Why competitor analysis is crucial for your marketing strategy?
Nowadays, the competition among businesses has increased a lot. The reason is the number of options available to the end customer. With globalization and technical advancement, the awareness and availability of products or services have improved. People can get anything they want anywhere. Additionally, they have got a lot of choices available in the market. This has pushed businesses to think about customers first. It has also become important for businesses to stand out from their competitors.
But how can businesses know where they stand? This is where business competitor analysis comes into play. A competitor analysis can help you at any stage of the business. You first need to identify competitors, analyze competitors, and assess how you can improve your strategies and tactics.
Doing an industry competitive analysis can help you know a lot about the competition and market. You should conduct market research and analysis of competitors before making any key decisions. This way you can avoid making decisions that cause a setback to your business.
Keep reading the blog as we will discuss in detail about competitor analysis and how you can conduct it effectively.
What is Competitor analysis?
Competitor analysis definition: A competitor analysis is also called as competitive analysis. It is basically the process of identifying competitors, researching competitor info and their different strategies & tactics to understand how they have got their present market share.
Competitor data can help you compare and discover your business’s strengths and weaknesses. Competitor analysis can also help you to know the top industry trends. You can then ensure that you are meeting and keeping up with the current industry trends.
What is competitive market research?
Competitive market research is the process of finding and comparing key metrics that help you identify differences between your products or services and those of your competitors. Comprehensive market research can help you in creating the best marketing and sales strategy for your business that gives you an edge over your competitors.
Why you should do a competitor analysis?
Most of the time, startups and small businesses have loads of tasks to handle. This is where they tend to keep the competitor analysis at the backdrop. However, it is crucial to understand that competitor analysis can help businesses in many other tasks as well. Now, we will tell you more about how competitor analysis can help your business.
1. Know your business’s strengths and weaknesses
By conducting a competitors analysis, you can know your brand’s strengths and weaknesses. Identifying your company’s strengths can help you position your brand effectively in the market. You can know how to portray the image of your products or services in the market. It’s vital you make your customers believe that you are providing the best offerings in the market. However, this doesn’t mean you should overlook your company’s weaknesses. You should identify the areas where you need to improve and work on them to avoid customer dissatisfaction.
From competitor comparison, you can understand what your customers prefer in the competitors’ products or services. Learn about what your competitors are doing that’s helping them and apply those strategies in your business to get the best results.
2. Understand your market
Competitor analysis can help you know about the different competitors that exist in the market. You can know their share and what has helped them to survive in the market. You can understand the desirable features that customers find in their products or services.
Conducting a competitor analysis can help you discover the unserved market areas. You can identify the gaps between what your target customers want and what your competitors are offering. This way you can create products or services that fill in those gaps and meet customers’ needs.
3. Know the current industry trends
Competitor analysis can aid you in identifying trends and understanding how the industry is moving. Keep in mind you shouldn’t do something just because your competitors are doing it. They might not always be right and their strategies might not lead you to success.
You should analyze the market and focus on your customers’ needs. You should understand why competitors’ strategy is working and how you can implement them in a better way. It’s always better to do things in a unique way than do what everyone else is doing.
4. Set realistic goals for business growth
While doing competitor marketing analysis make sure you consider both small-scale and well-established companies. Studying and researching well-established companies can help you understand what works and how one can reach success. You can keep well-established businesses as your reference points and set realistic goals for business growth. Whereas, knowing the new companies entering the industry can help you identify potential threats you may have in the market in the future.
Competitive analysis in marketing
Now, from the above information you must have understood why you should do competitor analysis. By executing competitor analysis marketing, you can know a lot about the market.
- You can identify your product’s unique selling point (USPs) and what sets you apart from your competitors’ products or services. This information can help you to enhance your marketing efforts in the future.
- Know what marketing strategies and tactics are working for your competitors. This competitor insight can help you ideate and create marketing campaigns that perform well for your business.
- Identify what your competitors aren’t doing that might be helpful. You can test and try out new marketing strategies that have the potential to do better.
- Read customer reviews of your competitors’ products or services to know what’s missing. This crucial information can help you build the best products or services that no one is offering.
When should you do a competitor analysis?
Till now we have explained what competitor analysis is and how it can be beneficial. Now, you must be wondering when you should do competitive analysis marketing Well, doing the competitor analysis is always the best idea when you are starting a new business. But this doesn’t mean the competitor analysis is just meant for the startups.
A competitor analysis should be done at each stage of a business. This can help businesses not only create the right strategies but make the right decisions. You can also identify the new trends in the market and find ways to gain a competitive edge.
What factors should a competitor analysis include?
In this section, we will tell you about the factors you should include in your competitive analysis marketing. These factors are recommended by Colin Schacherbauer, an executive marketing assistant at Investor Deal Room.
1. Feature Matrix
First, find out all the features that your direct competitors’ products or services have. You can note this information in a spreadsheet to compare your competitors easily. You can also create graphs or visual representations to conduct analysis competitors with ease.
2. Market Share Percentage
Evaluate and calculate the market share percentage of different companies. This information can help you identify the main competitors in the market. When you are creating the market share percentage graph, keep the practice of the 80/20 rule. This means considering 80% of your direct competitors and 20% of the top competitors in the market.
See what marketing plans are your competitors implementing. Have a look at their company website, SEO strategy, social media strategy, and different marketing campaigns. By looking at their marketing planning, you can know the best ways to reach out to the target audience.
Check at what price your competitors are placing their products. Analyze where they are on the quantity vs quality scale.
See what makes your competitors unique and what they describe as their best features or qualities. Look at their advertising to know their differentiators.
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Find where your competitors are located and the regions where they’re available. Check whether they’re just available online or have a physical company.
Identify your competitors’ strengths and what works well for them. Have a look at their reviews and see what customers say about them. You can also try their products to see in which aspects are they performing better than your products or services.
Analyse competition to see where they are lacking. Is their social media marketing strategy weak? Is there website complicated? Does there online store shortfalls? Is there delivery service slow?
Know what are their company objectives and what values they promote. Evaluate their employee satisfaction and company culture. Read their employee reviews on different websites to get an insight into their company culture. From this information, you can understand how you can improve your own company culture.
10. Customer reviews
Check your competitors’ customer reviews and see how people are rating them. Look at the 5-star, 4-star, and 3-star reviews. Read both positive and negative reviews to get an accurate insight about your competitors.
How to do a competitor analysis?
When doing a competitor analysis, be clear about what you want through it. Below we have 6 simple steps that can help you to do conduct an effective competitor analysis. You can also add other areas of research depending on your company’s objectives.
1. Who are your competitors?
The first step of competitor analysis is to identify the potential competitors. List your competitors and the different options available to the customers if they don’t purchase from you. The easiest way to do this is by searching your product name or category on Google and different search engines. Check the results and from there you’ll find most of your competitors. You can also survey your existing customers and ask them about the alternatives of your products.
When creating your competitors’ list, you should include a diverse set of companies. This will help you create an accurate picture of what the current market looks like. Consider companies that fall into each of the three categories of competitors. We have explained the 3 categories of competitors below.
- Direct Competitors:Direct competitors are the ones that sell products or services similar to your brand to the same target audience. These are the companies that come at the top when you search for competitors. For example, McDonald’s is a fast-food burger chain. Burger King and KFC are its direct competitors.
- Indirect Competitors: Indirect competitors sell a different product or service in the same category to a similar target audience. For example, Domino’s and Pizza Hut can be the indirect competitors of McDonald’s. They sell pizzas to the same target audience.
- Replacement Competitors: Replacement competitors sell outside your product category but they somewhat satisfy a similar customer need. If we take the example of Domino’s, for them the replacement competitors would be anyone who’s providing frozen meals like pizzas. Frozen meals also meet the customers’ need for hunger satisfaction. Out of the three types of competitors, replacement competitors are the hardest to identify.
For competitor analysis, it’s always good to consider your direct and indirect competitors first. However, that doesn’t mean you should neglect your replacement competitors. You never know when the replacement competitors become the first choice of customers and a business threat.
2. Competitor matrix
The best way to do competitor analysis is by using the competitor matrix. A competitor matrix is also known as a competitor grid. It is basically a table or spreadsheet that you can use to add your competitors’ data and research. This will make it easy to compare your findings and identify industry trends.
You can start by devoting one row or column to each competitor that you have found through your research. Next, list the data points and information that you want to find about your different competitors. You can also add more categories if you get more information through your research.
3. Background Information
After you have listed your competitors, you should start finding information about them. This doesn’t mean that you have to get into the details like their revenue and customer numbers. You can begin by finding the most basic information and then getting into the details. Look at their website, social media pages, and any recent content they have published about themselves. Below we have some basic points that you can start with for doing competitor analysis.
- Company History: Look at the information about your competitors like establishment date, partners, and any mergers or acquisitions. You can easily find this information on the company’s website and in the About section. Go through their social media pages and any article that they have published about their company. Find the past press releases from the company. Learning how your competitors got where they are right now can help you find some of the best strategic ways.
- Location: This aspect is completely based on the industry type. For example, if you have a company that sells soda locally then the companies you compete against will be local. However, if you have an eCommerce business, then your competition would be against companies selling worldwide. Therefore, it’s always good to know where your competitor company is based and the areas where they sell.
- Company Size:Check the size of your competitor companies. Are they large well-established or SMBs? You can look at their LinkedIn profile to know the company size. Evaluate how many customers they have and how much revenue they are generating. Revenue-related information is easily available for well-established companies. For medium and small-scale companies, you can do estimations. Knowing how large your competitors are, you can collect the rest of the data accordingly.
4. Create customer profiles of your competitor companies
As you know, customers are the core of a company. By knowing the customer base of your competitors, you can understand a lot about them. To find out the target audience of your competitors, look at what they are using as their product claim. See what kind of messaging they are using. Analyze the people who are interacting with their brand. Examine the client testimonials they have provided on their different platforms.
You can use this information from different sources to create customer profiles of your competitor companies. These customer profiles might be similar to your target customers. You can make note of the differences and find the customer needs that your competitors might not be able to fulfill.
5. Use the 4Ps
Now, you know the target customers of your different competitors. It’s time to look at how they reach the divergent segments of the market. This means you need to understand their marketing strategies.
The marketing mix has all the important elements that a company needs when launching its product. It includes the 4Ps which are product, price, promotion, and place.
- Product: See what product exactly your competitors are selling. Study the advantages and disadvantages of their product or service. Find out what makes customers pick their product or service in the market.
- Price: Analyze what pricing model your competitors use, is it a one-time purchase or subscription? Check the pricing of their product or service. Look for the discounts and offers they provide to customers. Is their product worth the price they offer it in?
- Promotion: This involves looking at the promotional strategy of your competitor brands. Examine how they launched their product or service in the market. Identify which marketing and advertising channels are they using. Pinpoint their unique selling proposition and the product features they highlight. See how they put forth their brand to the customers.
- Place: Determine where your competitors are selling their products. Are they selling it online or is it available in stores? Look at their business model, do they sell it directly to customers or partner with distributors and suppliers?
By finding out information about the marketing mix of your competitors, you’ll know a lot. Ensure that you include both quantitative and qualitative data of your competitors to carry out an effective competitor analysis.
6. Strengths and Weaknesses
From the above points, you’ll get comprehensive information about your competitors. Now, you can easily identify the strengths and weaknesses of your competitors. Compare the strengths and weaknesses of your business to theirs to see if you can fill in those gaps. Record your research on a spreadsheet to analyze and draw crucial conclusions.
Competitor Analysis: Vital to the success
Competitor analysis is not the ending of your strategic planning but rather the beginning of it. You can get key insights from competitor analysis that you can implement while making crucial business decisions. To start with competitor analysis you should first do the SWOT analysis of your own business.
Knowing the strengths, weaknesses, opportunities, and threats of your business can help you a lot. Once you have completed the competitor analysis, you can compare various data points and find out how you can improve. You can get data-based actionable insights that can aid you in growing your business significantly.
Competitor analysis is not a one-time activity but an ongoing process. You can always refer to the competitor analysis research data to evaluate your decisions. Before making impactful changes, always look and find out if your competitors have tested it and failed.
No matter if you are a startup or a well-established company, it’s always a good idea to know your competitors. You must conduct a competitor analysis to put your business on the path of less failures and more success.
A competitor analysis can help you know the choices available to the customers and whom you are competing against. Just by analyzing the strong points and failures of your competitors, you can avoid making similar mistakes. However, it’s also needed that you keep track of your own KPIs as well.
WebMaxy eGrowth is an eCommerce customer management platform that can help you track the KPIs of your business. It comes with a wide range of features that we have explained below.
- KPI dashboard: Tracks different KPIs of your business like marketing spend, revenue, CPC, CAC, and ROAS
- Marketing insights: Tells you about the conversion and revenue contribution of your different marketing campaigns.
- Online store: Know how your online store is doing. Get accurate information about your total sales, average order value, canceled orders, and returning customers.
- Audience segmentation: Segment your customers into lists based on distinct attributes and their recent activity. Target them effectively through personalized marketing.
- Email campaigns: Create and run email marketing campaigns to target your customers effectively.
- Social campaigns: Manage your different social media accounts from one place. Plan and schedule your social media posts.
- WhatsApp campaigns: Set up your WhatsApp business account. Run Whatsapp campaigns and connect with your customers personally.
- Marketing automation: Automate your marketing workflows and enhance your customer journey.
- Customer loyalty: Create and run customer loyalty programs to retain your customers for a long time.
- Help desk: Interact and engage with your customers on different platforms. Create automated replies and reduce your first response time.
Schedule a demo with our experts on call to learn more about WebMaxy eGrowth or email us at firstname.lastname@example.org.
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Competitor Analysis FAQs
A competitive market analysis is a process of researching and studying the major competitors to understand their marketing strategies and know what they are doing well. A competitor analysis can help you to know about the strengths and weaknesses of your competitors. You can find out the best strategies and tactics that have helped them to grow their business. Identify the customer needs that they aren’t able to fulfill. You can use this information to build products or services that meet customers’ needs and deliver results.
A competitor analysis can help you know and understand the competition in the market. By conducting competitor analysis you can learn how to build and market your products. We have given below the steps to conduct competitor analysis.
1. Identify your competitors
2. Analyze their website
3. Examine their content strategy
4. Look at their social media
5. Decide your next steps
SWOT analysis is not the same as competitor analysis but is a type of competitor analysis. In SWOT analysis you look at your competitor’s strengths, weaknesses, opportunities, and threats. In competitor analysis, you look at the various aspects of your competitor like their website, social media strategy, marketing mix, messaging, background, customer profiles, and so on. SWOT analysis can be used in competitor analysis to get comprehensive information about the competitors.
Competitor analysis is a process of researching the competitors to know their strengths, weaknesses, marketing strategies & tactics to improve your decision-making and strategies. To do a competitor analysis you should first identify your competitors in the market. Then, start with gathering information about them through different sources like their website, social media, press releases, and articles published by them. Look at their marketing strategies and tactics that have helped them to establish themselves in the market. Find out the gaps between the products or services they are providing and the customers’ needs. Build products or services that can satisfy these customers.
A competitor analysis can help eCommerce know a lot about its competition in the market. They can get an understanding of the advantages and potential threats in the market. They can know who are their direct and indirect competitors. Additionally, they can know what business strategies and tactics their competitors are implementing for pricing, marketing, and distribution. This way they can compare their eCommerce business and find ways to improve it.
A competitor analysis can help you discover ways to gain an edge over your competitors. The different types of competitor analysis are as follows:
– SWOT analysis- It is the process of analyzing the strengths, weaknesses, opportunities, and threats of your competitors.
2. The customer journey map– Analyzing the steps that a prospect goes through with a business before becoming a customer.
3. Growth share matrix- It is a visual tool that helps to know the market share and market growth rate.