We have covered the basics of competitive analysis to a practical 6 steps strategy that helps you conduct an effective analysis for your business and achieve meaningful results.
Understanding the competition is important for the success of every business. Competitive analysis enables businesses to identify areas of strength, Opportunities, and areas for improvement.
In this article, we will cover,
- What is a Competitive analysis?
- Why is it important to conduct competitive analysis?
- How to conduct a competitive analysis in 6 steps?
- Bonus tips for conducting a competitive analysis?
- When to do competitive analysis?
What is a Competitive Analysis?
Competitive analysis is the process of collecting and evaluating data on competitors' products, pricing, marketing strategies, distribution channels, growth strategies, and customer base. This data is used to identify your competitor’s strengths and weaknesses.
Engaging in a competitive analysis allows businesses to identify their competitors’ potential advantages and barriers within their target market or products.
Why is it important to conduct competitive analysis?
Conducting a thorough competitor analysis serves the purpose of gaining insights into the strengths and weaknesses of your competitors in comparison to your own business, as well as identifying potential market gaps.
The significance of a competitor analysis lies in its ability to,
- Provide valuable information for enhancing your business strategy by recognizing areas where your competitors excel and areas where they fall short.
- Identify opportunities to surpass your competitors in these areas, thus retaining and attracting customer attention.
- Ultimately, gaining a competitive edge within your sector, which is essential for long-term success in the market.
How to conduct a competitive analysis in 6 steps?
- Identify your competitors
- Gather information about their target market
- Analyze their 4Ps
- Conduct a SWOT analysis
- Understand their customer experiences
- Analyze their online presence and SEO strategies
1. Identify your competitors
Identifying all possible competitors in your industry is the first and crucial step in competitive analysis. Use market research, customer feedback, social media, and online platforms to create a list of competitors that compete for the same customer base.
Now you have to classify the competitors you have found into four groups,
Direct competitors
Direct competitors are other businesses that offer the same or similar products/services and target the same customers in the geographic area that your business serves.
Indirect competitors
Indirect competitors are businesses, they serves the same customer base but different products or services to solve the same problem.
Substitute competitors
Replacement or Substitute competitors provide an alternative product or service that you offer that targets the same customers in your geographic area.
Emerging competitors
Emerging competitors are businesses that enter the market with innovative business offerings that pose a threat to existing brands.
2. Gather information about their target market
Once you’ve identified your competitors, it’s time to analyze their market. Start by looking at company websites, social media pages, and Email subscriptions.
Here is some basic information you can take to thoroughly analyze your competitors,
Company history
Gather information such as founding date, funding sources, and any mergers or acquisitions they have been involved with. This information can typically be found on the "About" section of their website or in past press releases.
Company size
Determine the size of your competitors' organizations by researching how many people they employ and how many customers they have. Additionally, try to find out how much revenue they generate. This information will help you better understand the scale and scope of your competitors' businesses.
Website Analysis
Examine the structure and content of their website to gain insights into their positioning and brand voice. Pay attention to the layout, messaging, and overall user experience to understand how they present themselves to their audience.
Focus on their social media engagement
Pay close attention to your competitors' social media engagement. Take note of who interacts with their social media posts and how they respond to those interactions. Also, consider the influencers they collaborate with, as that can provide insight into the audience they are targeting.
Email Subscription
Subscribe to your competitors' email lists to observe their email marketing strategy, including frequency, copywriting style, and the type of content they cover. This will give you a better understanding of how they engage with their audience through email.
Paid Ads Research
Utilize tools such as Ahrefs and Semrush to identify if any of your competitors are running paid advertising campaigns on search engines. This can provide valuable information on their targeted keywords, ad copy, and overall advertising strategy.
3. Analyze their 4Ps
Once you have gathered the initial insights, it's essential to delve into the fundamental aspects of marketing, often referred to as the "four Ps": product, price, place, and promotion. Here's a detailed breakdown:
Product
- Assess how well the product meets customers' needs.
- Identify the specific products or services they are offering.
- Explore the features included in their product or service.
Pricing
- Understand the pricing of their product or service.
- Determine the pricing model they utilize.
- Identify if it's a one-time purchase or a subscription service.
- Determine if they offer any sales or discounts.
Place
- Investigate where customers typically seek the product.
- Identify the distribution channels and locations where they sell their products.
- Determine if they primarily sell online, in physical stores, or both.
- Understand if they sell directly to customers or through partnerships with retailers or third-party marketplaces.
Promotion
- Examine their advertising strategies to target customers.
- Identify the advertising channels they use, such as social media, email marketing, or print advertisements.
- Recognize their unique selling proposition.
- Understand their brand story and how they communicate about their brand.
Analyzing these aspects of your competitors' marketing strategies will provide you with a comprehensive understanding of their approach.
4. Conduct a SWOT analysis
SWOT analysis is a framework for competitive analysis that identifies your company's strengths, weaknesses, opportunities, and threats. It involves leveraging your competitor's strengths and comparing them to your business to identify areas for improvement.
Strengths and weaknesses are internal factors within your control that can be modified over time, while opportunities and threats are external factors that are beyond your control. Although you can strategize for potential changes, you cannot directly influence these elements.
Strengths - Identify the areas where you excel, such as marketing, products, sales, branding, and technology.
Weaknesses - Pinpoint the areas where you are facing challenges and identify what is hindering your progress.
Opportunities - Explore the areas where your main competitors are weakest and identify any untapped market opportunities. Also, consider any recent changes in your business or the market.
Threats - Assess what your biggest competitor is doing better than you, what new products or features they are developing, and what issues you are currently not addressing.
Your analysis should cover the following areas,
- Marketing strategy
- Pricing strategy
- Competitive feature
- Market share percentage
- Customer reviews
- Product offering
- Competitor products
- Consumer trends
- The economy
- Market demand
5. Understand their customer experiences
Investigate how your competitors engage with their customers at different touchpoints. This involves a comprehensive analysis of their customer service strategies, various communication channels utilized, and the mechanisms employed to gather and respond to feedback. Follow your competitors on social media, subscribe to them via email, and purchase products and services so that you can experience your competitor’s customer journey.
By gaining insights into their customer experiences, you can develop strategies to deliver exceptional customer interactions, thus promote greater loyalty and satisfaction among your own customer base, you can learn from the competitors' mistakes, and aim to avoid similar pitfalls.
When researching customer experiences for each competitor, consider the following,
- What are the different touchpoints that your competitor’s used throughout their customer’s journey?
- What kind of customer experience do your competitors provide after subscribing or making a purchase? Do they provide customer support, upsells, and access to a community?
- What kind of content do your competitors provide to educate and entertain their customers at each touchpoint?
- What makes it difficult for your competitors to move to the next stage along the customer journey?
- What call to action or instruction do your competitors follow?
6. Analyze their online presence and SEO strategies
Analyze the digital presence of your competitors, including their website, social media tactics, content marketing approach, marketing channels, and SEO impact. Gain an understanding of how they leverage online platforms to attract, interact with, and convert their audience.
SEO strategies - Utilize a keyword research tool to identify the topics your competitors are ranking for. This will provide valuable insights into the effectiveness of their strategies and uncover new keywords that you may have overlooked. Review your competitors' websites to understand their SEO tactics. Identify their high-ranking keywords, backlink strategies, and content optimization techniques. If you operate a local business, consider analyzing and extracting data from Google Maps listings to gain a deeper understanding of how companies optimize Google My Business for lead generation.
Social media strategies – As I mentioned above, evaluate the social media presence of your competitors and take note of the type of content that generates engagement, post frequency, and audience interactions.
Utilizing these insights will enable you to enhance your digital presence, capture a larger market share, and maintain a competitive edge in the online arena.
Bonus Tips for Conducting a Competitive Analysis
Here are some bonus tips that you shouldn’t overlook when carrying out a competitive analysis:
1. Keep an eye on every change
Don’t treat competitor research as a one-time activity. You need to keep checking on your competitors’ updates. Whether it’s a change in SEO rankings, a redesign of their business website landing pages, or changes across their online platforms. Pay close attention to their websites, social media pages, and even their Google My Business profiles. Even a small tweak from their side can turn into a big opportunity or a potential threat for your business. You need to be ready to adapt quickly, either by making changes or by seizing the opportunity.
2. Review their customer reviews
Customer feedback is a goldmine. Make it a habit to go through your competitors’ reviews every three to six months. These reviews reveal not just what customers love about them, but also what they complain about. That’s where you’ll find opportunities, that will help you to fill the gaps that your competitors are missing.
3. Track their social media activity
Social media tells you a lot about both your competitors and their customers. Watch how often they post, what products they highlight, and the kind of promotional campaigns they run. Even more importantly, read the comments. Those interactions give you a real sense of how customers feel about their products and services, which can open up new ways for you to position your own offerings.
4. Watch their seasonal promotions
Festive seasons and year-end sales are the times when most industries see a boom. Observe how your competitors use these opportunities. What kind of promotions do they run? Which platforms do they use to push their campaigns? Understanding their seasonal strategy can help you plan smarter campaigns of your own.
5. Think beyond the day-to-day
Competitor analysis isn’t only about looking at small details. It’s also about spotting the bigger picture. Keep an eye on industry-wide trends and see how quickly your competitors adapt to it. The faster you can react to changes, the stronger your position will be.
6. Leverage AI tools
Finally, don’t underestimate the role of AI in competitor analysis. Tools that can collect, analyze, and interpret data will save you time and give you sharper insights. If your competitors are already using AI to get ahead, you’ll fall behind if you don’t. Implementing the right tools will help you make smarter, faster decisions and close the gap.
When to Do a Competitive Analysis
Many studies suggest doing a competitive analysis on a regular schedule quarterly, semi-annually, or at least once a year. From my experience, reviewing your competitors every three to six months is the sweet spot. This time frame gives you fresh data and enough insight into the latest changes they’ve made, while still leaving you enough time to react and adjust your own strategies.
Of course, how often you run an analysis also depends on your team size, resources, and overall business needs. For most industries, checking in every quarter to once a year gives you enough opportunity to benchmark your progress and stay competitive.
That said, competitor analysis isn’t just about fixed schedules. Some things require constant attention like tracking SEO rankings, website and landing page updates, customer reviews, and social media activity. Seasonal promotions are another area you don’t want to miss, as well as how quickly competitors adapt to big industry trends. Monitoring these factors regularly will help you spot gaps, uncover opportunities, and make sure your business doesn’t fall behind.
Conclusion
No matter the size or stage of your business, it's crucial to maintain awareness of your competition. Performing a thorough competitor analysis is a vital step in positioning your company for success. Competitive analysis is an ongoing process. To stay ahead in the market, it's important to consistently revisit and update your competitor analysis.
I hope this article will help you conduct a competitive analysis effectively.
