Having a good competitor analysis allows you to stay one step ahead of your competition. This can be a major factor contributing to the success of your business. To maintain your competitive position in the market, it is vital to perform regular analysis.
Many businesses fall prey to the belief that investing on one does not produce results. But in reality, it can do wonders if done and used the right way.
However, the real question is how can you conduct such analysis? The best way to go about this is to hire a company that is familiar with the process.
But how do you know if they are doing the right things? For that you should know the basis of how to conduct a competitive analysis which will be the focus of this article.
The Significance of a Competitor Analysis
A competitive analysis is important for all businesses because it helps in identifying the competitors and understand their strengths and limitations in relation to yours. As a result, you are able to refine your strategy based on theirs.
With a well performed analysis, you will be able to find the following:
- What your potential customers think of the competition
- A base of knowledge and information on which you can build strong competitive strategies
- Insights into what makes you stand out from the competition and what doesn’t
- An understanding of the needs of your customers
- Strategies for expansion
Below we have outlined the necessary steps and stages you need to follow to perform a competitor analysis. The first step is to identify who your competitors are.
Who Are My Competitors?
The first major step of any competitive analysis should be to figure out who the real competitors are. This is a tricky part as many people believe that someone who is offering the same product as them is the only competitor. However, this is not always true.
Your potential competitor is the company that is offering products or services to cater to the needs and problems of the same ideal customer as you. For example, an opera company that is providing service to entertain people in the age range 35-40 in the same locality is in direct competition with a football club that is providing entertainment to the same ideal consumer.
You see how there is a difference in the product or service both offer, however, since the problem they seem to solve is similar, they are in direct competition with each other. This is why, when identifying your competitors, the focus should be more on the value rather than the product or service they are offering
Gathering Information about the Competitor
Once you have identified the potential competitors, the next step is to gather information about them. However, before you begin with this step, make sure you know the purpose of the competitive analysis. This way, you will be able to allocate the right resources at the right places and save a lot of time.
Here are some questions that you can ask to gather information about your competitor:
- How are they trying to satisfy the target market?
- Are they dealing in a wider or smaller range of products?
- What promotional and marketing strategies are they using?
- What do customers think of them? Read the reviews and analyze them.
- How are they doing in terms of quality, price, sales, market share, value, image, customer support, location, etc.
Once you have found ample information about them, ask questions to do a comparison with yourself. For example:
- Am I at a competitive advantage or disadvantage?
- What do the existing customers think of my business in comparison to the competitor?
- How can I make my business stand out from the competition?
These questions are quite general and can be applied to any company in any industry. To go into detail, you would have to ask questions that are specific and unique to your situation.
How are they playing with price?
Pricing is an important aspects of any business, especially if you have just entered the market. That will ensure you deliver the proper value to your customers.
But before you make this judgement, look at the prices your competitors are offering for their products and services. This way, you will have a general idea about the willingness of the target market to pay for the product.
Identifying The Objectives And Strategies of the Competitor
The next step is to identify and analyze the objectives and strategies of your competitors. This will help you devise strategies of your own that will have a better chance of producing results.
To have a good understanding of your competitor’s strategies, you can ask some general questions that include:
- Are they looking to increase or maintain market share?
- Are they focusing on maximining long-term or short-term profits?
- Are they using technology to improve products?
- Are they trying to take a position as the market leader?
Once you have gathered this information, you will be able to figure out what direction to move further in. The detail that will come after these answers will lead you to devising your own content marketing strategy.
Once you have an understanding of what the competitors are trying to achieve, you will be able to figure out the strategies they are using. This way, you will have the knowledge and information to devise a counter-strategy to win over the market. Some of these counter-strategies include:
- Reducing the price or introducing discounts
- Have a differentiation to the services or products (premium product, innovation etc)
- Diversifying advertisements on various platforms
Time to Devise your Own Strategy
The final stage of any competitive analysis is where your device your own content marketing strategy based on the information you have. Here you need to understand the importance of content marketing as it is the best tool to win over a potential customer base from your competition. With great content, you can achieve the following:
- Establish yourself as the industry leader
- Nurture relationships to increase leads conversions and audience retention
- Improve your SEO optimization
- Have an established presence on social media
All of these are great ways of retaining your competitive position in the market.
Conclusion
Content marketing is an important tool to establish your online presence and to help you move further in the market. Having a competitive assessment at your hand equips you with the necessary information to devise a better and effective content marketing strategy to ensure you stay ahead of your competition.
What is your experience with competitive analysis? Share your thoughts with us in the comment section below.
Enjoy this article? Subscribe to get similar articles delivered to your inbox and don’t forget to share it with your friends.
Alan Lo, Managing Partner of Stratwell Strategic Solutions, brings a decade of entrepreneurial and business development experience. Early in his career he was instrumental in building out the distribution channels of a real estate investment firm with over $2 billion in AUM. He has then founded an investment company in 2014 which he successfully exited in 2019.
