plan to have employees, might be a lack of supervisory experience.

Summarize the Main Issues in an Issues Statement 
Finally, determine which issues are most significant and integrate them into an Issues Statement. Use your carefully researched Issues Statement as you set your marketing objectives and strategy. Here are examples of an Issues Statement:

While there are few barriers to offering public relations counseling to small business owners (a telephone and computer is all that's required), the 30 years combined experience of the partners of Miller Public Relations is its competitive advantage. No other PR agency in the area Miller serves offers a comparable depth of experience.

To compensate for the owner's lack of experience and interest in supervising employees, a professional manager is being recruited and should be in place by November.

References:
• Small Business Administration

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