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Sizing up your competitors is a big part of small business success. In a nutshell, that’s what a competitive analysis is all about. This research will help you understand the strengths and weaknesses of direct competitors. Doing this kind of competitive research will give you a leg up in your target market.
For instance, a competitive analysis example could be comparing the market strategies of Sony and Nintendo to understand their strengths and weaknesses.
This article will cover some of the boxes you’ll need to check to do a thorough competitive analysis.
What is a Competitive Analysis?
A competitive analysis is the assessment and study of your competitors. By identifying a competitor’s strengths and weaknesses, you can improve your small business efforts. There are quite a few different areas covered. These look at aspects like marketing strategies and target markets. They also cover digital aspects like social media. Usually, there is also a strong content section.
It’s important to take the time to plan one of these carefully. They can supply a road map for where your business can improve, and a well-structured competitive analysis report can highlight market weaknesses you can capitalize on. Competitive analysis can also point out market weaknesses you can capitalize on.
Why Do a Competitive Analysis?
There are some big benefits to this kind of competitive analysis. Read on to find out how your small business can stay on top of your market share with one.
Alex Azoury, Founder & CEO, Home Grounds, offers up some other insights on why it is important to conduct competitor analysis.
“There are two good reasons for one of these,” he writes. “If you haven’t started your business, analysis gives you a clear insight into the demand for your product or service. It makes you think about how to differentiate yourself in the market.”
The other reason has a lot to do with getting a handle on other competitors. Azoury explains.
“For an existing business, you must stay informed about your competitors’ marketing campaigns and activity online. Figure out whether you could exploit gaps in their strategy. Use the analysis to measure yourself against the same criteria. Then take an objective look at your business to find areas for improvement.”
How to Do a Competitive Analysis
The idea sounds simple. However, putting together an analysis template that works is a little more complicated. There are several steps you need to go through. You can use these to get a better understanding of your target market. You might be an established business or start-up. Either way, putting this data together gives you an accurate picture of what your competitors are up to.
Analyzing your competitors’ pricing strategy is crucial to ensure your prices are competitive and aligned with market standards.
There are other advantages. It can help you pivot in the marketplace and fill in any gaps. These analyses are also useful for deciding when to develop new products and services. Or they can help you decide when to cancel ones that aren’t working.
Here are some boxes to check for accurate competitor analysis.
Use The Web
Getting started with your competitor analysis means getting off on the right foot. Start on the Internet with the search engine you’re most comfortable with. That’s where you’ll find most of the competitor business information you need. However, the starting point might be different than what you’d expect. Instead of searching for a competitor’s name, you can start with your business name.
Google will supply a list of other business competitors. That’s a good place to start your analysis. The Google search engine results page (SERP) will display a knowledge panel on the right. Check out the bottom. That’s where you will find the names of competitors. Keep in mind that it’s a mix of the three different kinds of competitors. However, it gives you a jumping-off point for your analysis.
Here’s another trick you can use to find more information for your competitor analysis. Try using a keyword that’s related to your business. If you make a list of these keyword phrases, you can plug them into any search engine and get a list of competitors.
Corinne McCarthy an SEO & Online PR Specialist with Web Talent Marketing, has some other suggestions.
“Use third-party tools (such as SEMRush.com or Ahrefs.com) to find keyword data on your competitor,” she writes. “It’s helpful to export the keyword data in an Excel file. SpyFu is great for looking at competitors’ paid keywords.”
It’s important to take a look at how your competitors are using search engine optimization. Google Analytics is a great tool to be able to engage in how any competitor is using SEO.
Mia Ballan is the Founder of Money-Minded Millennial, and she provides some added advice.
“Make sure the competitor you choose is closely related to what you do. To check that they’re an authoritative source, you can use measures like Moz Domain Authority,” she writes. “There should be clues on their website that tell you that they’re legit (years in business, customer reviews, etc).
Finally, there’ s no point in taking notes from a competitor that isn’t successful. Check their website rankings, the quality of their content, and industry awards to confirm that you want to follow their lead.”
Put Together a List of Your Direct and Indirect Competitors
First things first, as they say. If you want to know how the competitors in your market are working, you’ll need to know who they are. That’s why the first step is to put together a list of competitors. You may think you already have a good idea. However, you need to consider the following to make sure you consider all your competitors.
It’s essential to understand that your direct and indirect competitors are often targeting the same customers, making it crucial to differentiate your offerings.
Like the different kinds your business needs to deal with. There are direct and indirect competitors. Understanding the differences between the two can help you put together a good competitive analysis.
Direct Competitors
These are the folks that are selling the same goods and services as you. Either directly in the same geographical area or in the same online space. Essentially, you and your direct competitors are offering exactly the same thing.
Follow this link for some examples in the wireless market. You’ll see that Verizon and Sprint compete directly with T Mobile and quite a few others. That should give you an idea about how to put together this part of the competitive analysis.
Azoury has some excellent suggestions.
“Set up a tool to record the information you find. I prefer a spreadsheet, but a table works too,” he writes.
Next, he says you need to enter the names of your main competitors across the top. He suggests three names. Be aware that your competitors may not be who you think. Start with the competitors you compete with directly.
“They’re the ones with very similar products or services who are targeting the same audience demographic or customer persona.”
The left-hand side of the sheet should have the following: He lists the following:
- A summary of what you know presently. Use any search engine to get this information from their website. Social media sites can be helpful, too. Look for their tagline, unique value proposition, and anything else that highlights their strengths/ weaknesses. Don’t leave any details out, like the email address.
- Target audience. Who are they targeting? One example might be men between 30-50 who purchase custom-tailored suits.
- Products or services – what are they offering?
- General marketing strategy – This is an important part of the competitive analysis you’re putting together. Find out what kind of content they’re using.
- Online marketing strategy – How do they promote themselves? Note your observations about their website and social media accounts. How do they generate traffic and leads? What do they post? Do they have reviews or testimonials? Unearth the content strategy.
- Strengths – Look for good content like great product descriptions, a valuable free resource, and professional images.
- Weaknesses – Do they respond to complaints? Is the business hard to contact? Things like poor site navigation work against any marketing efforts.
- Competitive advantage – Do these competitors manufacture their own products? What kind of media coverage do they get? What about free resources?
Here’s another helpful piece of advice about how a competitive analysis like this works. If you’re working on your brand, you should only focus on these types of competitors. Find out if their content marketing efforts include a blog. Take a look at their social media to see what they focus on. The chances are you can tweak the content templates they are using for your product or services. A lot of this information is on competitors’ websites.
Indirect Competitors
These are businesses that sell goods and services that are similar in the same market. The idea here is you and your competitor might appeal to the same target audience. If you sell shoes, and company B sells boots, they could be considered an indirect competitor.
These folks are important because they sell different products to the same niche market. Paying attention to how they use marketing can help you out with your content. Working through the content marketing these companies use can give you insights into new markets.
Some people think these competitors can actually make excellent partners. Here’s an example. If you sell curling irons, you should look for a business that sells hair care products. Staying competitive at the same time means looking to see if these competitors are scaling up or down.
Tertiary Competitors
These folks are at the bottom of the list. Why? Because they don’t pose an immediate threat to your product or service. However, they do offer something different that might be considered a replacement. A proper competitor analysis here could include the local ice cream shop if you sell doughnuts. That kind of business could change marketing strategies quickly and include similar products.
Deciding which area the competition falls into depends on your individual company. For example, if you sell hammers and nails, it won’t be hard to categorize the competition. That won’t be the case for a software company with different features and plans.
Conduct Market Research
Conducting market research is a crucial step in a competitive analysis. It involves gathering data and information about your competitors, target market, and industry trends. This research can be primary or secondary.
Primary market research involves collecting original data through surveys, focus groups, interviews, and observations. This type of research provides valuable insights into your competitors’ strengths, weaknesses, and strategies. For instance, conducting surveys can reveal customer preferences and pain points that your competitors may not be addressing.
Secondary market research involves analyzing existing data from sources such as industry reports, academic studies, and online reviews. This type of research provides a broader understanding of the competitive landscape and market trends. Reviewing industry reports can help you identify emerging trends and shifts in consumer behavior.
Some common methods of market research include:
- Online surveys and polls: These can quickly gather data from a large audience.
- Focus groups and interviews: These provide in-depth insights into customer opinions and behaviors.
- Social media listening and analysis: This helps you understand what customers are saying about your competitors.
- Competitor profiling and analysis: This involves a detailed examination of your competitors’ strategies and performance.
- Industry reports and studies: These offer comprehensive data on market trends and forecasts.
- Customer reviews and feedback: These provide direct insights into customer satisfaction and areas for improvement.
By conducting market research, you can gain a deeper understanding of your competitors, target market, and industry trends. This information can be used to inform your business strategy, identify opportunities and threats, and develop a competitive advantage.
Compare Marketing Strategies
Taking a look at your competitors’ marketing strategy is an important step. There are a few things that go into a complete competitor analysis. Remember, this part of the analysis is content-based. Take a look at several different factors including how many blogs competitors are using.
McCarthy has some more advice on looking at your competitors’ marketing.
“Look at the content on your competitor’s website. Focus on key pages like the homepage and service or product pages. Analyze the headings and look for keywords in the page copy. Evaluate the tone, style, and length. Compare to your own website content. ”
“Don’t underestimate website speed,” she writes. “Use Google’s PageSpeed Insights to see how fast your competitor’s website loads compared to yours’. Make sure you aren’t losing potential customers due to a slow website.”
Compare Websites
Any good competitor analysis needs to consider what the other business is doing online. You can get some good information from the content on their website. Social media is important too ( see below) but the website is a treasure trove of good info on your competitors.
There’s a whole industry that can help here.
Still, there’s some good information that you can get for your competitor analysis from the website.
- It might start a little like detective work at first. Even if you only get one email address to an employee or customer, you can get some information to follow.
- The website can give you some information about webinars and other social media events. These can be helpful to learn more about competitors’ business.
- The website is a great place to get links to interviews competitors have done in the media.
There are several things that you should consider here. For example, what tone does your competitor use on their homepage? Take note of the images they use. It’s also a good idea to focus on the name and email of any clients found in testimonials.
Compare Social Media
Social media is an important part of understanding what competitors are up to. Important information, like how people are talking about that competitor, is here. Here are a few boxes you should check to get the most from your competitor’s social media channels.
Take a look at who they are talking to and interacting with. That gives you a reinforced idea of the target market. Take a look at the platforms that are working for your competitors. Not all social media channels work for all small businesses.
For example, YouTube is an excellent social media channel if your goods and services need assembly and explaining. Checking out other platforms like Instagram makes sense. You’ll want to take a look at the language your competitors use on other platforms like Facebook.
Check out how a competitor’s business uses influencers. Make sure to gauge the emotional content of the posts for each social media channel. Don’t forget to check out any LinkedIn channels. The content found there usually tells you something about B2B marketing.
Consider Pricing
There are lots of areas to cover. While some look at social aspects like content, others look at figures like pricing. If you are comparing your pricing strategy to the competition, there are a few things to consider. It’s all pretty straightforward if your goods and services are similar. Start adding on features like those with software, and things can become more complex.
The first step here is to benchmark your prices against the competition. You might be able to get some numbers off the website. If not, you’ll need to dig down a little deeper. Try looking for name and email info from testimonials to contact.
If you have direct competition selling at the same prices, you can drop your price to increase sales. Dropping your price can force competitors to innovate in order to reduce costs and keep pace.
Use a SWOT Analysis
After you’ve gathered up the data you need, your business needs to put everything together. That’s where a competitor SWOT analysis comes in handy. The word is an acronym. It stands for Strengths, Weaknesses, Opportunities, and Threats. These are flexible. They can be built to analyze your own business or that of your competition. Some companies use them as a baseline. The analysis points to their own company and gives them a starting point for the competitor analysis.
There are many advantages. One big one is businesses can see areas to take advantage of in the market through their competitors using SWOT analysis.
Ty Stewart, CEO & President of Simple Life Insure, adds a reason for using these.
“The best tip I have to perform a successful competitive analysis is always to have a specific end goal in mind,” he writes. “Without that fixed, concise purpose fueling an analysis, you’ll end up with a whole lot of data but little direction to run with it. ”
He says you can shape findings by having a specific question or project that competitive analysis answers. That way, you’ll get a lot more from the work. These SWOT analysis tools can help.
Identify Market Gaps and Opportunities
Identifying market gaps and opportunities is a critical step in a competitive analysis. It involves analyzing the data and information collected during the research phase to pinpoint areas where your competitors are weak or missing opportunities.
Market gaps refer to areas where there is a lack of competition or a need for a product or service that is not being met. Identifying these gaps can help you develop a unique value proposition and differentiate your business from competitors. For example, if customer feedback indicates a demand for eco-friendly packaging that competitors are not offering, this could be a market gap you can exploit.
Opportunities refer to areas where there is potential for growth or expansion. Identifying opportunities can help you develop a business strategy that takes advantage of these opportunities and stays ahead of the competition. For instance, if industry reports suggest a growing trend in online shopping, you might consider enhancing your e-commerce capabilities.
Some common methods of identifying market gaps and opportunities include:
- Analyzing customer feedback and reviews: This can reveal unmet needs and preferences.
- Conducting competitor profiling and analysis: This helps you understand where competitors are falling short.
- Identifying industry trends and patterns: This can highlight emerging opportunities.
- Analyzing market research data and reports: This provides a comprehensive view of the market landscape.
- Brainstorming and ideation sessions: These can generate creative ideas for new products or services.
By identifying market gaps and opportunities, you can develop a business strategy that is tailored to your target market and competitive landscape. This can help you stay ahead of the competition and achieve your business goals.
Common Mistakes to Avoid
There are several common mistakes to avoid when conducting a competitive analysis. These include:
- Focusing too much on direct competitors and ignoring indirect competitors: Both types of competitors can impact your market position.
- Failing to analyze the competitive landscape and market trends: Understanding the broader market context is crucial.
- Not conducting thorough market research: Incomplete research can lead to inaccurate conclusions.
- Failing to identify market gaps and opportunities: Overlooking these can result in missed growth opportunities.
- Not regularly updating and refining the competitive analysis: The market is dynamic, and your analysis should reflect current conditions.
- Not using the insights gained from the competitive analysis to inform business strategy: The ultimate goal is to leverage these insights to improve your business.
By avoiding these common mistakes, you can ensure that your competitive analysis is comprehensive, accurate, and useful in informing your business strategy.
Best Practices for Competitive Analysis
There are several best practices to follow when conducting a competitive analysis. These include:
- Conducting regular and ongoing competitive analysis: The market is always changing, and so should your analysis.
- Analyzing both direct and indirect competitors: This provides a complete picture of the competitive landscape.
- Using a variety of data sources and research methods: This ensures a well-rounded analysis.
- Identifying market gaps and opportunities: This helps you find areas for growth and differentiation.
- Using the insights gained from the competitive analysis to inform business strategy: This is the ultimate goal of your analysis.
- Regularly updating and refining the competitive analysis: Keep your analysis current to stay relevant.
- Using competitive analysis to identify areas for improvement and innovation: This can help you stay ahead of the competition.
- Using competitive analysis to develop a unique value proposition and differentiate your business from competitors: This is key to standing out in the market.
By following these best practices, you can ensure that your competitive analysis is comprehensive, accurate, and useful in informing your business strategy.
Competitive Analysis Template
Being able to corral all this information together in a template is good. There is some flexibility here. However, a good template will have all of the following content.
- Revenue – The clearest path is checking the website of the competition or looking for press releases.
- The Target Market – Look through the content on social media platforms.
- What makes their products different and unique?
- The number of employees.
- Their products and services with pricing.
- The marketing strategies they use.
- The social channels and websites they operate in.
- Content on the history of the company.
Here are a few tips on getting a competitive analysis template. Looking for an online worksheet is a good idea. But you’ll need to be careful to make sure it has all the categories you want. There are some industry leaders offering them, like Shopify.
If you’re making your own, don’t forget to include sections for social media and website content. You won’t be able to get an accurate analysis without considering digital marketing.
Final Thoughts
Understanding what a competitor is doing can help your business to succeed. That’s what a good competitive analysis is all about.
Mia Ballan, the Founder of Money-Minded Millennial, provides a good definition.
“The key to performing an effective competitor analysis is to choose the right competitors. The criteria you should look out for are: 1) are they relevant, 2) authoritative, and 3) successful,” she writes.
Maddie Bishop, Senior Brand & Communications Strategist at Jacob Tyler, has the last word:
“The best competitive analysis research is not only interesting but useful. It should offer an insight into how your brand can grow, pivot, or innovate within and beyond its marketplace.”
Before you start, Bishop says, you need to ask three questions. Here is the list of Bishop supplies.
Define what you need to learn. Do you just need an overview of the market, or are you looking to see how you can dominate it?
Decide who your competitors actually are. It may not be as obvious as you think. Are they the leaders in your market? Those making a similar product or offering a similar service? Or those who have made a strategic move you aspire to?
The question is whether you really need a traditional competitive analysis. It’s unlikely you could achieve market-leading success simply by copying their tactics. Of course, sometimes you just need an overview of where you stand. But if you’re trying to inform your next strategic move, there might be a better way. Perhaps you could actually learn more from some thoughtfully chosen category case studies?
Remember there are several things that a good competitive analysis should do. First and foremost it should identify gaps in any marketplace.
A good analysis can also be the first step in developing brand-new products and services. If done right, it also helps identify important market trends. In the end, it is designed to help you sell and market your products and services more effectively.
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