What is competitive analysis, and why is it crucial to your brand?
Regular competitive analyses can be extremely beneficial to businesses from any industry, large or small. They offer insights into opportunities for innovation, growth, and promotion, and provide you with the guidance you need to consistently outshine your competition.
After all, no matter how innovative your product or service may appear to be, there’s a good chance someone else is already selling something similar. While having competitors in your market is a good thing (it shows demand for your solution), it also means you need to find ways to stand out.
When you conduct a competitive analysis, you can define the strengths and weaknesses of other businesses, and use those insights to fuel your own success.
What is Competitive Analysis? An Introduction
A competitive analysis, also known as a competitor analysis, or competitor research, is the process of identifying core competitors in your industry, to learn from their tactics.
With a competitive analysis, you analyze your competitors, looking at the products, unique selling points, marketing strategies, target audience, and sales efforts. The information you gather can act as a point of comparison when you identify your own company’s strengths and weaknesses.
Plus, the information you gather from your competitors can help you to find new, more effective ways of reaching your target market, and increasing revenue.
Why do a Competitive Analysis?
Learning how to effectively identify your competitors, their strengths, and weaknesses, and the opportunities available to your business can be complex. However, a competitive analysis can be an extremely useful tool for increasing your market share. Used correctly, it will:
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- Help identify your competitive advantage: Analyzing the strengths, weaknesses, opportunities, and threats of competitors in your landscape will help you to define what makes your products and services unique. This can help to improve the results of your marketing messaging and sales efforts.
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- Inspire your strategies: Learning what your competitors are doing right to engage and convert audiences in your niche can be extremely useful. It provides inspiration for your own campaigns, and can guide you towards new methodologies. Plus, a competitor analysis can show you areas where your competitors are struggling, so you can swoop in.
- Provide useful benchmarks: Examining the competitive landscape provides you with benchmarks you can use to measure the success of your own products, services, marketing, and sales strategies. This can help you to measure growth.
How to do Competitive Analysis
Knowing what to focus on when conducting a competitor analysis can be complex for new business owners. There are various guidelines out there that can walk you through the basics of running your own competitor evaluation. While strategies vary, most will include the following steps.
Step 1: Identify your Competitors
The first step in learning how to do a competitive analysis is determining who your competitors are. Think about where your customers would turn for a solution to their problems if they weren’t buying from you. A good option is to search for your product name or category in Google, or use keyword research tools like SEMRush and Ahrefs.
Make sure you pay attention to various different types of competitors, such as:
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- Direct competitors: Companies that sell a similar product or service to you, and target the same target audience. For instance, Slack is a competitor to WhatsApp, Microsoft Teams, and other common messaging apps.
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- Indirect competitors: Companies who sell a slightly different product or service to you, but target a similar audience. For example, Dominos is an indirect competitor to McDonalds, Wendy’s, or Burger King.
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- Replacement competitors: Organizations that exist outside of your product category, but serve a similar need. For instance, motorcycle companies don’t operate in the exact same industry as car manufacturers, but they serve a similar need (transportation).
Step 2: Gather Crucial Information
A significant part of any competitor analysis process is research. You can guide your research strategy by using a competitor matrix, or competitor grid. This is a table or spreadsheet you can use to organize all the data you collect about each essential competitor.
When conducting your research, you’ll need to gather information about:
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- Competitor products: What products or services do your competitors offer? What’s their market share, and what pricing strategy do they use? How do they distribute their products and services, and how to they differentiate themselves from other solutions?
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- Company data: How long has the company been in business, how successful are they in terms of profit and revenue, and how large is the business? Do they have a global reach, or are they focused on a specific location?
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- Sales tactics: What methods do your competitors use to earn revenue? What does their sales process look like, and what channels do they sell through? What pricing structure do they use, and how involved are salespeople in the buyer journey?
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- Marketing strategies: How do your competitors market their products? Do they use webinars, videos, podcasts, blog posts, or social media posts? How committed are they to sharing press releases, case studies, and marketing campaigns?
Step 3: Profile Your Competitor’s Target Customers
Examining a competitor’s customers is an excellent way to determine whether they’re trying to reach the same audience as you, and whether there are any gaps you can take advantage of. Take a look at your customer’s mission statement, the messaging they use, and who they interact with on social media. You might be able to see some examples of current customers in their case studies too.
While you’re defining your competitor’s target audience, it’s also worth looking at how they’re committed to serving those customers. Remember, 59% of US consumers will leave a brand after a few bad experiences, so excellent CX is crucial.
Look at how your competitors support their target audience through the buyer process. Pay attention to the feedback and reviews they receive online, and use this information to help strengthen your marketing messaging.
Step 4: Assess The Marketing Mix
The “Marketing Mix” otherwise known as the Four P’s can provide useful insights not just into your competitors, but how you can gain a competitive advantage over other brands. Understanding your competitor’s marketing mix means not just looking at their content marketing and social media efforts, but their full go-to-market strategy. Look at:
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- Product: What are the features of the product or service they sell, and what are the core benefits your competitors consistently draw attention do in their campaigns?
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- Price: What kind of pricing model does your competitor use? Are they offering any specific offers or deals, such as free shipping or discounts? 43% of customers are willing to pay more for something as simple as faster delivery.
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- Promotion: How do your competitors spread the word about their products and services? What advertising channels do they use? (social media, content marketing, print advertisements, email, etc). Do they use specific technologies, like a certain ecommerce platform, or automation tools?
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- Place: Where do your competitors sell their products? Are they online only, or do they have their own brick-and-mortar locations? Do they sell through channel partners and third-party marketplaces?
Step 5: Perform a SWOT Analysis
Finally, once you’ve gathered as much information as you can about your competitors and their strategies, the next step is a SWOT analysis. SWOT stands for strengths, weaknesses, opportunities, and threats. Your SWOT analysis should compare the activities of your competitors to your own marketing and sales methods.
Ask yourself how you compare in terms of:
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- Brand positioning: pricing, target audience, go-to-market strategy
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- Marketing strategy: channels, messaging, ecommerce website etc
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- Customer experience: service, support, and solutions for customers
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- Pricing strategy: price options, deals, and offers
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- Product solutions: features, services, or unique benefits offered
Be as honest as possible with yourself when you’re assessing your competitors. Don’t overlook their strengths, or downplay your weaknesses. This will give you a more comprehensive view of how you can improve your sales and marketing strategies, and increase results.
The Power of a Competitor Analysis
Completing a competitive analysis is an excellent way to ensure you’re positioning yourself effectively in your chosen market, and leveraging the right sales and marketing methods. However, competitor analysis isn’t something your company should only do once.
Your competitors and your market will constantly change over time. That’s why it’s so important to keep a close eye on the landscape. Pay attention to up-and-coming brands in your industry. Leverage social listening and monitoring tools for customer insights, and track press releases and news reports relevant to your industry.
If you can stay one step ahead of analyzing the competition, you’ll also be able to improve your chances of outshining them in the future too.
Need help learning how to analyze and beat your competitors? Join the Hard Skill Exchange today to get advice and guidance from leading sales and business experts.
