Do you want to conduct a competitive analysis to better understand your rivals, launch a new product, or even get more ideas about your marketing strategy? Let’s see what you should do!
You take on a new project: a shoe brand (not quite on Edward Green‘s level but on the rise). You believe that they have serious potential to disrupt the industry.
But you know before you can start thinking big, you have to get a better picture of your environment. You need to explore the competitive landscape of a product to determine how similar products are in your industry. More importantly, you need to define your sources before making any decision.
Do you know what will answer all these questions?
A competitive analysis.
But it shouldn’t be a normal one. It needs to go much deeper than just looking at your rivals’ social media, campaigns, or advertising efforts for comparison.
For the best outcome, you need to look into their history, their progress in selling their products, who they consider your closest competitor, and where they’re falling short.
To conduct a competitive analysis, you must put together a good understanding of the industry hierarchy. It demands exploring, for instance, the up-and-coming shoe brands, and figuring out who is the competitive landscape you measure against.
You need to be aware of similar-size brands that your clients may browse and compare against your business.
Indeed, the strategic advantage behind compiling this analysis is that it helps you portray a better picture of the competition. That’s how you can obtain a successful real-life template to emulate but also recognise and avoid failures.
Implementing a competitive analysis takes some effort to put together, but it’s worth the time.
Here we will go through why you need to conduct a competitive analysis and give more insightful tips.
But first, let’s define competitive analysis, so we have a clear meaning from the beginning of our guide.
What is Competitive Analysis?
A competitive analysis compares your business to other businesses within your industry— several rivals that are competing for more marketing share.
Rivals are focused on a similar geographic location and may also target similar customers and similar products, services and marketing strategies to your own company.
So, it’s the process of analysing your competition’s business ideas to uncover the strengths and weaknesses of your competition. Based on this analysis, you can reach customers that are not 100% happy or satisfied with the solution they get now.
So, you can offer your product and grow your market share, effectively expanding your company.
This analysis is a system for figuring out your business’ standing in the competitive environment. So, you will study what you have concerning your competition.
It’s a strategy for collecting intelligence and putting that information to optimise.
With a thorough analysis as part of your initial business plan, you have a practical strategy to position yourself to outshine your competitors and draw loyal customers.
To conduct a competitive analysis, you will invest in planning, research, and honest introspection. Executing this analysis needs the patience to take it step-by-step, and you will be surprised by what you discover about the business world in your neck of the woods.
Why Conduct Competitive Analysis
What you will gain from the competitive analysis is hard to miss. It will help you from many different perspectives. So let’s see why you should consider building your own.
- Identify Market Opportunities
Conducting competitive analysis will help you gain market share and brand awareness because you become more aware of your and your competitor’s strengths and weaknesses. In addition, that will give you a chance to learn what you can do and what not to do.
For example, when doing a competitor analysis, you will look deeper into customer reviews, for instance. You might discover that a competitor received poor ratings or negative feedback in a specific area.
These reviews might be because of lousy shipping experiences or an untalented customer service team who had a public tit-for-tat debate instead of building a relationship with the customers. But, in the end, it made things even worse, and your competitor was in an unfavourable position.
This situation creates assumptions about trust and transparency.
Now, your competitor is dying, but you can take advantage of this by offering terrific customer service and letting people talk about how decent your brand is when dealing with customers.
- Enhance Your Business Knowledge
A competitive analysis will help you grow your brand knowledge— the knowledge you can share and bring out ideas.
Then you become an expert and possess an authority that you use to build a trusted relationship with your customers.
Additionally, you will use this knowledge to share with your team to ensure that each individual knows the border picture.
All of that will help build their appreciation and learning for their business.
- Understand Your Competitors
Do you know your competitors?
Yes, I do.
Do you know them well?
Mmm… I am not sure.
On the surface, this might seem like an easy step. You don’t need to go further than Google. Quick research reveals who else is selling similar products. But trust me, understanding competition requires more than thinking and nuance.
Here is the deal; when you conduct a competitive analysis, the question is, “how well do you know your competitors?” It’s not about listing your competitors. It’s about how many things you know and to what extent you know about the strategies they’re applying for success.
If you don’t, then maybe you should. Implementing a competitor analysis is vital for not only being on the same page as your competitors and matching their qualities. In addition, it will give you an edge because understanding your rivals helps you to know your business much better.
First, you must understand the variety of rivals you face. Then, you need to split your competition into direct and indirect.
The first group are those businesses selling items and services identical to what you offer. So, for example, if you sell notebooks, you’re in direct competition with other pages or websites selling notebooks. Not to forget that you’re competing against brick-and-mortar bookstores selling notebooks.
The second group sells goods and services similar to yours but targeting different segments or not the same as yours but which speak to the same customer or meet the same needs.
What does this suppose to mean?
Take this; a restaurant that serves pasta directly competes with another pizza restaurant that offers pasta but indirectly competes with a hamburger restaurant or stands and other catering companies.
Because all satisfy customers who want fast food, they all fulfil that need in various ways.
Apart from spotting any opportunity in the market, you will be able to uncover their strengths and weaknesses. Then, you begin to understand what works, what you can master, what doesn’t work, how to make better decisions and what you can do to avoid mistakes.
Throughout this process, you will understand your business strengths and weakness. The deeper you get into your value proposition, the better position you can preserve in your customers’ memories.
But how can you find competition?
It always begins with research. First, use the right keywords that describe your company. Then check Google research for every competitor that appears and start your analysis.
Be thorough and search every term in your company description, including all terms that cover your indirect rivals. Then combine terms that you can think of to find more potential competitors.
Identify the top research results within the geographic area. Next, determine how your offerings can beat them and the differences that will push you to stand out.
It’s time to dig deeper into your giant composition by investing. So, you will need to check websites, annual reports, prices, promotions, marketing activities, government reports, testimonials, reviews, and certifications.
You may contact their current and former employees. They would provide you invaluable insights into who your competitor’s business strategies, potential pitfalls, and best practices.
- Convert Your Competitors’ Customers to Your Product or Service
Once you understand your competitors’ weaknesses, you can make your business stand out. Thus, you make it easier for your customers to find you.
The most crucial benefit of making your business unique is to increase your market share. In a world where you can find a sea of business, making yourself visible and noticeable is the key to success.
The best way to help your business overperform is to conduct a competitive analysis; then, you can make use of an optimal marketing strategy.
You can either opt for getting creative using online platforms to market your business or develop your product by adding a unique feature.
Make sure that whatever competitive analysis template you choose must be able to explain your competitor’s mistakes.
Yes, even if you think your competitors have reached perfection by doing everything right, there’s always a point where things go south.
If your competitor fails at something, it gives you a bigger chance that you can address the problem and focus on making progress.
Then you will be able to convert their customers to your product.
Consequently, focus more on learning from your competitors throughout creating analysis. Uncovering their strategies can help you avoid the same mistakes.
- Create Your Own Benchmarks
Benchmarking refers to the process of building points of reference against what you have to measure growth. For example, say you analyse shoe brands similar to your own. To perform a benchmark, you’d need to take the metrics for how well these brands’ social media posts do, combine them all for an average and set what you get as a benchmark and your ultimate goal to surpass.
So, what benchmarks can you create?
Set things you can easily measure, like engagement, impressions, and social media, reach their website SEO performance and return visitors to keep the pace. Then you need to set the pace in your corner of the industry.
This information can be used to identify and fill critical gaps in your business.
Yes, I hear you. You might mumble now that you know many companies that had an easier time getting off the ground. They don’t conduct a competitive analysis, and all these steps are not included. But it doesn’t make them experts.
According to many studies, running a business without guidance can be a quagmire, especially if it’s your first time. Harsh! But that’s the truth.
So, you have to look at the kind of roles your rivals want to bring on. What gaps are they filling that you can do also?
Building a competitive analysis is about more than knowing what your competitors are doing; it’s about bringing on new staff.
When your competition brings a new competitor for a new role, your newcomer senses a change in the industry and wants to offer something that will ensure smooth sailing or a successful business.
And you should be aware of how you should react. No… You should be proactive rather than reactive and have taken the next step because you have already conducted forecasting, and nothing can surprise you.
- Conducting SWOT Analysis
Not just identifying your main competitors and analysing their capabilities, but the competitive analysis will keep your business healthy by taking advantage of a long-standing economic tool, SWOT analysis.
You can discover your strengths and weaknesses when setting up your competitive analysis. But if you direct your focus on using an utterly competitive framework, you will nail it.
SWOT comes with four sectors to determine your company’s position or visibility: strengths, weaknesses, opportunities, and threats.
So, you’d need to use a whiteboard for each competitor and draw a large box. Each box will be separated into four equal quadrants.
The top two quarters explain internal factors; strengths and weaknesses— and the bottom two include external factors, opportunities and threats.
Strengths and weaknesses refer to tangible factors or real assets that affect your business.
So, creating this template will help you list the company’s available resources and any possible liabilities. It might contain:
- Investment, income, funding, and any financial resources
- Employees, customer segments, and other human resources
- Location, facilities, features, and equipment
- Copyrights, patents, and trademarks
- Brand proposition and image
- Process, software systems, employee training or programs
- Innovative pricing plans
- Fixed and variable costs
On the other hand, opportunities and threats refer to any factors you have no control over. These factors can positively or negatively influence your business, such as:
- Emerging competitors within your marketplace
- New products entering the market
- Shift in customer needs
- New technology threatening your service
- New governmental regulations
- Inflation or any economic complications
- Economic trends
- Demographic changes
- Changes in relationships between you and your suppliers or partners.
Eventually, this analysis provides a clear vision of your competitors’ health and where they seem more vulnerable. Once you’ve performed your SWOT analysis for your rivals, run the same analysis for your own business.
The information you will get from this step is priceless.
- Know Your Whys
When a potential customer sees your product and a similar product side by side, the why of your brand will often be the determining factor in conducting that sale.
The truth is most similarly priced products in an industry are much the same.
But to make it easier for your customers, you need to help them determine why they should pick your product.
Conducting a comprehensive and well-structured competitive analysis will end this mind-talk because you have an advantage over your competitors by a noticeable feature that no one offers.
How Can Profiletree Help You?
Competitive analysis helps you evaluate your position in the market, whether you are just starting out your business or already have an established position within your industry.
It allows you to assess the landscape around you and make more informed decisions.
That’s why it’s one of the top things you can do for your business. When building your analysis, every part of the template can bring benefits to your brand. For example, a SWOT analysis can indicate a new direction for business development, improve your overall position, increase customer loyalty, and optimise your product.
If you want to be one step ahead of your competitors, you have to know the status quo first. Then, you must discover which areas to improve upon and where you can easily create a competitive advantage.
All of these steps will help you shape your business decisions.
And that’s what we can do for you. We will help your business become the best version of itself by executing marketing research and accurately identifying your competition.
Our experience enables us to reach your competitors and provide a foundation for knowledge-based analysis.
How? Here are some things we can do for your business:
- Listen to your objectives and your priorities.
- Establish a baseline to build on your strategy.
- Perform a SWOT analysis for you and your competitors.
- Conduct surveys and interviews with a sample of your target audience to uncover your weaknesses and strengths in your customers’ eyes.
- Take an objective look at your sales, business, and marketing reports to help you improve your strategy.
- Define metrics to evaluate your competition.
- Record all information on readable documents to help you make better decisions efficiently.
For the most up-to-date information on the services we offer, why not check our services page or contact a member of the team. Thanks for reading!