Knowing what your competition is doing is key to identifying areas for growth and finding new opportunities. Conducting a competitor analysis will show you where your business offering lies and how to maintain your competitive advantage. Let’s look at how you carry out competitor analysis and how you can use it to refine your business strategy.
In this article:
- What is a competitor analysis?
- What should you be finding out?
- Analysing your own business
- Identifying the competition
- Collecting useful data: sales strategies, pricing and marketing
- Putting it all together
What is a competitor analysis?
Competitor analysis involves assessing the strengths and weaknesses of other businesses in your sector in relation to your own. With a well-planned competitor analysis, you’ll find out:
- How existing and potential customers view your competition
- What gives your business an advantage over competitors
- Key practices to grow and maintain a competitive advantage
- Ways to optimise existing markets and grow into new ones
How to conduct a competitor analysis
- Analyse your business
Before you tackle the competition, carry out a SWOT assessment on your business where you identify your strengths, weaknesses, opportunities and threats. What are your products, target audience or marketing tactics? How is your social engagement? What is your sales process? What marketing materials do you use and which social media platforms are you on? Once you identify key metrics, you can use them as a benchmark.
2. Identify the competition
Research businesses that are similar to yours. Are they in the same geographical location? Do they sell the same products but to a different market? Make a list of businesses that are potential competitors for your goods and / or services.
3. Start collecting detailed data
Research your competitors’ product lines or services in detail. What price do they charge? Do they sell high or low quality? Do they work on a volume sales model or is it more bespoke? Do they offer discounts? How does the company stand out from its competitors and what are the needs of its target audience?
4. Identify your competitors’ sales strategies
While you will not be privy to your competitor’s sales data, you can make an educated guess based on their activities. What does the process look like? Do they sell online with an e-commerce site or do customers have to email or phone to buy? Do they offer free consultations, reports or other materials to attract customers? What channels do they sell through? Do they have multiple locations to sell from? Spot ways you could do something similar or find gaps that they’ve missed.
5. Look at pricing
Understanding what your competitor’s charge can help you set your own prices. What you do or sell might warrant a higher price tag. Alternatively, you might decide there is a gap in the market for affordable products and price lower. Until you analyse them you won’t know where you fit in the market.
6. Understand how they promote themselves
Assess the channels a competitor uses to reach their target audience. Some will rely on social media and others will use more traditional forms of advertising like newspapers, billboards and mailshots. Subscribe to their newsletter if they have one and follow them on social media to keep up to date. You should also look at what marketing materials they use such as blogs, whitepapers, ebooks, webinars, YouTube, podcasts, press releases, FAQ sections and case studies.
7. Learn what technology they use
Where possible, look at the tech they’ve installed. For example, if they sell online then is the system off-the-shelf like Woocommerce or Shopify or is it custom-built? What payment gateways do they use? Do they have an automated phone system? Are they relying on Mailchimp or another piece of marketing software? Do they run Facebook, Instagram or Google ads?
8. Analyse their social media engagement
How active your competition is on social media will give you a good idea of their brand and their message. Which platforms do they use most? Are there platforms where they have little or no presence? Do they have hundreds of posts or just a handful? What is the frequency of posting? What tone do they use? Does it link back to their site, sales funnels, special offers and sign ups? Have a look at their images — are they generic or do they have photos that reflect their business?
Use Facebook Insights or a social media tool to analyse how much engagement all their posts receive. Are they getting lots of interaction or is there very little traction? Are there certain topics which are more popular? Do they get lots of shares or mentions by followers?
9. Analyse all the data
As you collate the data, perform a SWOT analysis for each competitor. Get into the habit of looking at their strengths, weaknesses and where a competitor might have an advantage over your business. Once you’ve done this, use the information to improve different areas of your business, for example adapting your sales and marketing to a gap in the market. Over time you’ll use your competitors’ weaknesses to improve your own brand and ultimately, your sales.
Competitor analysis doesn’t need to be done every week but making time two or three times a year is part of what makes a business successful. A market can shift rapidly but if you’re keeping a watchful eye on it, you’ll be able to meet any challenges head on and proactively grow your business.
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