What is a competitive analysis? and how do you conduct one?
To gain a competitive advantage, you should consider conducting a competitive analysis.
Have you ever conducted a competitive analysis for your company? And more importantly, do you know how to do it properly?
You may miss out on valuable insight that can help your brand grow. If you’re unsure or if the last ‘analysis’ undertaken was a quick look at a competitor’s website and social media presence.
What is competitive analysis and how do you perform one effectively?
Competitive analysis is the process of examining your rivals’ products, strategies, pricing, marketing, and customer engagement to understand how they operate and where your business can improve or outperform. It involves identifying direct and indirect competitors, analysing their offerings and positioning, evaluating their sales and marketing strategies, and performing a SWOT analysis.
A competitive analysis reveals where your business stands in relation to others in your market. By evaluating competitors’ strengths, weaknesses, and market moves, you gain insight that helps shape better strategies, refine your positioning, and uncover opportunities for growth or improvement.
In this article, you’ll learn how to perform a competitive analysis to give your company a competitive edge in the market.
What is competitive market analysis?
Competitive market analysis is a process of studying your major competitors to gain knowledge about their products, sales, and marketing strategies. By gaining knowledge about your competitors, you can enhance your strategy, keep them at bay, and increase your market share. There are several advantages to conducting a competitive market analysis.
You can use competitive analysis to discover how your competitors operate and where you might be able to outperform them.
Stay on top of industry trends and ensure that your product consistently meets and exceeds industry standards by staying informed about current developments.
Competitive analyses offer several benefits besides those we’ve already discussed:
What is competitive market research?
Identifying and comparing key market metrics that help distinguish your products and services from those of your competitors is a crucial aspect of competitive market research.
An effective sales and marketing strategy is based on comprehensive market research, helping your company stand out.
A competitive analysis is an essential component of marketing.
It’s always beneficial to perform competitor analysis. By completing a competitor analysis, you’ll be able to:
- Discover critical, game-changing information about your competitors.
- Get to the truth and close the gap on your rivals.
- Reduce risk, increase insight and understanding
- Gain the first-mover advantage and avoid costly mistakes.
- Help you assess the risks and rewards.
- Drive strategy. Make smart decisions based on considered Intelligence, not rumour and gossip.
- Spot opportunities, identify new markets, and help customers anticipate what they need to prepare for competitor moves.
- Then learn from the mistakes of other companies.
- It can blow assumptions out of the water.
- Monitor your competitor’s pricing
- Discover what your competitors are offering and compare it to your own operation.
- Find new or potential competitors.
- And provide an early warning system.
- Predict changes in your industry, legislation and regulations
- Size up candidates for acquisitions or mergers
- Identify customer needs, gauge your reputation and win more tenders.
- Stay competitive, but be up to date on how your customers perceive you.
- And isolate cost-saving technologies and processes, and improve internally.
All of these four components are critical to your business’s success. Let’s examine some methods for conducting a thorough competitive analysis.
Identify your competitors
Before you can accurately compare, collate and synergise the data, you must determine who you are competing with. What works for a business like yours may not work for your brand.
How do you do this?
Divide your potential competitors into two classes: direct and indirect.
- A direct competitor is a company that offers a product or service similar to yours and operates in the same geographic area as you.
- An indirect competitor provides products that are not identical but could satisfy the same customer need or solve the same problem.
In theory, these two words are simple; however, people often confuse them. Only compare your brand to your direct competitors when assessing your brand; this is something many brands overlook.
For example, a subscription-based fitness App is paid for monthly and caters to a similar customer base. However, upon closer inspection of their competitors, they realised that none of these products were identical. One brand focused on gym sessions, while the other focused on steps, walking and running. Indeed, these brands cater to the exact needs of their users. Getting us off our bum, but they do so with different kinds of fitness, making them indirect rivals. Even slight differences can have a significant impact.
But you shouldn’t ignore your indirect competitors entirely. It’s essential to watch these brands, as they could shift positions at any moment and enter the direct competitor zone. For example, your fitness app competitor could launch gym-based workouts and enhance their product enough to attract your customers.
It’s also one of the reasons why you should routinely run a competitor analysis. The market may shift at any time, and if you aren’t constantly monitoring it, you won’t detect these adjustments until it’s too late.
Your competitors’ products should be determined.
The product or service is the heart of any business, and that’s where we should begin.
You should examine your competitor’s entire product offer. Not just the prices, but the quality and scope of their products or services.
You should also take notice of their pricing and any discounts they provide customers.
Is there anything to consider?
Study the results of your competitors’ sales tactics and research them. It can be tricky to run a sales analysis on your competitors – But not for us, of course :-)
The following pointers will tell you how competitive the sales process is and what information your salespeople must have to compete during the final purchase phase.
- Finding annual reports online is simple when dealing with publicly held companies. With privately held firms, however, you must do some digging to locate this data.
- Searching through your CRM or reaching out to customers who have expressed interest in your competitor’s service or product may yield some of this information. Find out what made your product or service more appealing than the alternatives.
- Run a report that shows all potential deals and their competitors.
- Solve the problem by requesting the necessary information from prospects during the sales process, and they should request this information from their leads to gather it.
- Who their current service providers are
- Whom they have used historically
- And who else are they considering during the purchasing process?
After losing the deal, inquire about why your competitor won to enhance your sales team’s understanding of your competitor.
- Why are you losing the deal?
- What services or features attracted the customer?
- Was it the price?
- Was it your sales process?
- Were they already lost because of them rather than you?
Find out why if they have already switched
If you ask open-ended questions, customers will provide honest feedback about what they find appealing about your brand. Once you’ve answered these questions, you can investigate your competitors’ marketing efforts.
Look at your competitors’ pricing and benefits
Pricing your product correctly depends on understanding how much your competitors charge for similar products or services. If you believe your product or service is superior to those of your competitors, you may consider charging more than the industry standard. You should, however, ensure that your salespeople are prepared to explain why your product is worth the extra cost.
Perhaps you believe there is a demand for economical products in your field. If so, you may wish to compete on price and appeal to clients who are not looking for an expensive, high-quality product. Pricing a product correctly requires factoring in several other variables. Still, it’s crucial that you stay aware of industry pricing to ensure that your product is priced in a way that seems reasonable to customers.
Consider matching your competitors’ perks or offering some of your own to stay competitive. For example, competitors may offer a considerable referral discount or a free trial version for a month. If you’re losing customers, these perks may be the reason, so if they seem reasonable for your brand, consider whether you could match them or offer some of your own.
Are you aware?
Are you aware that high shipping costs are the primary reason for abandoned carts? Due to free shipping, consumers are increasingly attracted to one brand over another nowadays. Your industry, primarily e-commerce, may be one where shipping is crucial. You’ll want to evaluate your competitors’ shipping charges and ensure they meet (or beat) them.
Investigating whether offering free shipping is feasible for your company if most of your rivals do so is important. You may want to consider alternative ways to differentiate, such as loyalty programs, holiday discounts, or social media giveaways, if free shipping is not an option for your business.
Look at how your competitors advertise their products and compare them with your own advertising strategy.
Studying your rivals’ websites is the quickest method to gauge their marketing efforts. Studying your competitors’ content strategies can help you refine and improve your own offerings.
- Does your competitor offer a large number of blog posts or just a few?
- Are there five white papers and just one ebook?
- How frequently are new ebooks or case studies being published?
- Is something new being published every week or once a month?
It is likely that if you encounter an extensive repository of material, your competitor has been publishing regularly. The content they post may help you identify their lead-generation tactics if they discuss topics that interest you.
Quality
Quality should be your next concern after frequency. If the quality is poor, their posts will not be of much value to their target audience, no matter how often they post.
Choosing a small handful of samples to review rather than attempting to evaluate every piece makes the process more feasible. Ensure your competitor’s content covers a wide range of subjects, so you can get a good idea of what they communicate to their target audience. Keep an eye on your competitors’ content as you continue to scan and consider these questions when researching your competitors’ content:
- Do you breeze through generic stock photos, or are you charmed by custom illustrations and photos?
- Are they using generic stock photos?
- Do they at least use text overlays with calls to action specific to their business?
- Do their images appear to be created in-house?
Tech stack
Knowing what technology stack your competitors use can help you learn about their approach and gain insight into how they operate. Choosing the right technology for your company can reduce friction and boost momentum if you know your competitors’ technologies. You might come across favourable reviews about a competitor’s customer service while researching. You discover that a customer is using powerful customer service software that you are not taking advantage of.
This information should allow you to improve your competitors’ procedures. “BuiltWith” is an effective tool for revealing what technology a competitor’s site is running on, along with third-party plugins such as analytics systems and CRMs, by typing in the company’s website URL. Another creative method to gain information about the technology your competitors are using is to review their job listings, particularly for engineering or web development positions. The job listing will likely specify the tools a candidate must be familiar with.
Take a look at how they distribute their marketing materials.
It’s essential to identify how engaged your competitors’ audience is with their content. You want to determine how interesting your competitor’s content is to their readers by observing how their target audience reacts to what they post. Find out if your competitors’ posts receive the average amount of comments, likes, and shares. Your competitor’s content promotion strategy will directly lead to improving your own engagement with prospective clients.
Look at their social media presence, strategy, and preferred platforms.
The last thing you want to look into when it comes to marketing is your competitor’s social media engagement rates and presence:
- How do your competitors drive social media engagement with their brands?
- Do you see social sharing buttons on each post?
- Are these clearly visible?
- Do they include links to their social media accounts in the header, footer, or elsewhere?
- Are there calls to action on their website?
It’s worth learning more about how a social media platform could help your business if your competitors are using it and you aren’t. Check your competitor’s engagement rates on these sites to see if a new social media platform is worth your time. Take a close look at your competitors’ content marketing strategy with the same critical eye you used to evaluate theirs. Then carefully examine their social media strategy with a fine-tooth comb.
- Are they posting visual content to promote brand awareness and engagement, or driving people to landing pages that result in new leads?
- Is this content mostly original?
- Are they sharing curated content from other sources? Are these sources regular contributors?
- What is the overall tone of the content?
- How frequently does your competition’s content interact with its followers?
Once you collect this information, you can use a grading system to evaluate the quality of your competitors’ content. This will help you compare the rest of your competitors.
Conduct a SWOT analysis
When conducting a competitor analysis, perform a simplified SWOT analysis simultaneously. You’ll always keep an eye on your competitors’ strengths, weaknesses, opportunities, and threats when you evaluate a company as a whole. You’ll be able to compare their weaknesses against your strengths and vice versa, and thus you can position your company better and start to identify areas for improvement in your own brand.
A competitive product-specific analysis
Product comparison examines key similarities and differences in products that target the same general market. If you are in a market where your competitor sells similar products to yours, you want to ensure you do not lose market share to them wherever possible.
Next, compare the key features of their product and services and go deeper and determine the brand’s unique selling propositions. Identify their target market, define what that market needs and gaps and then analyse how you can provide it.
We are Octopus. The Global People-Powered Competitive Intelligence Agency.
Outsmart your competition. Make the unknown known. Octopus helps you gain clarity in complex markets. With clients and tentacles around the world, we deliver sharp, actionable competitive intelligence through a blend of deep primary (HUMINT) and secondary research. If you’re looking to make smarter decisions, beat the competition, and reduce uncertainty, we’re the partner you want on your side.
