A Comprehensive Guide to Competitor Analysis
Chances are, unless you're selling Jupiter sand, you'll have some competition in the market. But unlike what many people believe, competition is beneficial for businesses. The presence of commercial competition typically indicates that there is a market need and that the product or service is worthwhile.
Additionally, it spurs you on to innovate, set yourself apart from the competition, and create your greatest product in order to dominate the market and grow your market share.
Therefore, competition analysis should be on your to-do list whether you're a new entrant to the market or an established player because your rivals are already doing it and looking for ways to overtake you.
What is meant by a competitor analysis?
The competition analysis process involves identifying your rivals and evaluating their business plans to ascertain their advantages and disadvantages compared to your venture or product.
The Competitor analysis template, often known as competitive analysis, helps to -
- Identify competitors: This includes both present and future rivals.
- Examine their corporate and competitive strategies, both long- and short-term, as part of your analysis of their business practices.
- Discover chances and threats: The goal of competition analysis is to assess your rivals' strengths and weaknesses compared to your own plans and find opportunities and threats.
The value of competitor analysis
Conducting a competitive analysis is crucial since it aids you in discovering opportunities and threats in the short and long term, in addition to helping you identify the competitors' strengths and shortcomings.
- Develop a grasp of the market's current dynamics and how prospective clients see the competition.
- Get a strong understanding of the consumers' exact needs and how to sell to them.
- Create plans for how to extend into new markets and grow in the present market.
- Create unique products that stand out from the competition thanks to their competitive advantages.
How to perform a competitive analysis?
Although doing a competitive analysis is not difficult, it frequently takes a lot of time and effort.
Here is a straightforward procedure for conducting a competitive analysis that you can use to find your rivals and analyse them to assist you in keeping an eye on other businesses in your market.
Identify your goal
Competitive analysis is a practice that has a specific objective in mind. You need a justification before you can analyse and assess the work of your rivals. The following causes are only a few of them:
- Determining and analysing market participants (as well as their marketing initiatives) to improve the development of new products and marketing tactics.
- Monitoring the marketing initiatives of current rivals to create more effective plans to draw in more clients.
- Researching rivals before entering new markets.
- Finding potential direct competitors who are now indirect rivals and assessing their strengths and shortcomings in regard to your company.
The competitive analysis process is supported by this factor, on which the subsequent steps depend.
Determine your competitors
- Direct competitors are businesses that serve the same clients, deal with similar issues, and offer a comparable service to yours. For instance, while discussing on-demand taxi aggregators, Uber and Lyft complement one another.
- Secondary competitors are those who serve various consumer groups but handle the same issue and offer the same remedy as you do. For instance, while Gucci and Gap both address the issue of clothes, their target markets are distinct.
- Indirect competitors: competitors who serve the same consumer group and handle the same issue but offer a different solution are considered indirect competitors. For instance, although addressing the same issue for the same target market, Domino's and McDonald's provide different solutions.
After that, decide which competitor type will be examined in light of the predetermined objectives.
Develop a framework for a competitive analysis based on the parameters
The following phase requires you to choose the "What" and "How" of the competitive analysis – what requires to be analysed, and what methodology would you employ to do so?
You can either create your own framework based on specific characteristics or use an existing competitive analysis framework, depending on your goal. Several of the competitive analysis frameworks in use today include:
- SWOT analysis: To assist in identifying potential competitive advantage, this method examines the competitors' strengths, weaknesses, opportunities, and threats.
- Porter’s five forces: New entrants, customers, suppliers, alternatives, and competitive rivalry are five criteria that can be used to analyse the industry structure.
- Strategic Group Analysis: To evaluate players' positions in the competitive market based on two variables, do a strategic group analysis.
- Growth-Share Matrix: To categorise the goods in your company's portfolio in relation to the industry's competitive environment to identify those that merit investment and those that do not.
- Perceptual Mapping: To illustrate how consumers perceive your products in comparison to rival options.
There are a lot more frameworks than simply these five. Many of these frameworks allow you to select your own parameters, although the majority use predetermined parameters. These factors, which derive from the actual objective of the competitor analysis, might be either qualitative or quantitative.
Data gathering and analysis
Competitor analysis is an essential skill for professionals of all experience levels. A continuing competition study helps the company keep tabs on its competitors, identify opportunities, and foresee potential risks.
- Ahrefs: To obtain information about their search engine.
- Sprout Social: To evaluate the social media activity of rivals.
- Using SimilarWeb, you can see a summary of the website's audience, traffic sources, search volume and keywords, social media activity, display advertising, and comparisons to related websites and mobile apps.
- Prisync: To monitor stock levels and competitive prices for its online store.
- Crunchbase: To learn about a company's funding, funding level, and personnel count.
The information is gathered, sorted, and then entered into the framework for competitive analysis for analysis.
For both young and experienced professionals alike, competitor analysis is a crucial discipline. An ongoing competitor analysis enables the business to monitor its rivals, spot opportunities, and prepare for any risks.