What is competitive analysis and how to conduct it professionally
No business operates in isolation. Every company, regardless of size or industry, has competitors. Think about them and getting into the question of how you look against their background is a common thing. But how can you analyze competitors and get detailed insights about them? And what to do with the received information?
In our article, you will find strategies for competitive analysis, as well as tips on how to make better decisions with this knowledge. Read on to learn how to find your competitors, analyze their marketing strategies, and understand their strengths and weaknesses.
What is competitive analysis?
Competitive analysis is the process by which a company studies its competitors to understand their strategies, Advantages and disadvantages. This tool allows a business to gain insight into competitors and their market position and adopt informed decisions about own strategies.
Competitive analysis provides an opportunity to study the products and services offered by competitors, to analyze the features, quality and prices to determine how they differ from yours. In addition to specific products, it is important to evaluate strategies marketing and sales to understand how competitors reach and engage with target audiences.
However, competitive analysis isn’t just about what your competitors are doing. It is also about identifying niches in the market, finding opportunities for differentiation and forecasting potential threats. Understanding what the organizational structure is, technological investments, market positions, and even the legal and regulatory systems of your competitors, you can develop more competitive and innovative strategies.
What does the competitive analysis report contain?
Definition of competitors. Classification of main competitors as direct, indirect or potential, based on their nature products and compliance with your proposals.
Product overview A detailed study of the range, features, quality and price of competitors’ products.
Market position Determining each competitor’s place in the market, including their market share, reputation and influence in the industry.
Marketing and sales tactics Analysis of channels and promotion methods used by your competitors.
Pricing strategies Understanding the pricing models and schemes your competitors use for their products.
Financial insights Examining existing financial data to understand the economic stability, profitability and growth prospects of your competitors.
Operational structure Understanding of business operations such as supply chain mechanisms, distribution networks and collaboration with partners.
Customer perception Analysis of how customers perceive and react to competitors, as can be seen from feedback, reviews and other forms of communication.
Digital footprint Assessing your competitors’ online presence, including their websites, blogs, social media profiles and digital campaigns.
SWOT analysis Systematic assessment of competitors’ strengths and weaknesses, opportunities and threats based on all collected data.
Why competitive analysis is important for business
First of all, competitive analysis gives you an idea of who are the main players in the industry, what are their strategies, advantages and disadvantages. By understanding where your competitors are, you can better define your position and accept more reasoned decisions. This will help you use your unique selling proposition more effectively and find ways stand out from the competition. Conversely, by identifying your competitors’ weaknesses, you can gain a competitive advantage.
In addition, competitive analysis reveals trends and changes in the market, so you can anticipate industry trends and act anticipating, rather than reacting to them. At the same time, insights gained through competitive analysis help not only in attack, but also in defense. Understanding your competitors means being alert to potential threats. If a competitor is preparing to active capture of the market or launches a revolutionary product, timely detection of such plans allows the company to build appropriate strategy. It also helps identify areas for improvement so you can continuously learn and adapt. So you can not only keep up with your competitors, but also get ahead of them.
When it is worth conducting a competitive analysis
Product launch If your company is planning a new product launch, a competitive analysis will show how to position yourself to improve your strategy launch This ensures that your product will have unique trading advantages or help fill unoccupied niches that competitors could not notice.
Entering new markets If a company is planning geographic expansion or capturing a new segment, a competitive analysis can provide insight into local competitors, market demands and potential challenges.
Annual business analysis Just as companies typically conduct an annual financial audit, regular competitive analysis should be part of annual strategic research, so that you are always aware of changes in the market and activity of competitors.
Significant changes in the industry Technological advances, regulatory changes or market upheavals require a review of competition as such shifts can change the competitive landscape.
Launch of large campaigns Conducting a competitive analysis before planning a large-scale marketing campaign can help with formulation messages that will stand out and resonate more effectively with your target audience.
Mergers and acquisitions If your company is considering a merger or acquisition of another business, an in-depth competitor analysis will help understand how this move might affect the competitive balance.
Business stagnation When your sales are down, it makes sense to re-evaluate your competitors to determine if it’s due to their increased activity, or there are deficiencies in your offers.
Customer reviews If a significant number of customers begin to compare your products with those of competitors, this indicates a need conducting a fresh analysis of market competition to understand the peculiarities of market perception.
Difference between market research and competitive analysis
Market research and competitive analysis, at first glance, seem similar, but they differ in their direction. As we have written before, competitive analysis is the process of evaluating your competitors, studying their strategies, strong and weaknesses. It’s about understanding how your business stacks up against the companies working on it the market itself. It is usually used when entering new markets, launching new products or forming business strategies. Competitive analysis methods may include competitor research, product comparisons, and marketing strategy studies. The results of the competitive analysis help the business to determine the existing niches in the market, potential threats, areas for differentiation and opportunities for growth. It answers the questions: “Who are your main competitors?”, “What strategies do they use?”, “How is their product different from yours?”.
At the same time, marketing research is a comprehensive study of potential customers, their preferences, behavior and needs specific market. Its purpose is to research the market and find opportunities and problems that exist in it. Marketing researches often used during product development, market entry, or when identifying new prospects in existing markets. Common market research methods are surveys, focus groups, and monitoring activities. As a result, you get information about product demand, optimal pricing strategies, promotion methods, and potential market segments. Marketing research can also determine market size, growth prospects, and trends. They have to answer such questions as: “Who are potential customers?”, “What do they want?”, “How do they behave?”.
Simply put, marketing research is more focused on customers and the broader market, while competitive analysis is focused on competing companies. Together, they provide a comprehensive view of the business environment that helps you be more efficient focus on the market.
Types of competitive analysis
- Analysis of direct competitors
Direct competitor analysis focuses on companies that offer the same or very similar products as you and targets to the same customer base. It’s about brands that your target audience can choose instead of you.
- Analysis of indirect competitors
Indirect competitors may offer different products, but they solve the same problem or satisfy the same need target audience. Although these companies may not be in the same category as your business, they are competing for your customers
- Analysis of potential competitors
These are companies that are not necessarily in the same industry or category, but are perceived by your target audience as alternatives For example, a home workout app can be a competitor to a gym, especially in this era digital technologies.
- SEO analysis of competitors
SEO competitor analysis focuses on competitors who occupy the same positions for the same keywords as you in search engines systems Understanding how to analyze your competitors in the digital space can help you improve your SEO strategy to improve visibility on the Internet.
- Product analysis
This is an analysis of specific products offered by competitors. This type of analysis considers features, advantages, prices, quality and any other characteristics that distinguish one product or service from another.
How to conduct a competitive analysis?
1. Identify your competitors
Make a list of your main competitors. Online research, industry reports, and consumer reviews will help determine them. Competitors can be conditionally divided into several types:
- Direct competitors: offer similar products or services aimed at the same audience.
- Indirect competitors: fill the same need or problem as your product.
- New Competitors: Young companies in the market that may not have caught your eye yet, but have potential for growth.
2. Set goals
Before delving into the process, you need to decide on the purpose of the analysis. Potential targets can be:
- Understanding the competitive environment and market dynamics
- Identification of unfilled niches in the market
- Forecasting market trends
- Understanding of competitors’ promotion strategies
- Informational support for the development of your product
3. Evaluate competitors’ products
Study the range of products offered by your competitors, compare their quality with yours and determine their features. This will help you understand what makes your offerings different. Here’s what you should pay attention to first and foremost:
Features and technical characteristics Start by comparing different aspects of the products. What features do they offer? How do these functions differ from yours? Look for any innovative aspects that stand out.
Quality and durability It’s not just about what the product does, but how well it does it. If you have access to the product, determine its durability and reliability.
User Experience This aspect is especially relevant for software products. How intuitive is the competitor’s product? Is it easy to use? Are there any complaints from users?
Variety of products Sometimes not only the specific product is important, but also the assortment. Analyze whether your competitors offer more choice of options.
4. Learn marketing strategies
Analyze your competitors’ websites, social media profiles, advertising campaigns, and other ways of promoting themselves. Understand how they position themselves and what messages they use to get an idea of their target audience, place in the market and potential pain points. Equally important is evaluating your competitors’ media presence and researching SEO approaches to find out as they are usually found on the Internet. Here’s what you should pay special attention to:
- advertising channels
- content strategy
- activity in social networks
- SEO and Internet presence
- events and/or webinars
5. Analyze the pricing policy
Understand how your competitors are pricing their products or services. Are they focused on the premium segment of the market or set competitive prices? Start by making a price list of similar products. Are they taller or shorter than yours? What can it depend on? The higher cost may be due to additional features, better quality and brand reputation. Conversely, lower prices may indicate budget or lower market positioning.
Check whether competitors have permanent discounts or special offers, pay attention to loyalty programs or promotions. Indicate what the payment model is: is it a one-time payment, subscription, freemium or something else? Each model attracts different customers and has its advantages and disadvantages. Sometimes the initial price is not everything. It is important to understand if there are additional fees or costs on service that customers should be aware of.
6. Research distribution channels
How are your competitors communicating their offerings to consumers? They use e-commerce, offline stores or both options? If competitors are betting on e-commerce, whether they have their own platforms or rely on third parties services or combine these approaches? Some companies may choose direct contact with the consumer, abandoning the traditional retail Others may prefer a presence in large stores.
Also, find out if your competitors have local, national, or international distribution strategies. Company coverage speaks volumes about its ambitions and logistical capacity. Understanding these processes allows not only to evaluate competitors, but and optimize own distribution methods.
7. Formulate your strategy
Develop your own strategy based on the received data. Use insights to find unoccupied market niches or areas where competitors’ positions are weak. Apply data to improve product development, customer service and ways distribution If a competitor offers something unique, think about how you can provide additional value to your customers. If certain marketing channels are overloaded or underfilled, consider reallocating your budget or giving it a try new approaches.
8. Track information
Competitive analysis is not a one-time activity. Markets are constantly evolving and competitors are changing their strategies. Set it up Google Alerts to track competitor mentions, subscribe to their emails and check back regularly the results of the analysis so that they do not lose their relevance. You should be aware of new product launches, changes in marketing strategies and target demographics, as well as mergers and acquisitions. This will allow you to proactively adjust yours strategies to maintain market positions.
Conducting a competitive analysis involves not only identifying your competitors, but also understanding their actions, strategies, advantages and disadvantages. It allows you to get valuable insights that can be used to make better decisions. With competitive analysis, you can strengthen your strategy, find new opportunities and prepare for challenges.