In this article we will consider why and how to conduct a competitive analysis, what tools can be used and what you need to pay attention to when researching. The guide is relevant for marketers and for managers of small and medium-sized businesses.
Competitor analysis in marketing
Competitor analysis (Competitor analysis) is a study of competitor companies, their products (services), sales and marketing systems, pricing approaches. The information collected can be used to determine the strengths and weaknesses of competitors, development and adjustment of own development strategy.
Competitor research is an important part of own marketing strategy development. Having conducted the analysis, you will be able to build or adjust plans to conduct or develop your business. These actions can be considered as a reactive (quick-response) approach to market changes.
Approaches to competitor analysis may vary depending on the objectives of the analysis.
What opportunities and information competitor analysis provides:
- Understanding the standards, current industry trends that allow businesses, products and services to meet the expectations of potential customers and even outperform competitors.
- Discovering new niche areas, developing and scaling your business.
- Understanding the target audience and their needs.
- Using effective tools to attract potential and retain loyal customers.
- Possibility to form the best or unique offer on the market.
- Definition of strengths and weaknesses of the business.
- Evaluating the risks of doing business.
Why conduct a competitor analysis? Set goals
- Identifying the strengths and weaknesses of the business. By studying how your competitors are perceived, you can draw conclusions about the strengths and weaknesses of your own brand. Knowing your strengths can affect the positioning of your product or service in the marketplace. Communicate to potential customers why your product or service is the best choice available.
- Knowing your weaknesses is also important for development. Understanding where you or your competitors fall short in meeting customer expectations can help points of growth. Study your competitors to see what they are doing right, and see what you can apply to your business.
- Opportunities to close unmet customer needs. Find out what your competitors’ customers are missing and offer them that product or service. This can be new products as well as related services, such as delivery terms, and loyalty programs.
- Track industry trends. Studying your competitors will help you see what direction the industry as a whole is moving in. However, you shouldn’t blindly repeat every move your competitor makes. Copying without considering your real place in the market and tracking your results will not lead to success. Assess the needs of your own customers and how you can create value for them.
- Set benchmarks for future growth. When conducting a competitive analysis, consider companies, regardless of their size or experience in the marketplace. Studying industry leaders will help you plan your growth strategy, and analyzing newcomers will help you find fresh ideas.
- Useful knowledge for doing business. Competitor analysis will help you expand your knowledge and competencies and gradually become an expert that customers will trust.
- Creating a unique selling proposition. By analyzing and comparing yourself with other market players you will be able to understand what makes your products and services unique. For example, the competitive advantage of a new fashion retailer may be the high quality products at low prices and fast worldwide delivery. A really working unique selling proposition will make your products and services unforgettable for customers.
- Optimize your advertising campaigns and marketing budget. By understanding how your competitors attract customers, testing and optimizing advertising channels you can noticeably optimize your advertising budgets and focus on the most effective tools.
When should you analyze your competitors?
As we wrote in the beginning of this article, competitive analysis is necessary at any stage of your business. Periodical updating of the research or carrying it out from the scratch will help to find new tendencies on the market and to keep competitive advantages in the segment of the market you are interested in. Certainly, it is worth conducting a detailed analysis of competitors when planning strategic changes in the company.
It is desirable to conduct research at least once a year.
