Do you know your competitors? What’s their marketing strategy? If your knowledge of competitors is limited to following their social media or their websites, you’re missing out on essential data that could help you grow your business. And this is where competitive analysis can help.
The world is changing in every possible way imaginable; the way we conduct business now is faster and more aggressive than ever before. So we need to know who our competitors are and how different their strategy is from ours.
In this article, we’ve gathered all the essential information about competitive analysis. Specifically, it will help you conduct a thorough competitive analysis so that you can learn everything about competition and create a better strategy to reach your goals.
What is Competitive Analysis?
Let’s start with the definition of competitive analysis.
A competitor or competitive analysis is the process of researching direct and indirect competitors, their sales, marketing and business tactics, and their products to learn more about their strengths and weaknesses. The primary reason for conducting a competitor analysis is to understand the brand’s own strengths and weaknesses and use that data to improve the business and marketing strategy and make correct business decisions.
Why is Competitive Analysis Important?
1. It Provides Data to Improve the Business Plan and Strategy
A competitive analysis allows you to analyse your competitors’ strategies to help you create a better strategy and to avoid wasting time on ineffective methods. The best part about this particular advantage is that you will gain insight into what you should focus on in order to maximise results. This is extremely important because it will help you save time and money in the process.
2. It’s Essential When Launching a New Product
Sometimes the biggest issue with a product launch is that the strategies behind it are not ideal. This could lead to substantial financial losses. Being aware of what is happening in your niche will help you start a better campaign and reach your goals. This is the best way to create a marketing strategy that will be viable for your business.
3. It Helps to Reposition Your Brand
When it comes to branding, nothing can be more important than being able to understand what is happening with your competitors and how they are positioning their brand with their audience. This can provide valuable information for anyone looking to improve their reach.
Competitive analysis can help you better understand the market and your customers and reposition it to attract more leads.
Competitive Analysis Guide
Now, let’s start with our ultimate competitive analysis guide. Note that this is a general analysis, and if you want to make an analysis about a niche of products, you can tailor it to match your goals.
Find out Who Your Competitors are
The first thing to do is identify your competitors. If you’ve done a competitive analysis before, you probably already know your competitors. But even so, it’s essential to do market research as there may be new brands that have entered the market recently.
There are different ways to find your competitors. You can search for your product or category on Google and analyse the results. You can also do a survey and ask your customers what alternative products/brands they would choose if it weren’t for your brand. Plus, if you sell your products in physical stores (besides your brand’s stores), you can go to these stores and see which products are in the same line as yours.
When you finalise your list, you need to understand which of them are your direct and indirect competitors.
Direct competitors are those who sell identical or similar products to the same target audience in the same geographical area as you. For example, Heinz ketchup’s direct competitor would be Del Monte ketchup.
Indirect competitors are brands that offer different products or services to the same customers as yours that would satisfy the same need (or needs). Continuing with our ketchup example, Heinz ketchup’s indirect competitors would be brands producing mayo.
In competitor analysis, we mainly research direct competitors as they can have more impact on our brand. But it’s also important to keep an eye on indirect competitors and analyse them as well. They can expand their brand at any moment and become your direct competitors. For competitive analysis, it’s better to analyse the direct and indirect competitors separately.
Research Competitors, The 4Ps
Now it’s time to research your competitors. But before you start, make sure to create a competitor matrix so that you can compile your research. You can create a spreadsheet, list on each column (or row) one of your competitors and on rows (or columns) list the factors you’re going to analyse for each of your competitors.
After that, you can start your research. We’re going to use the model of the 4Ps or marketing mix, which is a popular market research model and very useful. If you search it on the Internet, you may also find the 5Ps, but the 4Ps is the original model, and there is not much difference between them, so you can use whichever you want. Here, we’re using the 4Ps model.
So, here are the 4Ps of marketing. We’re going to analyse them one by one.
Start by exploring your competitors’ products. Visit their websites, their physical and online stores and answer the following questions:
- What is their primary product or service?
- What features do their products/services have? How are they different from your products?
- What problems do their products solve?
- What do customers like in their products? What are their products’ strengths and weaknesses?
You need to learn everything you can about their products. Visit your competitors’ websites, check customer reviews, and check their social media to find all this information. Put every vital detail about their products on your competitor matrix.
As you’ve identified your competitors’ products or services, you need to analyse their pricing strategy. Specifically, you need to answer these questions:
- What pricing model do they use? One-time purchase or subscription?
- How much do they charge for their products or services? Are their prices lower or higher than yours for similar products?
- Do they offer discounts, special offers or sales frequently?
- What’s their price/quality ratio? How does their pricing reflect the quality?
The third P is the Place. It refers to where your competitors sell their products. It can be an online store, a physical store or through retailers. Here are some questions to consider:
- Where do your competitors sell their products? Through an online store or physical store?
- Do they sell directly or through retailers or third parties?
And finally, the fourth P is the Promotion. It’s about how customers find the products and through which channels.
- What channels do your competitors use to reach their audience and sell products? What’s their marketing and advertising strategy?
- Which of their promotional channels performs the best?
- What’s their brand message? Does it resonate with their audience?
- Which unique feature of their product/service do they emphasise? What’s their unique selling proposition?
Note that these are basic questions; you can expand them as much as you want to find more valuable information about your competitors.
Try to cut down the information you found into bullet points and add them to your competitor matrix.
Identify Their Target Audiences
All the efforts companies put are for satisfying their customers’ needs and selling them their products. So, it’s essential to understand your competitors’ target audiences. As you are in the same market, their target audiences will be similar to yours, with slight differences. But still, it’s important to know about these differences.
So, explore your competitors’ mission statement, their messaging, and who follow them on social media. Note the differences between your target audiences, how they interact with their audience compared to you and how effective their methods are.
Again, add all the important points to your competitive analysis matrix.
Perform a SWOT Analysis for Your Competitors
Now, you already know all the essential information to start analysing. Besides the points mentioned above, you can research and add more categories and data to your matrix if you want. It all depends on your goals and how extensive you want your competitive analysis to be.
When you collect all the information, you can begin the SWOT analysis of your competitors. SWOT analysis is one of the best techniques to identify the strengths and weaknesses of a company.
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. You can create another small matrix for each of your competitors and list their strengths, weaknesses, opportunities, and threats in each cell based on the information you found. You can also fill in this information while researching your competitors to make your job easier.
Here you can find free templates for SWOT analysis to make the process easier for you.
Perform a SWOT Analysis for Your Brand
Now comes probably the most critical part of our analysis, as you will find your brand’s strengths, weaknesses, opportunities, and threats and be able to compare your brand with your competitors. The whole point of a competitive analysis is to understand what your business does better compared to your competitors and what you can improve to perform more efficiently.
Try to be more precise here than you were in the previous step to list all the major points about your brand.
What do you do better than your competitors? Is your products’ quality, pricing or marketing strategy better?
What do you lack? Where are your competitors better than you? Are your customers fully satisfied, or are there things that you need to improve?
Is there any new market you can tap into? Are there locations with less competition? What trends can you take advantage of?
Are there any trends you are unprepared for? Are there any new competitors that can affect your position in the market? Which economic or political situation can affect your business?
P.S. It’s easy to confuse opportunities with strengths and threats with weaknesses. Remember that strengths and weaknesses are internal factors that happen inside your business. The other two are external; they happen outside of your business.
Improve Your Strategy
And the last thing you need to do is to create a better strategy. You already know what you lack and where and what you should focus on more. You can improve your marketing and sales tactics based on competitive analysis to achieve your goals.
It’s essential to conduct a competitive analysis regularly. Of course, it’s time-consuming, and you can’t do it very frequently. But when you notice that your business is not growing, or you want to grow faster, or you simply haven’t done an analysis in the past year or two, it’s better not to wait to conduct the competitive analysis.
Competitive analysis is a vital process that can help businesses to improve their strategy and tactics and become more competitive in the market. Using competitive analysis in your strategic planning can help you make better business decisions and stay ahead of your competition. Always keep an eye on your competitors to strengthen your positions and succeed in all your business goals.
Ubersuggest is a great all-in-one option for beginners. Ahrefs and SEMrush are also great for analysing your competitors.
You can use Google AdWords to access the Google Keyword Planner Tool.