Most people think of competition as a bad thing. They see it as a rivalry, something that is harmful to both parties and only results in one side losing. But if you look at the competition differently, you’ll see that it can actually be quite beneficial. In fact, if used correctly, competitor analysis can give you the edge you need to succeed in your business.
However, before you can start using competitive analysis to your advantage, you need to understand what it is and how it works. So keep reading this guide because we’re about to show you everything you need to know about competitor analysis so you can understand your rivals’ strengths and weaknesses and find ways to stay ahead of the pack.
Note: In this article, we will use the term “competitive analysis” or “competitor analysis” interchangeably. So if you see one or the other, don’t get confused; they mean the same thing.
What Is Competitor Analysis?
Competitor analysis is the process of identifying and evaluating your competitors in order to gain a competitive advantage. It involves understanding their strengths and weaknesses to identify opportunities and threats. With competitive analysis, you can discover more about each competitor’s marketing strategies by investigating their pricing, promotions, channels, and market share.
There are two types of competitors: direct and indirect competitors
- Direct competitors are those who offer the same product or service as you do. They are your main source of competition and the ones you need to keep an eye on.
- Indirect competitors offer a similar product or service but are not precisely the same. They may be able to satisfy the same need as your product or service, but they are not your direct competition.
Why Is a Competitor Analysis Important?
Before leveraging competitive analysis, it is important to understand its purpose and how it can help you. Here are some reasons why a competitive analysis is essential for businesses:
Identify and Fill Crucial Gaps
Without experiencing anything first-hand, it can be difficult to identify gaps in your market. A competitive analysis will give you insights into what your competitors are doing right (or wrong), so you can make necessary changes to improve your own business.
Note your competitor’s strategies, marketing mix, target audience, and overall business approach. Doing so will help you find areas where your company falls short and make the necessary changes.
Understand Your Competition’s Marketing Mix
How about you get something from your competition without spending any money? That’s precisely what competitive analysis can do for you. It can help you understand your competition’s marketing mix (product, price, promotion, place).
From there, you can replicate their strategies that work and avoid the ones that don’t. Make sure you don’t copy them entirely, as that can lead to legal trouble.
Identifies Your Unique Selling Proposition (USP)
Jotting down your direct competition is not enough. In order to really understand what they are doing, you need to research their marketing mix in-depth (we’ll get to that later). This competitive analysis will help you understand your own business better. In particular, it will help you identify your Unique Selling Proposition (USP).
Your USP is what sets your business apart from the competition. It makes you unique and allows you to serve your target audience better. Once you know your USP, you can use it to your advantage in your marketing campaigns.
How can you find USP? Look at your competitor’s marketing mix and find an opportunity they are missing. This could be a certain type of customer, a certain product, or a certain marketing strategy.
Allocate Your Budget More Efficiently
As you get to know your competition better, you will also better understand how much money you need to spend on marketing. This is because you will know which strategies are working and which are not.
Monitor Your Competition’s Every Move
In the business world, things are constantly changing. What works today might not work tomorrow. This is why monitoring your competition’s performance over time is important. Competitive analysis will help you do just that.
You can use competitive analysis to track your competitor’s progress and see how they are changing their strategies. This way, you can stay one step ahead of them.
How to Do Competitor Analysis?
Let’s say you want to enter the competitive market of web hosting. You would first need to identify your competitors. The best way to do this is by using Google.
Just type in “web hosting” and see which companies come up. These are your direct competitors.
You can also use Google AdWords Keyword Planner to find more competitors. Just enter a few relevant keywords, which will show you a list of companies bidding on those keywords.
It’s essential to identify and research not just your direct competition but also companies in different industries that cater to the same target demographic as you. This process gives you a fresh perspective on your business or customer base.
To locate these businesses, do an internet search or look on websites such as Product Hunt and Crunchbase. These will help you find similar products and services to what you’re offering and enable you to conduct market research. You must find as many direct and indirect competitors as possible so that your business knows who they are against.
Pto Tip: If you want to find out more about a specific competitor, you can use a tool like Crayon. Crayon will give you an in-depth competitive analysis report covering their marketing strategies, website traffic, and social media activity.
Analyze Competitors’ Online Presence
Online presence covers all aspects of a company’s internet marketing, from competitors’ websites to social media platforms. This is one of the most important things to look at when conducting a competitive analysis, as it will give you an insight into how visible they are online.
The first thing you should do is visit their website and assess its design and user experience.
- Is it easy to navigate?
- Is it mobile-friendly?
- How does it compare to your own website?
You should also take a look at their social media platforms. See how many followers they have and how active they are. Take a look at the type of content they are posting and the engagement they are getting. This will give you an idea of how well they connect with their target audience.
It’s also a good idea to set up Google Alerts for your competitors. This way, you will be notified every time they are mentioned online. This is a great way to stay up-to-date with their latest news and activity.
Check Online Reviews
To get an idea of how customers feel about a particular company, you should check online reviews.
You can search for the company on Google and then scroll down to the “Reviews” section. Here you will find a list of customer reviews.
You can also check out sites like TrustPilot, Yelp, and Consumer Reports. These are all great sources of customer feedback.
It’s important to note that you shouldn’t just focus on positive reviews. You should also look at the negative ones, as they will give you an insight into the areas that need improvement.
Pro Tip: Don’t forget social media platforms like Twitter, Facebook, and Instagram. These are also great places to find customer reviews. According to the list of statistics by Reputation X, Social media is used by 54% of people to research products. So, it’s definitely worth checking out.
Identify Your Competitor’s Strengths and Weaknesses
Once you have gathered all this information, it’s time to analyze your competitor’s strengths and weaknesses.
Both small and large businesses have strengths and weaknesses. It’s essential to identify these to find areas where you can improve.
Strength is where a company excels in comparison to its competitors. This could be anything from a competitive pricing strategy to a well-designed website.
On the other hand, weakness is an area where the company falls short. This could be anything from a lack of online presence to poor customer service. This is where you need to focus your attention if you want to make your business stand out.
Pro Tip: When conducting a competitive analysis, it’s important to look at the competitive landscape. This will give you an overview of the target market and help you identify the key players. It will also help you understand the competitive dynamics and how your business stacks up against the competition.
Why do you do all the hard work when plenty of competitive analysis tools out there can do it for you?
Many competitive analysis tools are available, from free to paid.
Some of the most popular competitive analysis tools are:
- SEMrush and Ahref’s Keyword Explorer
- Google AdWords Keyword Planner
- Google Trends
- Sprout Social
- Google Alerts
Determine Your Competitive Advantage
The next step is to determine your competitive advantage. This is what makes you different from your competitors and sets you apart in the market.
Your competitive advantage could be anything from a unique selling proposition to a competitive pricing strategy.
Having a competitive advantage is essential as it will help you attract and retain target customers.
There are numerous competitive advantages that you can leverage. It’s essential to choose the one that is most relevant to your business.
Some of the most popular competitive advantages are:
- Customer service
- Product Quality
- Delivery times
A piece of advice: Don’t ever fall on bad marketing tactics just because you saw your competitor do it, and it worked for them. Chances are, their marketing technique won’t work the same way for you.
Let Your Competitor Analysis Guide Your Business Strategy
To summarize, conducting a competitive analysis is a great way to stay ahead of the competition.
It will help you understand your competitor’s marketing strategies, their strengths and weaknesses, and how they stack up against you in the market.
Once you have all this information, you can use it to guide your business strategy and ensure that you are always one step ahead of the competition.
Time to Take Action: Join 20,000+ individuals and teams relying on Speak Ai to capture and analyze unstructured language data for valuable insights. Start your free trial or book a demo to streamline your workflows, unlock new revenue streams and keep doing what you love.