What is Competitive Analysis?
A competitive analysis, also known as a competitor analysis, is a way of evaluating how well your business and its products or services are performing compared to other companies selling similar products or services in your market.
Regular competitive analysis can help you spot opportunities to innovate, promote your business, enhance your products or services, and outshine your competition.
Every business niche has competitors. You likely won’t be the sole provider of a service or product in any industry, even if your product or service is the best option. Competitor analysis and competitive research are an integral part of not only sustaining your small business but ultimately growing your business. Learning where other brands are succeeding and what strategies they’re using helps you plan and strategize more tactically. It also gives you a good idea of what works and what doesn’t for your customers.
The advent of the internet and social media has made competitor analysis more straightforward and comprehensive. Business owners can now conveniently identify their competitors and learn more about their engagement, strategies, and tactics. With all of this information, you might be wondering how to conduct a competitive analysis for your own business.
7 Easy Steps to Conduct a Competitive Analysis to Grow Your Business
1. Determine who your competitors are
First, you’ll need to figure out who you’re really competing with so you can compare the data accurately. What works in a business similar to yours may not work for your brand.
So how can you do this?
Divide your “competitors” into two categories: direct and indirect.
Direct competitors are businesses that offer a product or service that could pass as a similar substitute for yours, and that operate in your same geographic area.
On the flip side, an indirect competitor provides products that are not the same but could satisfy the same customer need or solve the same problem.
2. Review Product and Service Offerings
After you’ve identified your competitors, the next step is to review their products and services, both apparent and obscure. Your competitors likely offer similar products as your own small business (after all, that’s why they are your competition), but this is the time to review the nuances.
Some considerations to review include:
- Pricing of the products or services: Are they priced higher or lower than your offerings?
- Ease of access: Are there faster delivery options or low-hassle return options?
- Features: Are there additional features that your competitors offer?
- Rewards: Do your competitors offer some sort of incentive or rewards program?
3. Compare Marketing Positioning
To determine whether your competitor’s policies are worth taking inspiration from, first look at their position in the marketplace. This can be done by looking at your competitor’s strengths and weaknesses and how the target audience is engaging with them. Once you’re done with your research, you can build a comparison matrix to see how you compare against your competitors.
4. Differentiate Content Strategies
It’s important to review your competitors’ blog content and see how yours stacks up. By being able to effectively discuss the industry you’re in, you’re showing your target audience that you are an active participant within your industry and a good source of truth. Furthermore, this allows brands to discuss product and service offerings, which can answer potential customer questions and position you as an authority in the space.
5. Listen to your Customers
Customers are the voice of any business so they must be put into consideration at all times if you want to consistently win their loyalty. Learn what your target customers really want, keep in contact with them, ask for their suggestions, and listen to their complaints. Let your brand make them feel wanted and like they matter. If you only seek to sell your product without putting your customers into consideration, they would have no problem taking their money to where they feel like they come first.
6. Be Strategic
You cannot compete against your competitors without a working strategy and your strategies should capitalize on the weaknesses of your competitor’s business as well as the strengths of your own business. The need for a strategy is tantamount because you need to understand where exactly to invest that would increase your ROI and overall business performance. Also, when developing strategies for your business, make them flexible. As times change, they must be easily adaptable. One common mistake business owners make is to think customers would remain because they have stuck to their business strategy for years and have always gotten results. However, as more businesses keep springing up, your customers are availed of the choices of more options. It is the digital age and it no longer matters who it is that started out first but who is in the market with the most acceptable strategy to the customer.
7. Follow The Trends
We live in a digital age where the demands of consumers are evolving consistently. Stay updated with the latest invention or creation that can offer your patrons the best service experience. People care a lot for their social credibility to stay intact and would not mind spending money to purchase social currency just to tend to their want for respect and public admiration. This means they need a brand that is forward and can bring the trendiest deals straight to them. One way to beat your competition is by creating a brand that makes your customers and prospective customers feel like they measure up socially and so it becomes a thing of pride to identify with your brand.
Competitive analysis is crucial because it helps you to understand your competition. It helps you to identify your competitor’s strengths and weaknesses and develop strategies to gain a competitive advantage. Conducting competitive analysis helps to understand market research and industry trends. You can identify areas that are lacking and improve your products and services accordingly.