As a small business owner, you probably think about your competition a lot. After all, no matter what your focus is, your customers will likely have other brands competing for their attention. So it’s vital to know about your competitors to help you present yourself in a unique light. That’s where competitor research comes in. 

This guide will help you understand how competitor research works by answering the following:

  • What is competitor research?
  • Why conduct competitor research?
  • How do I conduct competitor research?
  • When should I do a competitor analysis?

What is competitor research?

Competitor research, also referred to as competitive analysis, is the process you use to identify competitors in your industry and learn about their solutions, marketing strategies, pricing, and so on. You can use the information you uncover to identify your strengths and weaknesses in relation to each competitor.

You can either do a general competitor analysis on a high level or dive into one specific aspect, such as marketing or product features. If you’re conducting the research for a business plan, you can learn more about it in this guide

Why conduct competitor research?

Competitor analysis helps you learn how other brands in your industry work and identify opportunities to present yourself as the better option. In other words, competitor research helps you identify your unique selling point (USP) and how you’re different from your competitors.

You can also find out what your competitors do that customers respond well to and where they fall short. All this information empowers you to create a brand and solution that stands out in the marketplace. Plus, you can use your research to build marketing campaigns that appeal to and attract your ideal customers. 

Conducting this research also enables you to stay on top of industry trends and changes in customer demand. This way, you can ensure your product consistently meets industry standards. 

How do I conduct competitor research?

Follow the steps below to conduct your competitor research.

Step 1: Identify your competitors

First, you need to identify who you actually compete with so you can find the right information. To do this, you need to consider where your customers would turn if they didn’t choose your business. 

An easy way to start is to Google your solution or category and see what comes up. You can also have your existing customers fill in a survey about alternatives they considered before choosing your business. Beware not to make your list too long as you won’t have enough time to research each competitor thoroughly. A list of around ten competitors is plenty. 

Direct vs indirect competitors

  • Direct competitors operate in the same area as your business and offer a solution that’s a similar substitute for yours. 
  • Indirect competitors are businesses that provide different solutions to yours that could still solve the same problem or satisfy the same customer need.

Step 2: Create a competitor matrix

A competitor matrix is a table, spreadsheet or alike that you use to compile your research. Doing this will help you stay organised and get a clearer view of your findings, and you can use the competitor matrix to compare your competitors and spot any trends. Try assigning colours to each competitor and trend to make your research even more straightforward.

Step 3: Learn about your competitors

Once you have your matrix and a list of competitors to research, it’s time to learn about their businesses. Start with the basic information and build your way up from there. Look at competitor websites, social media, and anything that’s been published about these companies.

Here’s some basic information that you may want to look for:

  • Company name
  • Company size
  • Product or service range
  • Location
  • Sales tactics
  • Marketing methods
  • Branding and colours
  • Pricing
  • Communication style
  • Social media

Step 4: Learn about your competitors’ customers

Learning about your competitors’ customers will tell you a lot about their businesses. Here are a few things you can look at to pinpoint your competitors’ target customers:

  • Read their mission statement.
  • Look at the messaging they use.
  • Track who your competitors interact with on social media.
  • Check if competitors feature existing customers in their content.

If you want, you can use this information to create customer profiles to give you a good idea of who your competitors try to sell to. These profiles will likely be similar to your own, so make a note of even the slightest differences. 

Step 5: Analyse your and your competitors’ strengths and weaknesses

Finally, use the information you’ve collected to identify your competitors’ strengths and weaknesses. Ask yourself why customers would choose or reject a company’s product and record your conclusions in your matrix. 

Also, consider your own strengths and weaknesses and compare them to your competitors. Determine where your solution is better and where you could improve to compete with similar brands. Doing this will help you serve your target customers better. 

When should I do a competitor analysis?

It’s useful to conduct competitor research when starting a new business, but that’s not the only time you’ll benefit from it. Competitive analysis is an excellent tool to use at every stage of the business lifecycle. 

Examples of times to research competitors include:

  • Before introducing a new product or service
  • To help you create more effective marketing campaigns
  • When looking to improve your customer service
  • Identifying new trends in the market

If you’re not sure where to start, it’s helpful to do a SWOT analysis where you evaluate your strengths, weaknesses, opportunities, and threats. Doing this can help you identify actionable next steps to move your business forward. 

Enhance your strengths with one simple app

One of the best ways to gain a competitive advantage over your competitors is to have systems in place that help you operate efficiently and, in turn, serve your customers more effectively. An excellent way to do this is to streamline your financial management.

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

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