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  • Writer's pictureAlexander Matambo

How To Conduct A Competitor Analysis

"If you know the enemy and you know yourself, you need not fear the results of a hundred battles"- Sun Tzu, The Art of War.

It stands to reason that if a group of people want what you are selling, there is probably a group of competitors offering them something similar. To maintain a competitive advantage, it is imperative for businesses to have a thorough knowledge of their competition.


A business needs to understand what its competitors offer to understand what the customer already has available to them and offer something different.

This article aims to roadmap the process of conducting a practical competitive analysis to learn the competition's strategies to increase the effectiveness of their own strategy.


What is Competitor Analysis?


Competitor analysis is the dynamic, data-gathering process where you categorise and evaluate your competition on an ongoing basis to understand their strengths and weaknesses compared to your own. The aim is to build a complete understanding of the competitive landscape and stay atop of industry trends.


By understanding what cards the competition has under their sleeves, you can better build strategies that improve upon them. The greater the insight into the competition, the greater the competitive edge for the business.

Why is Competitor Analysis Important?

A well-researched competitive analysis can be the blueprint needed to identify gaps in the market where you can gain a foothold on the competition or outperform them ultimately.


The following are the specific benefits a competitive analysis can provide to a business/brand:

  • Provide you with a benchmark to measure your performance in different business aspects.

  • By actively comparing your offering to those of competitors, you can more easily identify, develop and fine-tune your unique selling point (USP). This can be beneficial for future business strategies.

  • Enables you to see what is working for the competitors. Businesses can use this market intelligence to improve their offering and stay ahead of emerging trends.

  • Reveals where the competition is falling short, allowing a business to identify potential gaps in the market that they can exploit.

  • Deepening existing market knowledge. Market analysis is an ongoing process. Continually collecting and analysing the data will increase a business's understanding of their industry and notice developing trends and forecast evolving market conditions, allowing the company to quickly adapt to changing market conditions.

How to Conduct Competitor Analysis

These are the steps needed to conduct a complete competitive analysis:


1. Determine who your competition is

The first step in conducting a practical competitive analysis is identifying exactly whom your business is competing against and the grounds on which this competition is based. This will help you more accurately compare relevant data. There are two main types of competition:

Direct Competitors: These are businesses that offer the same product or service as you, operate in the same geographical area, and target similar target groups as you. Their offering could act as a substitute for yours.


An example could be Netflix and Disney+; they both offer subscription-based streaming services to customers at similar price points, making them direct competitors.

Indirect Competitors: These are businesses that sell products or services that are not the same as yours but could satisfy the same customer needs. They are often harder to identify but are essential to note.

Sticking with the Netflix example: Netflix satisfies customers' underlying need for entertainment and giving them a way to pass the time. The same need can be met by different businesses such as YouTube, cinemas, gyms, parks, and social media.


When conducting competitive analysis, it is essential to focus on direct competitors because they provide more actionable information for your business. Direct competitors can give you insight in:

  • Product Viability: Their mere existence proves that there is demand for your offering type, and you can use them to gauge what features work best for the chosen target market.

  • Barriers to Entry: your direct competitors set the bar for entering the market. If Netflix charges £10 for streaming services, Disney+ cannot possibly charge £25 unless they add a twist to their offering.

However, businesses should not wholly disregard indirect competition. These brands can quickly shift their position and pivot into the "direct competitor" zone, emphasising the importance of continuous competitive analysis.


2. Determine what products the competition offers


The next step is to analyse the competitors' product line; this is the complete list of the goods and services that the business is selling.

You should critically analyse the pricing, special offers, and discounts as they might contain valuable insights.

Key questions to ask at this stage:

  • What is their pricing strategy: high-cost or low-cost?

  • What is their current market share?

  • What is the company's unique selling point? What are the distinctive characteristics of their offering?

  • What is their distribution strategy?

  • What customer group are they targeting?

  • Do they utilise e-commerce or online selling?

3. Sales Strategy


A comprehensive understanding of the competitors' sales process will give you the ammunition needed to optimise your own process, and arm your sales representatives with the valuable information needed to close deals.

The size of the competitor usually determines the ease of finding out this information; publically traded companies publish their annual financial statements. However, you will need some ingenuity to uncover this information about privately-owned companies. A viable solution would be to go and experience the sales process first-hand.


Some questions to consider:

  • What sales channels are they selling through?

  • What are their sales volumes?

  • What does the entire sales process look like?

  • Are they expanding or down-scaling their sales process?

4. Pricing


Pricing is an essential element in the customer's decision-making process, making it a vital component to analyse critically.


There are many factors that go into correctly pricing a product , but it is crucial to understand the industry pricing standards to ensure that your products are priced correctly.

Comparing pricing can be tricky, notably when the products differ. The best way to go about it is to find as much common ground as possible and compare appropriately. A perceptual map can help in the process of identifying how different competitors price their products and where you fit into this picture.

As you analyse the competitor's pricing, be sure to check for "add-ons" or perks that the competitor is offering to customers. These perks can be a source of significant competitive advantage, so either try to match the bonuses or provide your own that the competitor currently does not.


5. Shipping

Research shows that shipping costs are consistently the number one reason for cart abandonment on online purchases. Shipping costs are a major determining factor in why customers will choose one brand over another.


Determine what your competitors are charging for shipping and analyse your different logistical providers to see if you can offer a similar rate, if not better.


If competitive shipping is not an option for your business, consider looking into ways to add value to the customer's purchase and improve their experience- loyalty programs, giveaways, or discounts.

6. Technology Stack


Technology is a significant enabler of sustainable competitive advantage for a business. Thus, understanding how your competitors utilise their technology can be a valuable component in reducing friction in your own business and creating your technology solutions.

One way of discovering your competitors' technology is using BuiltWith; simply type their URL into the software, and you will be able to see what technology their site runs on, as well as their accompanying third-party add ons and plug-ins ranging from A/B testing tools to analytics and CRM.

An alternative approach would be to look at the competitors' job posting, particularly for technical roles in web development and engineering. The posts will likely mention the tools that the prospective candidate needs to be familiar in- a crafty way to get intel on the technology the competitor uses.


Questions to consider:

  • What e-commerce solution is the competitor using- SAAS, open-source, headless commerce?

  • Is there an alternative technology stack that would offer a better online experience for customers?

  • Are they utilising innovative technology: augmented reality (AR), virtual reality (VR), chatboxes?

7. Web Content Analysis


In the age of technology and high-speed internet, it should come as no surprise that a business' website is a vital touchpoint for generating sales. Constantly updating the technology and keeping up with trends is essential for site conversion.


Have a good look around the competitors' websites and see if you share common themes, content types, or resources. Identify gaps that could prove lucrative for your business that you are not currently implementing.

Questions to consider:

  • What content type do the competitors create?

  • What is their target market?

  • Is there a theme to their content?

  • Do they have a media kit?

  • What content is performing best?

  • How is the content being used to generate sales?

  • Who is writing their content (In-house team? Multiple contributors?)?

  • How in-depth is the content they produce?


8. Search Engine Optimisation (SEO)


Search engine optimisation is the art of optimising your website around specific keywords to rank higher on search engines.

Search engines such as Google and Bing can be massive online traffic sources for your website, potentially bringing prospective customers who will buy what you are selling.

Understanding your competitor's SEO strategy can help you reverse engineer their online success and identify areas that can help improve your site's ranking. There are two key elements to focus on: the competitor's keywords and the backlinks they have.


Keywords: This will give you insights into what keywords they use to bring traffic to their sites, helping you shape your own keyword strategy.


Getting this wrong could lead to a business either targeting difficult keywords and not ranking on the first page, or ranking for keywords that do not get much traffic or cause customers to buy.

Either situation is not ideal.

Backlinks: A website's SEO performance is linked to how many content-relevant links they get pointing back to their site. Backlinks from sites with higher domain authority, in particular, increase a site's ranking more than most other factors.


Discovering the links that the competition uses comes with benefits, namely, learning what sites and types of content you can try and get links from. This will give you an excellent foundation to build your SEO strategy.


SEO PowerSuite is an effective tool that you can use for both these tasks, and an added benefit is that it comes with a free version.



Questions to ask when assessing competitors SEO:

  • What keywords are the competitors using that you currently are not?

  • What is the difficulty of the keywords you have selected?

  • What channels are the competitors getting the most traffic from?

  • What sites are the competitors linking to that are not linking to yours?

  • Which type of your competitor's content gets shared the most? How does your content compare?

9. Social Media


Social media has revolutionalised the competitive landscape and how companies do business in recent years. There is massive value to be gained from understanding how competitors use social media, and what people on social media platforms say about them.

The first thing to note is what social media platforms your competition uses and gauge their success on those platforms. If the competition uses a platform you are not on and succeeds on it, this presents an opportunity for your business.

The key is to be present on the platforms that the audience frequents. The essential platforms are Facebook, Twitter, Instagram, TikTok, Snapchat, and Pinterest.


Next, look at the key quantitative metrics on each individual platform:

  • Number of followers/fans

  • Engagement (number of likes, shares, and comments)

  • Virality of content

  • Posting frequency and schedule

Analyse these factors with the same critical view as you did with their content strategy. After collecting all the relevant data, generate an overall score for your competitor's ranking for easier comparison.

Questions to consider when analysing social media performance:

  • What type of content is performing best?

  • What is the focus of their content: brand awareness, generating sales?

  • Whom are they interacting with?

  • What language do they use? Tone?

  • Do they make use of user-generated content?

  • Do they work with influencers? Is it successful?

10. Putting It All Together.


By this stage of the analysis, you will have gathered much information that could give valuable insights into the competitive landscape. While the information is still fresh, it would be best to put it in a form that would be easy to revisit later.


The following tools help organise research data in a format that is easy to follow:

  • SWOT Analysis

  • Porter's Five Forces Framework

  • Perceptual Mapping

  • Research-Based View (RBV) Framework

These tools help you assess and analyse the strengths and weaknesses of the competitors' strategies and pit them against your own. This will help you identify areas for improvement for your own business.


Once the research data has been gathered and categorised, you need to form a baseline so you can compare your business to the competition more accurately.


Look at your business through the same metrics you used to evaluate your competitors and see how your business stacks up. This will form the new baseline from which you can develop the competitive analysis on all your competitors.


Closing


A competitive analysis is an ongoing process that helps a business discover how its competition operates and gives helpful insights into areas where the company can improve. If done correctly, it can be an essential instrument in creating a competitive advantage.

It is important to remember that the focus of a competitive analysis is not to steal what the competition is doing but to understand where how your company stacks in the market and find opportunities to improve your offering. The end goal must always be to find ways of serving the customer better.




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