Competitive Analysis is crucial for determining how your business stacks up against the competition. It’s a smart way to look for areas for improvement and opportunities. If you haven’t been conducting a periodic competitive analysis, don’t worry, we’ve got your back. Today we will cover everything there is to know about competitive analysis that will put you in the driver’s seat.
“All failed companies are the same. They failed to escape competition.” ~ Peter Thiel
There is one group of people who love competition. Take a wild guess…
Consumers are the ones who actually benefit from competition. As companies try to outsmart each other by:
- Bringing new products to market quicker
- Improving the quality of their products and services
- Reducing prices
- Catering to the needs of each and every customer
However, if you are a business…competition can be well, deadly.
Unless you are selling jewelry made out of rocks from Mars, you likely have competition.
You’re not alone. Every company in every niche does.
It doesn’t matter if you are Coca-Cola or a small mom and pop store. You are either stealing other customers or having your business taken away from you.
Understanding the competition and keeping an eye on what they are up to is critical to your business success and growth.
Most marketing plans incorporate competitive analysis or competitive intelligence. Having knowledge about your competition’s market approach, strategies, and marketing messages, can help you remain one step ahead. It’s a battle to gain your customer’s mindshare.
A study by Conductor found 74 percent of marketers believe competitive analysis is “important or very important.” Surprisingly, six out of 10 marketers admitted they weren’t good at it!
One of the overwhelming reasons why more than half of the marketers feel they are not very good at competitive analysis is their lack of strategy.
If you are someone who needs help to stay ahead of the competition by leveraging competitive intelligence, this blog post is for you. Let’s start with the basics.
WHAT IS COMPETITIVE ANALYSIS?
Investopedia defines competitive intelligence as:
“The process of collecting and analyzing information about competitors’ strengths and weaknesses in a legal and ethical manner to enhance business decision-making.”
No, it’s not about hiring a private detective to spy on your rivals. We wouldn’ t recommend you to go that far!
At Bit, we define competitive intelligence as:
“Researching information about your competitors that already exists in the public domain and utilizing it to your advantage.”
With technological advancement becoming a regular affair, it has never been easier to find out about a rival company and see what they are up to. You can literally just Google the type of product or service you are offering and get a list of companies offering similar products or services in your niche.
WHY IS COMPETITIVE ANALYSIS IMPORTANT?
Researching and analyzing your organization’s competitors helps you discover:
- Current and potential threats in the market
- Identify opportunities in the marketplace to give you an edge over others.
- Discover its USP (unique selling proposition)
- Your’s and your competitor’s weaknesses
According to Kauffman Index, over 550,000 new business are started each month in the US alone. For the fourth quarter of 2016, the percentage (7.4%) of new job seekers starting their own businesses is the highest it’s been in four years according to the Challenger Gray startup report. More and more people are starting up businesses of their own, creating a lot of competition for consumer mindshare.
On top of that…in a world of globalization, your competition is not limited to your zip code, but anywhere in the world. There can be two girls selling items from their basement on Amazon which is similar to yours.
Competitive intelligence is important, especially for new startups and businesses who lack millions of dollars for marketing. Knowing how your competitors are killing it and replicating it can save you thousands of dollars in experimentation.
Competitive intelligence helps you to find answers to questions that can make or break your success.
- How is my business different than the competition?
- Does my website loads faster or slower than competitors?
- Why does my competitor have higher ratings than me on Amazon?
- Why do their Facebook fans keep growing?
- How are they able to keep their prices so low?
- What do my customers think of my company compared to my competitors?
- What makes my product/service offering unique?
Your competition is not limited to your zip code.
The aim of any business is not only to satisfy the needs of customers but to do it better than their competitors. By getting answers to the above questions, businesses can see if they are on the right track or they need some catching up to do.
HOW TO CARRY OUT COMPETITIVE ANALYSIS
A quick Google search can provide you a list of companies and businesses selling something similar to you. However, more advanced tools are helping company’s gain crucial insights regarding their competitors. Tools like Buzzsumo, Google Trends, Hubspot, and Alexa rankings are exceptional in providing insights for competitor websites like traffic sources, demographics, ad impressions, website load speeds, referral sources, keyword research, etc.
For businesses other than those existing on the internet, Davidson, in his book “Even More Offensive Marketing,” gave an exceptional model to collect competitor analysis from three different sources:
1. Recorded Data
Recorded data includes information that is formally published by the organization or by external sources. For example a company’s annual reports, newspaper or magazine articles, press releases, etc.
2. Observable Data
This type of data can be collected by simply observing your competitors from an arm’s length. This could include product pricing, service offerings, ad campaigns, etc.
3. Opportunistic Data
Opportunistic data is collected strategically. This includes talking or meeting with their customers, their suppliers or partners, and their former and current employees. It also includes attending trade shows, seminars and scoping out the competition, etc.
The important part is not only to collect this vital information but to put it together in a meaningful way. Your company ultimately needs to reap its benefits and plan accordingly.
Here are some of the steps you need to follow to conduct a thorough competitor analysis:
Set Your Goals
First and foremost, you have to decide what you want to accomplish out of your competitive analysis.
- Are you looking to exploit your competitor’s weaknesses?
- Are you looking for new market opportunities that your competitors have ignored?
- Do you want to refine your marketing message?
- Do you need a design overhaul?
Knowing your analysis goals upfront will provide you with better insight on how to research, develop an action plan, and execute.
The next step is to identify competitors offering similar products or services. These include current as well as potential competitors. To find who your competitors are, you can do the following:
- Ask your customers who else they are considering for the same product.
- Do a Google search or use tools like Alexa, Similar Web or Buzzsumo.
- Identify competitors by attending trade shows, conferences, and seminars.
- If you own a retail shop or e-commerce business, search on Amazon to find companies selling similar products.
- Keep up-to-date with industry and market news related to your product to spot any up and coming competitors.
Once you know who your competitors are, you can kickstart your analysis by collecting data about them. As mentioned earlier, data can be can be divided into three sections: 1) recorded 2) observational and 3) opportunistic data. Scout through these resources and collect as much data as possible.
For your competitor’s internet presence, you will want to evaluate and answer the following questions::
- How fast does it load?What is the color scheme?
- What’s their design and brand style?
- What type of ad placements do they have?
- What are their landing page optimization techniques?
Their content marketing strategy:
- What content marketing strategies do they use?
- How often do they blog?
- Do they publish short form or long form content?
- Are they trying new marketing avenues like podcasting and video marketing?
Their social media presence:
- How many fans or followers do they have?
- Are they making use of influencer marketing?
- What kind of ads are they are posting?
- Which age groups or demographics are they targeting?
- How often do they post on social media?
Analyze and Compare Data
Once you have collected all the data you need, it’s time to analyze it.
Merely collecting data is of no use until you put it to work. Comparing your own strategies, tactics, and metrics against your competitor’s can give you macro-level insight. You may gain insight on trends in the market and opportunities you are missing out on. For example, if you are getting only 2% of your traffic from social media and your competitors are getting upwards of 10%, you know it’s time to revamp your social media strategy
Identify Areas for Improvement and Opportunity
After completing the competitive analysis, you now have a clear understanding of what your competitors are up to.
It’s time to put this information to good use by finding out areas of improvements. Is it your social media strategy that’s stopping you from becoming dominant in your space? Is your customer service on par with your competitors? Does your product match in quality with your rivals? All of these questions can be answered through competitive analysis.
COMPETITIVE ANALYSIS: MAJOR TAKEAWAYS
Competitive analysis answers three key questions about your competitive landscape:
- What’s happening around you? (what your competitors are up to.)
- Why is it happening? (What are the strategies implemented by them.)
- What can you do about it? (What areas can you improve)
By staying on top of your rivals, your company can quickly react to the competition and develop strategies accordingly. Competitive analysis should not be taken lightly and should be performed from time to time to actually reap the benefits. There’s little to no benefit in doing a competitive analysis when your rivals have already taken a big step and acquired majority of the market share.
The competitive analysis allows your company to:
- Stay Ahead of your competitors
- Learn from mistakes of other companies
- Get insight into industry trends
- Compare yourself with industry leaders, aka Benchmarking.
- Stand out from the crowd
- Replicate and modify successful competitor strategies and tactics
We all have heard the saying “knowledge is power.” Having the knowledge about your competitors and the market can serve you with a great deal of power and advantage over your rivals.
What are your thoughts on competitive analysis? How often do you keep track of your competitors? Let us know in the comments section below!