Let’s take a brief look at the main approaches used by marketers to analyze competitors:
SWOT analysis
The SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis assesses the strengths, weaknesses, opportunities and prospects of a business. This will help cull the information gathered during the competitor analysis and determine the next steps for your own business.
Each SWOT analysis will include the following four categories. Items may be added depending on the area of the business. A SWOT analysis would not be complete without each of these elements:
- Strengths. Strengths describe what the organization excels at and what sets it apart from its competitors: a strong brand, a loyal customer base, unique technology, and so on.
- Weaknesses. Weaknesses prevent the organization from being successful. These are areas in which the business must reorganize in order to remain competitive. These could be, for example, a weak brand, lack of quality service, high prices.
- Opportunities. Opportunities refer to favorable external factors that can give the organization a competitive advantage.
- Threats. Threats refer to factors that can harm the organization. For example: rising costs of materials, increased competition, labor shortages.
Ask the following questions: what strengths and weaknesses are repeated in competitors’ branding, marketing, and products? What opportunities do you see for the business to benefit? What actions of competitors might pose a threat?
SNW analysis
SNW analysis is similar to SWOT but has more comparison criteria. This method is chosen for a more detailed study. Here, not only the weaknesses and strengths of the business are taken into account, but also the neutrals. The purpose of this analysis is to study the business from the inside out to determine what new features or options are not yet being tapped by competitors. Once researched, you can add them to your business and use them as an advantage.
The 4P (Product, Price, Place, Promotion) is an approach that is based on four main “points” of marketing planning:
- Product (or service);
- Price;
- promotion;
- Place (distribution, distribution channels, store location, etc.).
These are mandatory planning elements when bringing a product to market. As you do your research, ask yourself the following questions for each item:
- The product or service. What do they sell? What features or options are included in their product or service? What appeals most to customers about the product or service? What are the weaknesses of the product or service? What customer problems do competitors’ products solve?
- Price. What pricing model do they use? Is it a one-time purchase or is the customer in constant need of the product (service)? How much does the product or service cost? Do they offer sales or discounts? Is the price commensurate with quality? How do customers perceive the quality of the product or service? Is there a loyalty program for customers?
- Promotion. How do competitors talk about their product or service? What advertising channels do they use? What features of the product or service do they emphasize? What is unique about the selling proposition? What is their company’s history? How do they position their brand? Does the company use advertising slogans? Does the company run promotional campaigns? Do companies collaborate with other brands to promote each other?
- Location. Where do competitors sell their product? Do competitors have offline stores? Do they sell directly to customers or collaborate with retailers or third-party marketplaces? Is the competitor’s product present on marketplaces or bulletin boards?
These questions are just a starting point from which to start analyzing competitors. Don’t be afraid to expand your list and tailor your questions to your area and your research goals.
PEST analysis
PEST-analysis (Political, economic, social, technological) is a marketing approach, which is necessary for finding the political, economic, social and technological aspects of the external environment which influence the company business. By conducting a PEST analysis, you can find out how competitors will react to any external changes. Will they see these changes as an opportunity to scale the market or will they see them as a threat? This will provide insight into how competitors are acting.
Suppose there is a social change and your competitors can’t handle it. Then it is worth developing your own strategy to help the business in the new environment.
Porter’s Method (Porter’s Five Forces Analysis)
Porter’s Five Forces is a model that identifies and analyzes the five competitive forces that shape each industry. It also helps to identify the weaknesses and strengths of a business. This model can be applied to any segment to understand the level of competition in an industry and improve a company’s long-term profitability. The Five Forces Model is named after Harvard Business School professor Michael E. Porter.
The following items should be considered for analysis:
- Competition in the industry (number of entrants in the market, market potential).
- Potential of new entrants in the industry (risks associated with new similar businesses).
- Strength of suppliers (number, prospects, amount of resources).
- Influence of customers (customer needs, demand forecasting).
- Threat of substitute products (consideration of the likelihood of new products to replace yours).
SPACE analysis
SPACE-analysis (Strategic position and action estimation) is a method that helps to evaluate the financial perspectives and strategies of a company. The SPACE-analysis examines 4 groups of factors. Each of them is evaluated from 0 to 6. After that, the average value of factors in each group should be calculated. The data obtained is transferred to the coordinate axes, which results in a quadrangle, which can be analyzed.
The whole process of analysis can be done in the following steps:
- Define the evaluation criteria (4 main factors), such as competitiveness, financial stability, etc.
- Evaluate each factor in groups, scoring from 0 to 6.
- Calculate the average values in each group of factors.
- Make a graphical representation of the results (SPACE-matrix).
Analysis of the obtained results according to the obtained matrix. The options may be as follows: aggressive state, competitive status, conservative state, defensive state. The state should be determined by the quarter in which the straight line is most distant from the center of the figure. Determination of the marketing and development strategy according to the state of the company.
