Competitor Analysis – How To Do It And Tools You Can Use
Your competitor analysis will form a segment of your overall business and market research (more on getting started with that here) – and it’s a crucial one. In this post we’re going to focus on exactly what a competitor analysis entails, why you need it, how you can create it, and a few useful competitor analysis tools that can help along the way.
What is a competitor analysis?
A competitor analysis is a comprehensive overview of the most significant industry players you stand to come up against. It should include at least three entities that stand to compete for your customer base. It covers several categories, including fundamental company info, their product or offering, customer opinion, and analysis of their strengths and weaknesses.
More on these below, but first, you’ll need to be aware of how to identify your competitors. This could be an article in itself, but a simple place to start is by Googling your own target keywords, both with and without your local area, and noting what comes up.
You can also use real-world directories and social media platforms like Instagram to supplement (what should be) your strong existing knowledge of your market landscape.
The two key competitor types in your competitor analysis
When researching, make sure you differentiate between:
Direct competitors – companies that offer the same product or service as you.
Indirect competitors – companies that offer something different that achieves the same goal for your customer. For example, Costa is a direct competitor of Starbucks. But Starbucks is also up against homebrew coffee, canned coffee, energy drinks, even tea brands. It’s important to be aware of these, as they can draw your customers away just as effectively as direct competitors.
Why do I need to conduct a competitor analysis?
Why do I need to conduct a competitor analysis?
With Companies House, LinkedIn, the growing trend towards transparency in company practices, and the research power of the internet in general, there really is no excuse not to develop an exacting profile of your significant competitors.
Your competitor analysis will give you key insight not just into what your industry peers are doing, but what they’re not doing – in other words, opportunities they’re failing to spot.
A well-researched competitor analysis provides you with several other edge-giving benefits:
Awareness of your position and potential among what can be a sea of similar brands.
- Strengthened establishment of your UVP (unique value proposition).
- More accurate forecasting of success based on analysis of the past attempts and behaviour of existing brands.
- Ability to learn from mistakes of others in terms of their present or past strategies, and identification of any gaps they may be leaving open.
What should my competitor analysis include?
There are several categories you should include in your competitor analysis.
- For each competitor, you should start with the basics: when the company started, how many employees it has, how it was funded, and any acquisitions it’s made since. Among other things, this will help you understand how quickly they were able to grow.
- Your second category for analysis should focus on what the company offers. This includes the product or service, unique features of the product, and pricing. Here you’ll also look at the product strengths, weaknesses, opportunities and threats (you’ll be doing a fair few SWOT analyses over the course of your business planning). This will tell you what your competition is doing right, doing wrong, or just plain missing out on.
- Your third category looks at what the company is saying about itself. This involves all marketing, advertising, comms, and social media efforts (more on this below).
- The fourth and final category looks at what other people are saying about your competition. It should observe the target customer, customer reviews, all marketing dimensions such as primary and secondary decision makers, and branding and brand messaging.
From this, you should be able to draw an intelligent, nuanced view of exactly where you fit into the market, the specific ways you’re likely to outperform others, and why your customers should choose you instead of your competition.
Methods of gaining information for competitor analysis
In person: It might feel a bit like sleuthing, but if your competition has physical premises, there’s nothing to say you can’t walk in and ask them how they operate. You might prefer to give them a call or request a quote online. Whether you tell them you’re doing market research for your own business or not is up to you.
If you prefer to be open and honest, you might be surprised at how helpful people are willing to be (although be warned, this will be very industry specific!). There’s a lot to be said for honest dialogue, but if you feel you’d get more information by posing as a customer, just remember to be respectful of your competitor’s time, and don’t get their hopes up too much for a lead.
Reading customer reviews: Your competition’s customers will hopefully become your customers, so what they say matters. This is probably the easiest piece of competitor intelligence to secure. Use product pages, blog posts, reviews and social media to look for patterns in what customers are saying about your rivals.
If it’s a recurring problem that you can fix, you’re onto a winner. Setting up Google Alerts for your competitor’s product names is an easy way to keep on top of new intel.
Observing marketing practices: One thing you’re unlikely to be let in on from a direct conversation with a competitor is how they advertise. But it’s not difficult to figure out. Observe where the marketing material of competing businesses appears, how often it appears, and what sort of customer is being targeted.
After Googling your competition’s services a few times, are you seeing Google or Facebook ads popping up? Are they featuring in local directories, or on TV or radio? Do they use billboards, or is their marketing largely digital?
Establishing marketing patterns of your significant competitors not only shows you what you could do, but may also illuminate some avenues that are not being taken advantage of.
What to do after conducting your competitor analysis
Now is a great time to revisit your business plan with your fresh knowledge of the broader market. You’ll now have a much keener insight into where the market is oversupplied, and where there are gaps to be filled.
The biggest changes you’re likely to make after observing your competition are within your brand positioning. Is the gap you wanted to fill as empty as you thought? Is your offering truly unique?
You’ll also want to make sure any notable advantages you’ve realised you have over your peers – for example, a strong sustainability angle or a favourable return policy – are being clearly emphasized in your marketing and advertising plans.
Useful competitor analysis tools
Feeling a little overwhelmed by the task ahead of you? Naturally, there is tech to help.
Mention is a competitor analysis tool that trawls the web for competing company info and industry trends across forums, blogs, news sites and social media channels. It presents the information in digestible graphs and reports. It’s main features are based around continual reporting and updating, so may be more useful for more established companies seeking to keep their finger on the industry pulse.
BuzzSumo offers instant alerts whenever one of your competitors is mentioned online. It also helps you understand their strengths and weaknesses, and informs your marketing strategy with real time data on what others are doing.
Skyword is a bit of a step up from an online tool. It offers a breadth of tools for new businesses, including content and social optimization, brand health analysis, product launch and positioning guides, and of course, competitor analysis.
A final thought on competition in business
As we move away from the aggressive, cut-throat archetypes of 20th century business, and towards a more inclusive, honest, and sustainable approach to entrepreneurship, there is a school of thought that suggests we should think of our peers not as competitors, but as ‘collaborators’.
As a 2016 Deloitte report on inclusive leadership quotes, ‘the new IQ is based more on group intelligence’. We gain more by learning from others than by trying to tear them down. If that’s a bit too peace-and-love for you, there’s still a lot to be said for building relationships with your industry peers rather than challenging, attacking, or alienating them.
A competitor analysis will always be essential, but aggressive tactics may not be.
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