How to do a Competitor Analysis
If you’re considering doing a competitor analysis, this post has everything you need to know. Is it worth it? How difficult is it to manage? Read on to find out all the necessary information about competitor analysis for businesses in 2021.
What is a Competitor Analysis?
In short, competitive analysis is a marketing strategy where you identify your major competitors and research their marketing strategies, sales, and products. By running a competitive analysis, you can create solid business strategies to help you to gain an advantage over your competition.
Competitive analysis will help you learn how your competition works; the ins and outs of their operation. This will allow you to identify any possible opportunities there are for your company to out-perform its rivals. It will also enable you to stay on top of business trends and ensure your product or service is meeting (or exceeding) the industry standards.
Why do a Competitor Analysis?
There are several benefits to doing a competitor analysis, and it is one of the more profitable strategies to consider. Firstly, competitor analysis will help you identify your product or services value proposition and what makes your business different from your competitors. This can help with all future marketing efforts.
How to Perform a Competitor Analysis
Although there are companies out there who will run a competitor analysis on your behalf, they won’t do this for free. It’s also not a difficult thing to manage.
We have broken the process down into eight easy-to-follow steps, which are:
#1 Determine Who Your Competitors Are
Firstly, you need to identify who you are competing with in order to compare accurate data. This is a fairly straightforward process that is best to begin by dividing your competitors into two categories: Direct and Indirect.
A direct competitor is a company offering products or services similar to yours and within your geographic area. An indirect competitor will provide products or services not the same as yours but that could fill the same consumer needs. I.e., if your business provides a soft furnishing cleaning service, an indirect competitor will retail the products for this.
#2 Identify The Products Offered by Your Competitors
The heart of every business is its product or service. This step involves analysing the complete product line of your rival and looking at the quality, retail price, and their manufacturing logistics. It’s important to take note of any discounts they offer or special buys.
If you also offer services, then look at your competitor’s services range – what exactly it includes, and if there is something they’re doing that you aren’t, such as same-day services or a discount for multi-services or friends and family recommendations.
Some things to question are:
- Are they a high or low-cost provider?
- What’s their market share?
- Who is their target audience, and what are their demographics?
- Is there a pricing difference for online and offline sales?
- What is the business’s USP? (Unique selling point)
- How are they distributing their products or services?
#3 Research the Sales Tactics and Results of Your Competitor
Running a sales analysis can be tricky. Here are the things you want to find out:
- What their sales process looks like
- The channels they use to sell-through
- Whether they have more than one location, and if this gives them an advantage
- If they are scaling down or expanding
- Whether they have any partner reselling programmes
- Why consumers don’t return there – look at online reviews or social media for this one.
- Their annual revenues and total sales volume
- If they discount products or services regularly, this could indicate things not going so well for the company.
Find out the information above, and you’ll have a comprehensive idea of what you need to do to be one step ahead of your rival businesses. This isn’t an easy or quick process, but it is the most essential. A lot of the information you can find online for publicly held companies; however, this is a little more challenging for privately owned businesses.
Don’t be afraid of approaching your competitors directly and ask some open-ended questions. You could come up against a brick wall, or you could receive honest feedback about what customers find the most appealing and what could be turning them away.
#4 Look at the Pricing, Perks, and Offers of your Competitor
Some key factors contribute to you pricing your products appropriately, and one of those factors is what your competitors are charging for a similar product.
Is there a gap in the market for an affordable product where you can still make a profit, consider why the gap is there, whether you can fill it and if it will be worth it. Alternatively, if you feel that your products are superior to those of your competitors, are you able to justify a higher price point?
#5 Research How Your Competitors are Marketing Their Products
Look at the websites of your top competitors to see their marketing efforts. There’s a good chance they’re missing something. Or, they may have one strategy that is doing particularly well, such as a regular blog, podcasts, celebrity endorsements, or published case studies.
#6 Take a Look at the Content Strategy of your Competition
Content is a significant player in an online business’s success. When right, it can make a company; when wrong, it can certainly break them. Look to see how good their on-page content is. Is it grammatically correct, is it informative, engaging, and relevant? How often are they updating their content in blog or press release formats?
#7 Stalk Their Social Media
Social media is a great way to see how consumers really feel about a business, as well as how that business interacts with its clientele. Of course, a social media platform can be managed by a marketer, but it is much more transparent than a brand’s website.
Here, consumers can post what they really think of the products and services and explain their reasoning without the brand being able to delete or censor this content.
#8 Perform a SWOT Analysis
A SWOT analysis will allow you to learn the strengths, weaknesses, opportunities, and threats of a competitive business. Here are the questions you should be looking for the answers to with your SWOT analysis:
- What is the company doing well with?
- Where do you have the advantage?
- What’s your competitor’s weakest area? (shipping costs, delivery delays, high prices, after-sales service?)
- How are they a threat to you?
By doing a competitor analysis, you will be able to see what your competitors are doing correctly, and this is critical information for ensuring your business stays relevant. It will also inform you of where your competitors are falling short, which is equally vital information to have.
If there is a gap in the market, your business can fill it; if your competitor is missing something, you can step in, etc. Competitor analysis provides a benchmark against which you can measure the growth of your business.