Competitor Analysis: What It Is and How to Conduct One
As a business owner, keeping an eye on your competition is important. After all, they may be trying to steal away your customers!
Do you find yourself obsessing over competitors? The more you know about your industry, the more opportunities you can see for growth.
There are many ways to conduct a competitor analysis. For example, some businesses hire consultants to do it for them, while others use market research tools and methods such as surveys and focus groups.
In this post, we will tell you how to do it yourself.
Competitor Analysis Explained
Simply put, competitor analysis is a critical aspect of some businesses. Competitor analysis is the process of assessing the strengths and weaknesses of your competitors in order to gain an edge over them.
Whether you’re a small business owner, or an employee working for a large organization, it’s worth investing time in this form of research. The benefits are numerous, from learning about the competition’s strengths and weaknesses to creating an effective marketing strategy that helps your business succeed.
Why Is Competitor Analysis Crucial For Business Success?
Before you can succeed as a small business, you need to know what your competition is doing. Competitor analysis helps you identify your enemy and develop a game plan for beating them. If you want to succeed in business, give yourself the best chance possible by doing competitor research before competitors do it first.
When conducting a competitor analysis, you’ll ensure your business is prepared for the next step. For example, you’ll identify that a new product or service isn’t a good fit for the market, outline how you can adapt your current strategy if customers reject it, and figure out if your prices are high enough.
This exercise can benefit your business by helping you:
- Identify your business’s strengths and weaknesses.
- Learn about industry standards so you can meet or exceed them
- Discover untapped niche markets
- Differentiate your products and services from others by meeting customer needs better than competitors
- Fulfill customers’ desires and solve their problems better than
- Set benchmarks for future growth.
What to Cover When Doing Competitor Analysis
As you can see, there’s a lot to consider when analyzing your competitors. However, by taking the time to understand these different factors, you’ll be in a much better position to identify opportunities and create a strategy for success.
- Company name and URL
- Company size:
- Industry verticals
- Target market:
- Services offered:
- Social media presence:
One final note: don’t forget to keep an eye on your competitors even after you’ve launched your business. They may change their strategies or introduce new products, so it’s important to stay up-to-date on what they’re doing.
8 Steps to Performing a Competitive Analysis
#1. Identify your REAL competitors.
Your competitors are brands dealing in the same offering you’re into. Knowing your real competition and your competitor’s brands and product offerings is the first step in this Competitor Analysis process. You can visit their websites, read their marketing materials, and talk to their customers. Once you have gathered information about your competitors, it’s time to start analyzing them.
Then, using the information gathered from these lists, make an overall comparison on what your target customers might consider as alternatives.
Here are some key questions to ask when doing a competitive analysis:
– What are your competitor’s strengths?
– Competitor’s weaknesses?
– What do your competitors offer that you don’t?
– Competitor’s pricing strategy?
– What is your competitor’s marketing strategy?
Once you have answered these questions, you should have a good understanding of what makes your company or product unique. This information can help you develop marketing strategies that will make you stand out from the competition.
To find your real competition, do:
- Use your research to identify any high-volume keywords that include terms related to your products and services. For example, if you sell a service involving gardening, keywords like “gardeners” on Google Search would be relevant.
- Grab the URLs of search engine results pages (SERPs) that come up first in search results for these high-volume keywords.
- You can use tools like SEMrush or Mozcast to see what appears to be the top spot competition on Google.
#2. Understand your competitor’s business model. What are their revenue streams? How do they make money?
In order to best understand how our company can better compete in the market, it is important first to understand the business structures of our competitors. Their strategies may vary depending on their size, industry, and target market. However, understanding these structures will give us a good starting point for formulating our own strategy.
If you are a large enterprise or retailer, then it is a good idea to investigate your competitors’ products and branding. This will help you prepare for a competitive edge and make future decisions that cater to your target customers.
#3. Identify their target market. Who are they trying to reach?
Analyzing the competition helps you understand their costs, seasonal business cycles, and unique marketing strategies. Review their social media pages to see how they use hashtags and keyword tags (#bestproduct), which can identify trends among consumers that are either buying or selling a product.
This information will help you determine what kinds of products or services your competitor might be selling or what new opportunities exist if you were to launch a new product or service in this industry.
#4. Analyze their marketing strategy. How are they reaching their target market? What channels are they using?
Running a sales analysis of your competitors can be a bit tricky. Uncovering sales process information like channel use, pricing and discounts, salesperson involvement in the buying process, and more will help you determine how competitive the sales process is. Look for publicly held companies’ annual reports online, or try to find information from privately held businesses from other public sources before you go exploring.
#5. Study their website. What does their website say about their business? How is it designed?
A website can tell a lot about one’s business success. If you want to learn more about a company, it’s always a good idea to study its website. This can give you some valuable insights into the company’s values and how they operate.
For example, if a company’s website is very basic and doesn’t have much information, it could be a sign that they’re not very invested in their online presence. On the other hand, a well-designed website with useful information could be a sign that the company is professional and takes its business seriously.
Of course, there are many other factors to consider when trying to learn more about a company, but their website is definitely a good place to start.
#6. Conduct a SWOT Analysis of your competition.
SWOT analysis is a highly effective tool that can help create a complete picture of the situation you’re analyzing. It doesn’t matter what industry you’re in, or what business you’re in; SWOT analysis can be used as part of every single strategy session.
You need to be able to present yourself and your products in an industry-relevant and complete way. A SWOT analysis, or strengths, weaknesses, opportunities, and threats (SWOT) diagram, is a common tool used in business strategy and decision making that can help you do just that. The process starts with listing everything you know about your business’s competitors and their successes (strengths), weaknesses, and opportunities. Then you devise a strategic plan to address them by building on your strengths while concealing your weaknesses.
#7. Research their social media presence & feedback. What are they saying on social media? How often are they posting?
There’s nothing more gratifying than a glowing review about your service, so read as many as possible. In addition, we recommend visiting competitor websites and reading customer reviews, especially if they have social media accounts. Look for answers to common questions about their services. If they’re communicating directly with customers, read their tweets and Instagram posts to get a better understanding of what’s happening in their business.
Understanding how your competitors respond to critique is a great way to learn about what customers like and dislike about their service. It might help you decide whether you want to work with them in the future or avoid working with them altogether.
Online reviews are an important source of feedback for businesses. While some may prefer to speak with customers and develop relationships directly, many companies rely on online reviews as a way to measure their success and help prospective customers decide which brands to choose.
#8. Talk to their customers. What do they like about the business? What do they not like?
Make sure you’re reading reviews and comments on your competitors. Pay attention to what people like, don’t like, and why they had a bad experience with that company. Don’t just take their word for it because they can be biased toward their own product – make sure you understand their situation before reaching any conclusions! Once you have a better understanding of what the customer experience was like, reach out to them directly through social media or in person.
You can show them you care about how they feel by providing excellent customer service through your business. It may seem small, but if some customers have a poor experience with one competitor, chances are that others will think twice about using that company too.
By establishing a relationship with your customers and being research-based, you’ll be able to gain valuable insight into their needs and help them solve problems. A business model based on relationships will benefit both you and your customers.
Do I Need To Analyze All Of My Competitors?
No, you don’t need to analyze all of your competitors. In fact, you probably don’t even need to analyze most of them. Just focus on the ones that are the closest to your market share or that pose the biggest threat to your business. The rest can be ignored for the most part.
Of course, you’ll still want to keep an eye on them and see what they’re up to. But don’t spend too much time or energy on them. Instead, just focus on your own business and make sure you’re the best you can be.
How Often You Should Perform A Competitive Analysis
There is no one-size-fits-all answer to how often you should perform a competitive analysis. The frequency will depend on your industry, your business goals, and other factors. In general, however, it is a good idea to perform a competitive analysis at least once a year.
If you are in a rapidly changing industry, or if your business goals are particularly aggressive, you may need to perform a competitive analysis more frequently. On the other hand, if your industry is relatively stable and your goals are more modest, you may only need to perform a competitive analysis every few years.
No matter how often you perform a competitive analysis, it is important to keep up with changes in your industry and your competition. By doing so, you can ensure that your business remains positioned for success.
How Competitive Analyses Help Small Businesses
The competitive environment for small businesses is changing quickly, so it’s important to stay abreast of what’s going on in your market. In fact, regular competitive analyses can help small business owners set strategic goals and make adjustments as necessary to stay firmly established in their markets.
A competitive analysis is an exercise in understanding where you stand compared to the competition and how your decisions affect that position. Running a competitive analysis can help small businesses figure out where they stand on specific market factors, such as price, product quality, and delivery times. This information can inform future decisions about the products or services that you sell or offer.
By understanding your competitor’s business, you can start to identify areas where you can improve your own business. For example, if they are targeting a different market than you, you may be able to reach more customers by targeting the same market. Or, if their website is poorly designed, you can create a better website that will attract more customers.
Thus, if you want to stay ahead of the competition, you need to continually monitor their activities and adjust your own marketing strategy accordingly. Stay flexible and be willing to change your plans on the fly in order to stay one step ahead. With a little hard work and dedication, you can make your business the top choice in your industry.
Even though you’re already performing your best, keep in mind that your product or service could be best by another brand, but it could also be much better! If you want to take your business to the next level and really stand out from your competitors, do so by focusing on making your customer experience better than any other that is available.
Now that you know how to do a competitive analysis, it’s time to put your skills to the test.