You can use a competitive analysis to find out where your company is succeeding, where it needs to improve, and what trends you should be focusing on. Completing a competitive assessment is a good idea when you feel your business is not moving as quickly as you would like or when competitors are getting orders from your target customers.
This article will explain what a competitive analysis is and how you can perform it for your company.
How to conduct a competitive analysis
Josh Rovner is a business consultant and the bestselling author of Unbreak The System: Diagnosing And Curing The Ten Critical Flaws In Your Company. (Lioncrest Publishing, 2020). He shared with us the nine steps to completing a competitor analysis.
Investigate the business of your competitors to determine which areas are worth examining
Pricing, distribution and delivery strategy, market share, and new products and services could all be considered. Other factors include the long-standing customers who spend the most, after-sales service quality, and sales and marketing channels.
Search for all competitors.
Most competitors will have minimal records of accounting and operations, particularly non-public companies. You’ll be able to easily find other useful information, such as target customers, product characteristics, the type of staff employed, and price points.
Document your research with a written report
Your document should be substantive, actionable, and not too long for your staff to read. You can use graphs and charts to visualize where you are in the market compared to your competitors.
Find areas for improvement and implement the changes
Would you be able to improve the quality of the products or services that you offer by adding a new feature, lowering prices, or improving the after-sales service? Would you be able to achieve a higher ROI for your budget if you invested in a CRM that is more capable and allows better lead management?
Rovner suggests including trends and information in your region or market to get a complete picture of all the competitors. Document the threats that may negatively impact your business and the opportunities that you can take advantage of to outperform your competitors.
Track your results
To determine the success of your changes, measure your sales using a Profit and Loss Statement.
Focus your attention instead on replacement competitors and direct and indirect competitors who share similar market shares rather than analyzing more than 10-12 competitors.
Competitive Analysis Explained
Competitive analysis, also called competitor analysis, is a method of evaluating the performance of your company and its products compared with other businesses in your market.
David Taffet is the CEO of Petal. He said, “A competitor analysis will identify market participants who are positioned to take advantage of your opportunity. It will also Analyze participants’ operational strengths, substantive weaknesses, product offerings, and market dominance.
You can improve your business by using competitor analyses.
Determine your strengths and weaknesses. You can use your marketing message more effectively if you know what you have over the competition. You can improve your product, service, or after-sales by knowing where you are behind.
Know the market you are in. While you may know some of your competitors, you might not know the latest players on the scene. It is important to understand your main competitors, as well as any potential threats.
Assess trends in your industry. What new product, service, or feature is being offered by competitors to gain an edge? What trends do they see that you don’t? You can determine if other businesses in your market are on the right track by examining their behaviors and actions. [Related Content: Top Ecommerce Challenges Facing Small Businesses ]
Plan for future growth. Do you want to be the third-largest firm in your industry instead of the fourth one? The competitive analysis will give you all the information that you need, such as how much you have to sell and the demographics of the market.
What factors should you include in your competitor analysis?
Colin Schacherbauer, from Investor Deal Room’s executive marketing assistant, suggested the following ten elements for an effective competitor study.
Find out all the analyses of each direct competitor’s service or product. This information can be kept in a spreadsheet of competitor insights to see how the companies compare.
Market share percentage
By evaluating the market by percentage, you can identify the major competitors in your region. Do not exclude large competitors because they can teach you a lot about how to be successful in your industry. Follow the 80/20 rule instead: Focus on 80% of direct competitors (companies that have similar market shares) as well as 20% of top competitors.
Please find out how much your competitors are charging and where they rank on the quality versus quantity spectrum.
What marketing strategy does each competitor use? Examine the websites of competitors, their social media strategies, types of events that they sponsor, SEO strategies, taglines, and current marketing campaigns. Follow these tips to develop a successful business marketing plan. ]
What works for your competitors? Reviews indicate that they have a better product. Are they well-known for their brand? Can you test the effects of a competitor to see which ones perform better?
Determine what your competitors could do better to give yourself a competitive edge. Does their social media strategy lack vigor? Are they missing an online store? Are they using an outdated website?
Consider where your competitors operate and what regions they serve. Do they have brick-and-mortar businesses, or do the majority of their sales take place online?
Assess your competitor’s objectives, employee satisfaction, and culture. Are they the kind of company that promotes its year of establishment, or are they a recent startup? You can also read employee reviews to gain more insight into the culture of competitors. Learn how to improve the culture of your company. ]
Analyze the customer reviews of your competitors, both positive and negative. Look at the 5-star, 3-star, and 1-star reviews in a 5-star rating system. The most honest reviews are usually those with three stars.
Benefits of conducting a competitive analysis
In the digital age, no business can expect to be preserved for a long time. If companies don’t keep up with the latest trends, they can go out of business overnight. Blockbuster made a grave mistake when it dismissed Netflix’s service at first. Netflix is now a major player, and Blockbuster has virtually disappeared.
It’s important to understand what motivates your clients, even if you’re not in a sector that is susceptible to such a seismic shift. You’ll be able to identify these trends by regularly analyzing your market through competitive analysis.
Make existing competitors’ products and services more attractive by making changes to them.
You could offer complementary products and services that your competitors are offering or change them.
New market entrants and transformative products pose a threat.
Rovner explained that in some cases, you might find yourself at a disadvantage in the market, and analysis to change your strategy to maintain sales volume. In other cases, it may be that you are at a competitive advantage and can make changes to increase your sales or profits.