Competitive Analysis
Creating a Competitive Analysis Business Strategy
By Dennis Bluthardt, Namaste Studios
“Businesses that understand their competition are 50% more likely to succeed.” In today’s rubberneck-speed marketplace, one secret to success lies in good, old-fashioned looking both ways. Successful businesses are likelier to use competitive analysis to identify market opportunities and avoid risky marketplace behaviors.
But what is a competitive analysis? In simple terms, a competitive analysis is an evaluation of your competition to justify strategic decision-making. You may examine what your competition is not good at, which may help you and your business identify your unique value. You may use information gathered about these issues to change your strategy and your company’s position about the strategies of your direct competition. Wet your feet by describing a general profile of each of your competitors.
In other words, a competitive analysis is the first step down the slippery path of business opportunity. It will help justify marketing and sales programs, premises, and equipment.
We will use key study areas published in the College Board exam handbook to focus our studies for this article. This technique will help you prepare points for discussion with students and associates. For example, about 5% of the final concept survey will cover topics from this module. We will also use notes from your business and employer discussions. As you may anticipate, product descriptions of a business strategy will follow many of the same steps necessary to prepare and serve an actual college degree.
Understanding Competitive Analysis
Competitive analysis is all about getting to know the competitors who exist in your marketplace.
It’s a systematic approach to discovering your competitor’s products or services, marketing strategies, and performance. You want to put yourself in the other guy’s shoes.
The goal of competitive analysis in marketing is to allow you to identify the weaknesses and strengths of your competitive set. Find out what they do well, and you can begin to decide what your company might do even better. Consider what services or products they fell short in delivering, and you know where you can offer customization or specialization to meet the market’s needs.
Competitors are a key source for marketers: they are one of the only external marketing elements you can change (by outperforming them), and they signpost new opportunities for brand distinction and identity in crowded, “mature” markets.
Lastly, you keep an eye on your competitors so that you can rapidly and efficiently respond to any changes they make in their marketing tactics.
Conducting Market Research
Market research is obtaining, analyzing, and interpreting information about your customers, competitors, and the overall environment in which you compete. It is a methodical way of answering questions and using the answers to improve your work.
While competitive analysis involves a structured approach, it is usually specific to information about your competition. How close are your “arrows” to those of your competition? And what do you need to do to make your “arrows longer” or move your strengths closer to your interests?
Researchers also use surveys and focus groups. Surveys provide highly reliable results. They are an opportunity for you to ask your best customers what they think of you and your products or services, and then you can use math to find out which factors really (absolutely and positively) need to be fixed. Focus groups offer the opportunity for you to learn about success inhibitors.
Researchers typically use a series of probing questions, often grouped around themes, and then utilize powerful synthesis tools to take these (at times) somewhat disjointed thoughts and identify key messages and findings.
Given the changes in the last decade, consider a couple of additional competitive data sources. These come from some common, current themes seen in online research. Though not executed in a survey format, these three types of research involve social media, website analysis, and online reviews. Though not executed in a survey format, they are frequently carried out and employed similarly to other types of market research.
So, with a systematic effort around competitive analysis and a few different types of market research to inform your decision-making, you will be positioned to move forward with a better plan!
Performing Competitor Research
Knowing your direct or indirect competitors is essential for any business strategy.
Competing directly means selling the same product or service to the same customers. The immediate rivalry for the coffee shop operator is with other coffee shops nearby, which offer virtually the same product to the same clientele.
Indirect competitors are when a customer’s problem or need can be solved with different solutions. If you have a coffee shop, you’re not only fighting against other coffee shops but also against other products that cater to the same need. In this case, these can be bakeries.
Here are some common ways to evaluate your competitors in the market:
Your competition’s strengths and weaknesses. What are they known for in the market? It can be their brand, the people working there, or the additional services they offer. What is their weak spot? It’s important to know this for good vs. bad comparisons.
Their market position. What audience are they aiming to reach, and how are they communicating this? Are they saying they are a premium brand? Usually, people are not looking for low-priced competitors. There are a ton of competitors who do cheap work, but the work is terrible.
How much of your audience can they meet with their service or product? If it’s 100%, then they are like your services. If it’s only 5% out of 100% of their service, then it’s only their small service, and they can’t be listed as your main competitor.
Utilizing SWOT Analysis
A way to think systematically about a particular area of concern is a SWOT analysis, which calls to mind strengths, weaknesses, opportunities, and threats. Your group composition should be assessed for strengths. This could be anything from having an incredibly experienced group of program directors to having a firm brand name. The weaknesses of your organization should be critiqued as well. Your department may lack a go-to front-end designer. Your past technology program or project bombed and is still creating brand problems.
Opportunities in the outside environment should be externally captured. For example, a recent Web 2.0 conference you attended could inspire you to consider running an event in your area.
Threats usually comprise other groups putting on similar events (direct competition) or the overall market appeal for educational technology-related events shrinking (decreasing market).
Market Positioning and Customer Segmentation
Market positioning is a strategic exercise to establish a place for your brand or product in the minds of consumers, typically relative to your competition. You’ll identify your unique value proposition and the key features that set your business apart from the thousands of others they could choose from. It’s a crucial step for competitive analysis because it forces you to evaluate your company’s strengths and weaknesses and how they fit into your marketing strategy.
Like positioning, you also need to work on segmenting your customers to develop your product.
Your prime segmentation variables are most likely going to be:
Demographics:
Who are your customers? You can divide them by age, sex, income, and education.
Behavior. What are they doing? These types of behavior can be used (along with many others) to identify your target customer and how you can change your sales process to increase your conversions.
Needs. This is hands down the most effective way to segment your customers. What do you need? What problems do they have? When you have that information, you can start writing some compelling ads.
Developing a Marketing Strategy Based on Analysis
Advancing your marketing means conducting competitive analysis. This is the business of identifying your competitors’ strengths and weaknesses, hunting for opportunities, and ensuring that your brand differs from theirs, not looking and sounding like everybody else.
To do this, you must gather intel on some of their essentials, including:
Products
Pricing
Marketing
Customer thoughts
Once you collect some basics, you can conduct a market SWOT analysis. This will assist you in ascertaining where your brand can locate itself among all the alternatives.
How you respond, based on your directions, must align with your brand strategy. That’s why you need to have a clear business strategy and objective. Doing it parallel to this exercise can be helpful, if it is done before marking the competitive analysis job a finished one.
This analysis is also not set in stone. Your game plan may have to change depending on how mature the market is or when some competitors/alternatives decide that a different strategy is better suited for their business. So, take another look at this exercise every five years, a year, or six months, depending on how frequently the conditions for your problem space may change.
Close That Gap!
Developing your business strategy isn’t complete without a comprehensive understanding of your competition. Knowing what your competitors do well (and don’t do well) provides an excellent context for the next steps in your strategy and how you should approach your marketing tactics moving forward, all things SWOT analysis. Here are a few examples of why a competitive analysis can help you:
Understand who your competitors are:
Learn more about the demographics in your industry
Identify gaps in the market
Refine your unique selling proposition
Get inspiration from “blue light specials” or “doorbuster sales” and other effective promotions run by your competitors. 36% of last-minute shoppers say they will rely on expedited shipping to receive their purchases on time. Make more strategic decisions about your ad spend. Improve conversion rates on your website by running experiments to identify potential pitfalls and sticking points. When new potential consumers enter your industry, you’ll be prepared to capture their attention with an understanding of both macro and micro-influencers in your space. This type of information is vital if you are trying to sustain long-term operations in your industry with the ongoing goal of attracting new customers and actively garnering the attention of existing customers in mobility mode.
To identify areas where your competition is both succeeding and falling short, concerning any industry mentioned in this list, there is a slew of excellent online tools that allow you to follow the money and find out exactly how much specific companies are making and even how they are making it.
For example, with the holiday season on the horizon, you might see which competitors are pulling out all the stops for their Black Friday deals during Cyber November with Google Dorks.
You can then count and time out when they are posting comparative tweets to try and figure out exactly what their social funnel implies, all while keeping in mind exactly what kind of engagement each post has. Good luck with this and Instagram’s relentless and ever-changing algorithms. I’m staying clear from Insta right now on principle alone.
What’s your competition doing to sell more (that you aren’t doing already)? Is Senka Shampoo for sale on your competitor’s web page, and if you were to start selling it, how much do you think you could sell? Industry research can help you figure it out.
It’s also important to note that a competitive analysis is a living and breathing document. It is never truly “complete” as the market continues to move, and thus, so does the competition.
Never rest on your laurels. Always go back to your notes, look at the market with a new lens, and make pivots and rewrites when and as necessary.
If you found this information helpful, please like and share it. You can also comment or join the community!
To learn more, visit Business Consultants at Namaste Studios to view our services or find a business consultant to fit your needs. Additionally, you can find more of our Business Consulting blogs here.
Bonus for blog readers: Interested in learning how AI automation can transform your Business? Click here to register for a FREE WEBINAR that can change your life!
