How do you make your product stand out when several of your competitors are trying to get their piece of the pie (also known as your target audience)?
How can you grab the biggest piece for yourself?
I don’t know much about pies but I do know a lot about competitive analysis, which you’re going to need if you want to differentiate yourself from those greedy competitors!
Not convinced? In this article, I’ll talk about the ins and outs of competitive analysis, what it can do for you, and how to conduct one without tearing your hair out. Let’s dig in!
What is a competitor analysis?
Competitor analysis is the process of researching your competitors and what they’re up to so you can compare yourself with them and find insights that will improve your business or service.
In the process, you’ll find out their strategies, strengths, and weaknesses, which are knowledge you can leverage to fill gaps or seize opportunities, just to name a few applications.
Do you need a competitive analysis?
“Why bother doing a competitive analysis?” you may be asking yourself, after reading that definition.
Well, competitive analysis matters a lot in business and if you want to stay relevant, you need to know what your competitors are doing.
Ultimately, a competitive analysis is not about your competitors–it’s about you. You’d want to see what makes you different.
You probably also want to become a profitable business. Competitive analysis is your key the castle.
But that’s not all a competitive analysis can do for you. It can also:
- Measure your performance using concrete indicators
- Measure your performance relative to your industry standards or competitors
- Help you solve your problems by finding new solutions
- Let you see what’s stopping you from achieving your objectives
- Give information that will dispel your assumptions about your business or industry
- Help you be proactive and spot opportunities and trends
- Helps you know your target audience better
- Allows you to course correct and know what you’re doing wrong
The process doesn’t have to be rocket science. You can do a competitive analysis in a few steps and armed with the right tools.
However, note that a lot of these steps are overlapping. You don’t need to do them in this order or even subsequently. Oftentimes, these steps happen simultaneously.
How to Perform A Competitive Analysis in Five Steps
Step 1: Find your competitors
Before anything else, you have to know who your competitors are. Start by doing an online search of companies that have the same products and are located in your area (whether physical or virtual).
Aside from Google search, look up competitors on Amazon and other marketplaces, too.
Use online platforms like Google Trends, Similarweb, or Panoramata. If you have a SaaS or B2B business, look at review sites like G2 and Capterra.
Does your industry have conferences or events? Grab a list of attendees or better yet, attend them in person.
If you have a brick-and-mortar space or location-based business, google “your business type” followed by the name of your town or city, or “your business type” plus “near me”.
Other ways of identifying your competitors:
- Ask customers about other brands they’ve considered
- Ask your sales team. They know best since they interact with prospects more.
- Go through industry directories.
It helps to group your competitors by type. Competitors can be classified in three ways: direct, indirect, and substitute competitors.
Direct Competitors
These are competitors that are selling the same product in the same area that you do. For example, Coke and Pepsi are direct competitors because they are big-name brands that have been selling cola for a long time.
Indirect Competitors
Indirect competitors are competitors that have different products or are in a different category but fulfill the same needs that you do. For example, a popcorn stand and a hotdog stand are indirect competitors because they fulfill the same need (convenient snacks).
Substitute Competitors
Substitute competitors are harder to spot and are not always who you think. They are a threat because they can replace your product by offering appealing alternatives to your target audience. For example, people may choose between a luxury bag or a trip to Europe to spend their hard-earned money on. Therefore, a luxury brand is the substitute competitor of travel agencies.
These are the main types of competitors you need to scope out and keep an eye on.
Step 2: Research their products and sales channels
Once you have identified your competitors, you need to gather as much information about them as possible. This includes information about their products or services, their pricing, their marketing strategies, and their sales channels.
However, note that a lot of these steps are overlapping. You don’t need to do them in this order or even subsequently.
Oftentimes, these steps happen simultaneously. Let this be your guide, instead of a strict rule.
You can start your research by looking at your competitors’ products. Create a document and outline all the details of your competitor’s products. Note their:
- Product features
- Shipping and returns processes
- Freebies
- Offers
- Upsells
- Cross sells
If they have an ecommerce store, stop by their website. On their product pages, observe key elements and data such as:
- their pricing
- the creatives they’re using
- the types of creatives (images, videos, illustrations etc.)
- the design and layout of their page
- copy
- Language and tone
- Product details
- CTAs
- Suggested products
- Social proof (reviews, press mentions, etc.)
- The add-to-cart process
- The checkout process
- How their product compares to other competitors you’ve surveyed
Put yourself in the shoes of a customer. Add an item to your cart, buy an item, or abandon your cart and see what steps they put in place.
Step 3: Look at their marketing and positioning
This step is crucial, the meat and potatoes of the data collection process. See how your competitors market themselves online. Look at their positioning and messaging across their channels from organic to paid.
You can check out their
- Social media platforms
- Email newsletter
- Target keywords and ads
- Website
- Landing pages
- Blog
- PR
- Webinars
- Podcasts
By doing this, you can have a sense of their overall digital marketing strategy. Deep dive into these channels even more for a granular look.
For example, you can note how often they post, the kind of content they publish, their engagement metrics, how they communicate on social media, and the products they highlight on each channel or platform.
The question you should ask in this step is “What is my competitor’s USP?” then back up your answer with proof.
Step 4: Research what customers are saying about them
You can gather all the quantitative data you want but it still won’t give you the full picture of how well your competitors are performing–that is unless you research their customers’ feedback.Thankfully, this is easier than ever because of review platforms, social media, and your customer’s websites.
In this step, look at recurring sentiments and complaints that customers bring up in reviews and comments on social media. Take this a step further if you wish and have the resources by conducting surveys, customer interviews, and focus group discussions.
Observe how your competitors interact with their customers and the quality of their customer service. Subpar customer support can be a dealbreaker for customers and therefore can be a key point for you to differentiate your business.
For all your data collection steps, describe the information as much as you can, paying attention to what your competitors are doing differently or what they’re doing that’s new or worthy of emulation.
Step 5: Conduct a SWOT analysis
Based on your analysis of your competitors, you can identify their strengths and weaknesses and pinpoint opportunities and threats to your business, a process also known as a SWOT analysis.
SWOT stands for:
Strengths
Identify what your competitors are doing correctly and what is working for them. For example, they could have a huge presence on social media.
Weaknesses
Identify what your competitors are not doing so well at or what they could do better. For example, maybe their customer support team is slow at responding to queries.
Opportunities
Identify opportunities or areas where you can gain a competitive advantage. Opportunities can also be external factors that can work in your favor such as new target audiences to market to.
Threats
Identify threats, which are defined as the areas where your competitors may be able to gain an advantage over you. Threats are also external factors, ranging from changing customer preferences to new government regulations that can affect sales.
SWOT analysis helps you formulate a new way to differentiate your product or brand and truly corner a space in the market just for you. But it doesn’t end here.
A competitive analysis is only as good as what you do with it. So craft your new game plan and execute it until you find a process that sticks.
How often to perform a competitive analysis
This question often gets asked and the answer is simple. Do it as often as you reasonably can.
For most businesses, this is every 6 months or twice a year. Trends crop up in what seems like mere hours these days. Things are changing all the time, ideas get stale, and the analysis you do today will be useless a year from now.
So stay current and update your analysis report regularly.
Competitive analysis is a gamechanger
A competitive analysis is an essential tool for any business that wants to stay ahead of the competition. You can use it not just to know your key competitors but to find your unique selling points so you can differentiate yourself and capture a larger audience.
At the end of the day, it’s just a tool for refining your marketing strategy, so use it correctly and keep sharpening your blade so you’re ready for any challenge.
FAQs
1. What is the main purpose of a competitive analysis?
A competitive analysis helps businesses understand their competitors' strategies, strengths, and weaknesses to find opportunities for growth. It provides valuable insights to improve marketing, sales, and product positioning.
2. How often should I conduct a competitive analysis?
It’s best to conduct a competitive analysis at least twice a year to keep up with industry changes. Regular updates ensure you stay ahead of trends and market shifts.
3. What are the most effective tools for competitive analysis?
Some of the best tools include Panoramata, Similarweb, Google Trends, and review platforms like G2 and Capterra. These tools help track competitors’ traffic, keywords, and customer feedback.
