When you know how to do a competitive analysis, you can create a more informed and effective marketing plan. Understanding the different players and its strategies in the industry helps you clearly see the competitive landscape, where your brand can shine, and what you need to do to ranked over your competitors .
What is a Competitor Analysis?
Competitor analysis looks at the other participants in your industry. You will gauge the strategies these competitors are using, as well as looking at the strengths and weaknesses of their operations in comparison to your own business. The idea behind completing this form of analysis is to properly be able to develop a go-to-market strategy and to stand out from the crowd.
Benefits of Conducting a Competitor Analysis
Competitive research is an essential tactic for understanding what your competitors are doing and what kind of threat they have to the success of your company.
You will better understand the entire market when you know exactly what your competitors are doing and offering. It can also help you figure out how your exact competitors may be, as this is not always clear on the surface.
By researching these companies, you can pick out what they are doing well and what you need to be avoiding. It is an ideal part of the strategic planning process going forward for your business that can help you discover areas where you can position yourself for a win.
You can get a better grasp of the market dynamic which in turn allows you to maximize your effectiveness when targeting customers. You can also figure out what your edge may be and how you can properly set yourself apart from the rest of the companies in your industry. This will provide the basis of your marketing strategy.
Finally, you will be able to identify potential upcoming trends that you can take advantage of when bringing your business to the next level.
What are The Steps to Writing a competitor’s Analysis?
Here are the 4 main steps you should take when writing your own competitor analysis:
1. Set Your Analysis Goals
You need to know your business and set your goals as part of this analysis. Key Performance Indicators (KPIs) are a way for your business to quantify the targets you want to reach.
You should also identify your top competition. This may seem obvious, but it is a crucial first step. Ask yourself, do you even know who are the top competitors in your industry?
If you’re selling products or services online, you’re likely to compete with tens or even hundreds of companies. These companies will all be going after the same selection of qualified leads.
Whether you’re a local, national, or international enterprise, there is likely someone in your company, probably in the marketing or sales team, who will be able to identify the leading competitors quickly. They are also likely to have insight into what differentiates these companies from yours.
2. Researching your competitors
Researching your competitors in both an online and offline setting is also essential. This allows you to see what they are doing, what their pricing is like, and understanding certain aspects that you might implement, into your own business.
Competitive analysis can significantly vary depending on the objectives of what you’re trying to learn. You may perform analysis around a specific area of business, such as competitor’s websites, or take a high-level look at their entire marketing approach.
As you collect data on your competitors, try to keep it organized. A spreadsheet or table can be easily updated and shared, making it easier to use the information you obtain. Within your document, take note of different criteria where you would like to compare and contrast. This could include:
- The revenue and market share and other important financial ratios
- The way the company differentiates itself
- The needs and characteristics of their ideal client
- The size of the company and information about their management
- An overview of customer perception of the company
- A broad strengths and weaknesses description
Additionally, it is impossible to create a competitive analysis report without extensive market research. This involves gathering information to understand customers, identify growth opportunities, and recognizing industry trends.
This research will help you to create a profile of customer personas, which will influence your business and marketing decisions and assist you in planning for shifts that could disrupt the marketplace.
Consider a SWOT analysis that will accompany this data set. This outlines Strengths, Weaknesses, Opportunities, and Threats around both your business and the competition. Defining these factors helps to take an objective look at your operation and can help you to make more informed, smarter choices to future proof your brand.
3. Data Analysis
Once you have gathered all of the relevant data on your competitors, you will need to analyze it. Everything from their marketing strategy to financial figures and business locations will be included in this spreadsheet.
Categorize each company as a primary, secondary, or tertiary competitor. This helps to determine how they relate to your business more effectively.
A primary competition is your direct competitors. They sell a similar product or service to your target market. These are the brands your customers are likely to compare you to. For example, HULU and Netflix are each other’s, primary competitors.
Secondary competition sells similar products but to a different audience. They may focus on the downmarket or upmarket with their products or services. Sticking with a television theme, for Netflix, Live sports streaming service would be a secondary competitor.
Tertiary competition is related to brands that market to a similar audience. However, they don’t directly compete with you or sell the same products. These could be competitors in the future if they choose to expand or potential partners.
4. Understand Your Added Value
Finally, you will need to summarize the strengths and weaknesses of your own business and understand where you can improve.
After performing a competitive analysis, you now have a better idea and understanding of what your competitors are doing.
Identify your key areas of competitive advantage and disadvantage. You should also review the competitive environment of your products or services.
Discuss and summarize the major issues and opportunities that face your company and may require action. Problems to be considered include distribution coverage, market penetration, price revisions, cost reductions, and product line needs.
Competitor Analyses Tips
Here are a couple of important tips that will help you to streamline the process:
You want to periodically update your analysis. As time goes on, the market changes. Your competitors may go out of business or add new aspects to their offering that completely changes the ball game. By staying up to date with the latest development, you will be better positioned to react and take action when needed.
Leverage public companies’ liabilities – unlike private companies, public companies must file and share in public their financial reports, quarterly as well as annually. And you can take advantage of this data and find super relevant financial details for your analysis, similar to the way experienced investors analyze stocks.
You also want to narrow your focus when conducting this form of analysis. You can spend ages looking at every minute aspect of your competitor’s businesses. However, you want to be efficient with your time and only look at the areas that really matter when it comes to your business goals.
Set Action Items – If you’re going to the trouble and effort of a competitive analysis, you need to ensure that you act on the findings rather than allowing them to be buried in a folder, gathering virtual dust on your hard drive. Use the report findings to develop a strategic plan and execute the tactics and unique angles discovered through this process.
Speed Up the Process with the Right Tools– There are lots of available resources to simplify data collection and can be used for competitive analysis. This has made creating a highly accurate, top-notch comparison easier than ever. You don’t need to reinvent the wheel and make life hard for yourself. Use tools and speed up the process while gaining important insights, so you can make informed business decisions.
—
Written by Baruch Silvermann.
Add CEOWORLD magazine to your Google News feed.
Follow CEOWORLD magazine headlines on: Google News, LinkedIn, Twitter, and Facebook.
Copyright 2024 The CEOWORLD magazine. All rights reserved. This material (and any extract from it) must not be copied, redistributed or placed on any website, without CEOWORLD magazine' prior written consent. For media queries, please contact: info@ceoworld.biz
