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Competitor analysis is the collection and analysis of information about your industry. It makes you understand the strengths and weaknesses of your competitors. Effective competition research is thorough. It examines competitors’ marketing strategies, competitive advantages, and content strategies. The main goal of competitive research is to determine what your competitors are doing and what threats they pose to your business. In this way, you can develop a more informed marketing strategy and even reposition yourself to overcome these threats. Competitive research is essential if you are serious about your company’s sustainability. Otherwise, your competitors may overshadow you and reduce your market share.
Why Do You Need a Competitor Analysis?
Competitive analysis helps you understand your competitors and find ways to outperform them.
- Identify your unique selling proposition. It sets you apart from the competition and shows potential clients why they should choose you.
- Read more about what works and what doesn’t. Competitive analysis helps you discover what works for your competitors and where they fail. This will help you refine your product and marketing strategy.
- Find out what your competitor’s customers want. Part of a competitive analysis is checking your competitors’ ratings. This enables you to identify gaps in your competitors’ products to improve yours and gain more market share from your competitors.
- Set a benchmark. A comprehensive competitive analysis gives you a benchmark to track and measure your success and growth.
Competitor Analysis Model
A competitor analysis framework is a model that you can use to shape your research on your competitors. It helps you focus on specific information by providing structure to your market analysis.
- SWOT analysis: A SWOT framework helps you assess the internal (strengths and weaknesses) and external (opportunities and threats) factors that affect your business or the course of action.
- Porter’s Five Powers: Porter’s Five Forces is a framework used for analysing an organisation’s competitive market factors. It helps assess an industry or market segment based on five elements, namely, new entrants, buyers, suppliers, substitutes, and competition. According to Michael Porter’s model, these are the main forces that directly affect the level of competition a company faces in the industry.
- Group strategic analysis: Strategic cluster analysis is a competitor analysis framework that allows you to analyse organisations in clusters based on the similarity of strategies. By identifying the clusters your company belongs to for specific strategic dimensions, you can understand the impact of different strategic approaches. You can also see which one has the most competition.
- Growth Stock Matrix: The Growth-Share Matrix is an analytical framework that compares the products in your company’s portfolio to the competitive landscape in your industry. Developed by the founders of the Boston Consulting Group (BCG) in 1970, the model has gained widespread acceptance to help companies decide which products to invest in based on competitiveness and market appeal.
- Perceptual Mapping: Perceptual mapping is a visual representation of the perception of your product relative to competing alternatives. It’s also called location mapping because it shows where your brand, product, or service is relative to your competitors. The first step is to identify two characteristics that you will use as a basis for comparison. You can then map out where your product and competitor’s products fall within those two attributes.
Competitor Analysis Examples
The following are examples of what is often included in a competitor analysis –
Brand Awareness: The percentage of the target market familiar with competitor brands. Customers tend to buy this. Knowing them, it’s difficult to challenge established brands.
Cost: Estimate the cost of a competitor’s product based on financial statements. Cost is a key driver in many industries.
Challenging a competitor that has developed effectively is difficult.
Product: Identify competitor product’s strengths and weaknesses from sources, such as product reviews.
Customer Experience: Evaluate competitor customer experience, such as customer service.
Opportunities: Evaluate business opportunities relevant to your industry.
Financials: Financial resources of competitors.
Intellectual Property: Legal barriers to competition, such as patents, copyrights, trademarks, and licensing.
Know-how: A competitive source of knowledge.
Relationships: Consider competitors’ relationships with regulators, partners, customers, and communities.
Distribution: Evaluate competitors’ distribution strategies. For example, competitors who do not compete in a certain field area.
Marketing: Consider competitors’ marketing strategies, such as promotions and pricing.
Risk: A summary of hard-to-dispute competitive advantages.
Opportunity: Opportunities, such as unhappy customers, competitive disadvantage, or a niche market that competitors cannot offer.
Conclusion
Competitor analysis is essential to getting the most out of your marketing efforts. Fortunately, there are many different tools available today for performing competitive analysis. Whether assessing the profile of competing companies or tracking their growth rates, these tools can come in handy. Also, with a lot of data to analyse, a comparison matrix can be helpful from identifying competitors to evaluating every aspect of their business.
