When a prize fighter steps into the ring, they don’t just swing wildly. They take the time to size up their opponent, looking for weaknesses and vulnerabilities. Before you can devise a winning strategy, you need to know who your competition is, what they’re good at and where they’re vulnerable.
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Today, customers have the luxury of choice when it comes to the businesses they spend money with. They can also quickly jump ship to a competitor if they feel they’re not getting what they want or need.
A great example is the marketing tech industry; in this sphere alone, almost 10,000 products are competing for business. They have the same features and offerings and target the same market. So how does a business stand out in this sea of competitors?
The answer is: competitor analysis.
Competitor analysis sounds like a lot of work, but it doesn’t have to be. In fact, with a bit of forethought and some careful planning, you can quickly turn a competitor analysis into a systematic process that will keep you ahead of the curve and help you make better decisions for your business.
So how do you go about doing a competitor analysis? This article will take you through the steps of conducting a thorough and effective competitor analysis, from identifying your competitors to assessing their strengths and weaknesses. By the end, you’ll have all the information you need to come out on top in any business battle.
What are the different types of competitor analysis?
There are two types of competitor analysis: primary and secondary.
- Primary research is first-hand information you collect through surveys, interviews, or observation. This type of research is more expensive and time-consuming than secondary research, but it’s also more reliable because you’re getting your information directly from the source.
- Secondary research is second-hand information that you gather from sources such as magazines, websites, reports, or articles. It’s less expensive and time-consuming than primary research, but you won’t get the same level of reliability.
For this article, we’ll be focusing on secondary competitor analysis.
How to do a competitor analysis
Here is a comprehensive five-step guide on how to conduct a thorough and effective competitor analysis:
1. Find out who your competitors are
This step is self-explanatory — you need to determine who your competitors are to assess their strengths and weaknesses. But it’s not always as simple as it sounds.
There are two types of competitors: direct and indirect. Direct competitors are businesses that offer the same product or service as you do. In contrast, indirect competitors are businesses that offer a different product or service but still serve the same customer base.
For example, if you’re a company that sells men’s shoes, your direct competitors would be other companies that sell men’s shoes. But your indirect competitors could be companies that sell women’s shoes (if you believe that some women might buy from you) or companies that sell men’s clothing (if you think that some men might buy shoes from you to complete their outfits).
Once you’ve identified your direct and indirect competitors, it’s time to move on to the next step.
2. Check out their sales strategies and results
Now that you know your competitors are selling, it’s time to look at how they’re selling. What kind of sales strategies are they using? Are they selling online, in brick-and-mortar stores, or both? What discounts or promotions do they offer?
These valuable data points will help you understand how competitive the sales process is and what data you should arm your sales representatives with to succeed in the final buy stage.
You can access annual reports for publicly traded organisations online, but you’ll need to do some detective work to get similar information for privately held enterprises.
This information might be discovered by looking through your CRM and contacting clients who said they were thinking about your rival. Find out why they choose your offering above others in the market.
3. Check out their website design and user experience (UX)
SEO and UX are two essential aspects of any website, and your competitors’ websites are no exception. Learn about their website design and how user-friendly it is. How easy is it to navigate? How fast does it load? Is the content well-organised and easy to find?
Start by doing a Google search for their product or service. What position do they come up in the search results? Are they using any keywords or phrases in their title or meta tags?
4. See how active they are on social media
Social media is a great way to connect with customers and promote your product or service. But it’s also a great way to keep an eye on your competition.
See how active they are on social media and what kind of content they’re sharing. Are they engaging with their followers? How often do they post? What kind of response do they usually get?
5. Perform a SWOT analysis on each competitor.
Once you’ve gathered all this information, it’s time to analyse each competitor’s SWOT analysis. This will help you identify their strengths and weaknesses and any opportunities or threats they may pose.
A SWOT analysis is a tool that helps businesses assess themselves and their competition. It stands for Strengths, Weaknesses, Opportunities, and Threats.
Here’s how it works:
- Strengths are the positive aspects of the business that give it an advantage over its competitors.
- Weaknesses are the negative aspects of the business that put it at a disadvantage.
- Opportunities are external factors that the business can take advantage of to improve its position in the market.
- Threats are external factors that could damage the business or hinder its growth.
Once you’ve identified each competitor’s strengths and weaknesses, you can start to develop a strategy for how to position your own business in the market.
IRL examples of competitor analysis
Firestone was a large and well-established company that dominated the market for seven decades until 1970. At that time, Michelin, a smaller competitor, began to erode Firestone’s market share by introducing the “radial” tire, which had superior performance to Firestone’s existing product.
Firestone responded quickly though; they already knew that this was trending in Europe, and soon after Michelin’s announcement, Firestone had its own radial tire on the market. The problem was that it was too little too late, and by then, Michelin had already taken a significant portion of the market.
The company was so focused on its strengths that it failed to see where it was vulnerable. This is where competitor analysis comes in. Firestone already knew that new technology was coming that would threaten its position, but it did not take the necessary steps to protect itself. As a result, it lost market share and never regained its dominant position.
That being said, competitor analysis is not just for those companies trying to gain an edge but also for successful companies that want to stay ahead of the curve. It is an ongoing process that should be part of your regular business routine – just like managing your international marketing strategy, or how to find your brand purpose.
By establishing a clear understanding of the strengths and weaknesses of your competitors, you can develop strategies to stay ahead in today’s digital-first marketplace.
As a digital-first brand or startup, it’s important to understand the competitive landscape in which you operate. Competitor analysis is a vital part of any good marketing strategy and will help you identify the opportunities and threats in your market.
Follow the rules above, and you’ll be well on your way to conducting a comprehensive competitor analysis that will help you to stay ahead of the competition.
Understand your competitor’s strengths and weaknesses, and develop strategies to stay ahead
Benchmark your website’s design and UX with your competitors’.
Make competitor analysis part of your regular business routine – or risk falling behind.