What is Competitor Analysis, When is it Needed, and Who Conducts it?
Competitor analysis involves examining the operations of your competitors in the market. It includes reviewing their business strategies, product strengths and weaknesses, advertising methods, sales volumes, and identifying both their strengths and vulnerabilities. This provides an understanding of a company’s position relative to other firms.
Conducting analysis thoroughly and regularly is crucial for maximum success. A competitor analysis performed today and another one six months later might yield vastly different results due to potential changes in sales tactics, new product launches, advertising shifts, or other business strategies by competitors.
It’s equally important to study as many market players as possible, including newcomers, since there’s a high chance they performed similar analyses before launching their own business and used the insights to gain a competitive edge.
Competitor analysis is essential before events such as:
1) Market entry of a company
2) Creation of a new website or application
3) Development of sales plans, advertising campaigns, marketing strategies
4) Product launches
5) Rebranding or switching business areas
Proper Goal Setting for Analysis
Competitor analysis in marketing can be conducted to:
– Launch a new product, introduce a new service, open new promotional channels, etc.
– Enhance existing products, strategies, marketing plans, etc.
During competitor analysis, multiple accompanying tasks can be addressed, such as:
– Identifying “gaps” and open niches that can be profitably occupied first
– Determining current trends in your sector
– Formulating pricing strategies relevant to the current market situation
– Minimizing risks associated with changing marketing strategies, launching new products, or entering new markets
– Boosting the effectiveness of advertising campaigns, customer interactions, and production processes
– Enhancing workflows: finding new suppliers, sales platforms, advertising channels, and staff training methods
– Crafting a unique selling proposition (USP) for your product
– Pinpointing growth opportunities and finding fresh ideas for business development
Selecting Competitors for Study — Whom to Look At?
Competitors can vary, and wisely selecting them helps in conducting a thorough competitive analysis and extracting maximum value. Main types include:
1) Direct Competitors: They sell similar products or offer the same services within the same price range and operate in the same area as you. For example, two steak restaurants in the same city compete directly for more patrons, striving to prove their steaks are superior.
2) Indirect Competitors: They promote different products but fulfill the same customer needs. For instance, a comic book publisher and a game figure manufacturer both target teenagers, satisfying an entertainment need. While their products differ, analyzing the competitor’s strategy may reveal effective audience engagement methods and new advertising channels.
3) Non-Obvious Competitors: They operate in different business sectors but can draw away part of your target audience. For example, a person choosing between a shopping mall for holiday gifts or an ice rink is considering non-obvious competitors. Understanding how to influence the decision to either skate or shop, especially with seasonal offers, could be beneficial.
When choosing companies for analysis, it is advisable to focus on those at the same business development stage or significantly ahead in several metrics. Competitors performing worse than your business may not provide useful strategic insights.
Different methods can be used to find competitors: reviewing user-generated reviews that mention similar companies, studying industry-specific firm ratings, conducting customer surveys, consulting open market research, or conducting your own research. You can also analyze ads for similar search queries or study maps if you have offline sales points.
The number of competitors to analyze may vary depending on the specific market niche. You might have only 2-3 notable competitors or a wide range of players at various levels. Sometimes, it’s easier to group competitors by common traits based on the primary consumer needs they fulfill.
For example, if you develop and promote an electronic planner application, potential clients need to organize tasks efficiently. They might choose a competitor’s app on mobile or PC, a CRM system, or even a paper notebook. You need to determine how to persuade them to choose your app, grab their attention, and highlight your unique advantages. Understanding where all these options are stronger or weaker than your app is essential.
Analysis Criteria — What to Compare?
Criteria depend on the analysis’s goal. You may compare sales, pricing, sales and advertising channels, brand positioning, customer service, and more. Ideally, conduct a comprehensive analysis of competitors’ operations to examine all factors affecting company success.
For instance, when analyzing direct competitors’ positioning and marketing strategies, examine:
– Revenue volume
– Methods of achieving revenue
– Product USP
– Website, app, software products
– Conversion rates
– Social media presence
– Email marketing
– Customer interaction methods
– Feedback handling
– Advertising channels and methods, and advertising budgets
Such analysis can provide valuable insights for refining your business strategies and eventually improve your company’s performance.
A range of specialized services and software tools can help gather useful data through competitor analysis in marketing:
1) Brand Analytics and Medialogia: Offer social media and media monitoring and analysis
2) Keys.so: Assesses traffic volumes for your website and competitors’
3) Wordstat: Displays brand search query ratings and dynamics
4) RBC Company and Rusprofile: Collect basic company reports
5) Cerebro Target and TargetHunter: Analyze social media audience and activities after content uploads
Client service and mail testing is best done manually. Use competitors’ product trials or even purchase paid versions to assess strengths and weaknesses, go through the order processes, interact with managers as a regular customer, and subscribe to newsletters. Thorough research can significantly aid in advancing your business.
Ensure data have individual metrics, present in clear numbers and unambiguous facts. This simplifies analysis and yields precise results.
SWOT Analysis
SWOT analysis helps identify:
1) S (Strengths) — strong points of the product (advantages and merits)
2) W (Weaknesses) — weak aspects of the product (drawbacks, deficiencies, and constraints)
3) O (Opportunities) — growth points, external trends, and trends
4) T (Threats) — threats (from competitors, regulations, changing customer needs)
The method compares your product with existing market offerings. Strengths and weaknesses can be influenced internally by the company. Opportunities and threats come from external sources but can be leveraged properly to improve the product and enhance company growth.
How to Present Conclusions and Use the Information Gathered
If you’ve defined the goals, criteria, methods of analysis, and gathered the essential data, it’s time to extract value. To do so:
1) Present analysis conclusions in a convenient format. Conclusions should be clear to all intended recipients. Visual and easily readable results are easier to evaluate and work with.
2) Create a document presenting conclusions in an easy-to-understand way. This could be a brief text summary of crucial takeaways, a table of noteworthy data, diagrams, or charts — all depend on goals and the volume of gathered information.
3) Share the document, making it accessible to all who need it for their work.
Market analysis is repeated at an agreed interval: goals are redefined, major players are selected for study, and criteria and all relevant information are gathered again. The ever-changing market landscape means new results could fundamentally alter your strategy and promotion methods, necessitating a fresh presentation of conclusions made available to all.
The results are discussed and transformed into tangible objectives, conveniently organized into task cards. Using Kaiten allows you to assign executors and deadlines to tasks swiftly, prioritize execution, and attach all supplementary information. The work on enhancing the product, website, or service can start promptly, with a manageable and trackable execution process.
Conclusion
Competitor analysis is crucial in strategic marketing for business growth and must be done thoroughly and regularly. Identify key goals, direct, indirect, and non-obvious competitors, and criteria and methods for assessment. Various tools aid in gathering vital information about market players’ operations. A well-executed analysis offers growth-worthy insights for a company, and a coherent presentation enables swift strategy planning for continued success.
Utilizing Kaiten conveniently manages efforts to rectify deficiencies and bolster company strengths. The service allows for displaying all current and impending tasks as cards on Kanban boards and overseeing processes to achieve high results swiftly.