Why competitor analysis frameworks are important when wanting to grow
All businesses need to undertake a competitor analysis framework. Beyond simply identifying competitors, it also allows you to identify opportunities, risks and your route to success. This article asks why competitor analysis frameworks are important when wanting to grow.
It’s important to understand your market and determine your next steps by evaluating a competitor’s offer. And not just their strengths and weaknesses with a poorly constructed SWOT analysis…. Sorry list. This article looks at how you can use a competitor analysis framework. From tech startups, established businesses, brands or sole practitioners, a framework is useful. The framework is usually composed of five stages:
Firstly, list your competitors and their products. Then, describe their marketing efforts. Note their strengths and weaknesses. Then draw your conclusions and determine your next steps.
First, you must list your competitors
Competitor analysis frameworks are needed to win more customers, capture market share and enhance your competitive advantage. However, it is not accidental or guesswork. You must first identify who your competitors are before you begin. Ask who they really are, not who the boss thinks they were.
They can be classified into two categories—direct and indirect competitors. Identifying your direct rivals is important as you are battling them for customers every day. An indirect competitor targets what you do in two different but similar ways:
- They target a different customer base while selling similar products.
- They offer other products and services but share a customer base.
Before starting, conduct research to identify your competitors. You shouldn’t rush this step. It’s critical to obtaining high-quality and helpful information. Never assume anybody is your competitor. Or dismiss business as irrelevant without looking and double-checking.
- Who are the companies that you already compete with?
- Which names come up in customer conversations?
Look for them on a search engine to get a visual idea of your industry or market segment. In addition, you may also want to look at key individuals in your industry or market segment.
2. Rank them
Now that you have created a list of competitors… now rank them.
Don’t waste valuable hours and resources researching companies that aren’t on your level. Rank your competitors based on how much market share they have. How strong their offering is, and what their online/offline presence is like. Rank them in any way you want. A way that’s suitable for your needs.
However, keep an eye on the ones you dismiss. Like a Pyramid, have your most important competitors at the top. Your least crucial at the bottom. The importance you place on them has nothing to do with size, track record, and experience in the market. Some new start could be a greater threat than the monolithic rival you have always been up against.
And things change, so don’t ignore any of them. But also, resist the temptation to obsess about them. Monitoring each competitor’s every move will fog your judgment and distract you. Again use the pyramid principle to determine actions.
3. Describe your top competitors and their product offering
So you know who your competitors are and how much competition they provide. Now it is time to get down to business and find out what products and services they offer. It’s important to gather this data without bias or preconceptions. And contribute to a larger competitor analysis allowing you to make inferences later.
A brief strapline can convey a lot of information about a product’s offer. You want to gather information about the products and services relevant to you. Of course look at their features and benefits. But also isolate what features and benefits are missing. Could this be an opportunity for you? Or a landmine to place under their sales pitch? There are various methods to obtain this data. Here are some examples:
- Look them up on Google (doh, of course, why didn’t you think of that 🙂
- See what people are saying about them?
- What are they doing online and offline?
- What are the customers they servicing?
- Get the product/service in your hands. Break it down and get under their bonnet.
Their website and presence
Look at your competitor’s website to see what they are saying. To see:
- How they describe their products or services
- How do they present their pricing
- What their customers say about them
- What statements are they coming out with about their offering
- The features and benefits they focus on
- Their tone of voice
- How do they present their brand? Is it cool, professional or dated?
- Also, most importantly, what are they not saying?
- How committed are our competitors to achieving their declared strategy objective?
- How and where might our competitor’s objectives conflict with ours?
- What are the options open to us for dealing with unfolding new realities?
- What vulnerabilities in our competitors can we exploit?
- Where do we not want to compete with our competitors?
- Who are our competitors’ key suppliers?
- Who are our competitors’ biggest customers?
- What brands are in our competitor’s portfolio?
- What are our competitor’s preferred advertising routes they choose an agency to pursue?
- And what is our competitor’s social media footprint?
- Who are our competitor’s key customers?
- What is our competitors’ International Customer Base?
- Also, what are our competitors’ actual Financial Positions?
- What is our competitor’s supply chain?
- Are our competitors’ supply chains ethical?
- Who manufactures our competitors’ range of products?
- Who owns our competitors’ IP?
Route to market
- Firstly, what is their route to a market?
- And what products do our competitors offer?
- What products do our competitors not provide?
- And what clients do our competitors prospect?
- Which prospective clients are our competitors not interested in?
- What have our competitors stopped doing over the last few years, and why?
- What gives our competitors distinctiveness?
- Where do our competitors compete, and which customers and niches?
- What kind of demand is there for our product or service?
Evaluate the competitive environment and your competitor’s strengths and weaknesses
Everything a company does to promote its products or services is considered marketing. In addition to advertising, marketing includes any promotional efforts undertaken. Knowing how your competitor markets and SEO strategy allows you to answer questions. Answers to understand the success rate of their targeting. Other valuable questions include. However, SEO analysis is a tiny part of competitive intelligence but it can reveal many things.
Here are some other questions you can ask within this competitor analysis framework:
- What’s the market opinion of these competitors?
- Whom do they target? Are they a cheap brand or exclusive? Modern youth or traditional?
- How does their offering look and feel? And how does it work?
- What experience do they offer their customers?
- Are they good at delivery?
- What is their pricing strategy?
- How easy is it for a customer to order from them?
- What is the state of their customer reviews?
- How good is their distribution and retail network
- How big is their brand awareness? Do they have established track records, and are they trusted?
- Also, do they have good relationships with buyers, distributors, editors and agents?
- What’s the market size?
- Is the market expanding?
- Or is it contracting?
- How’s the industry value chain structured?
- Is the competition intense?
- Is there a threat of new entrants to the market?
- How many potential buyers are there?
- What are the barriers to entry?
- What’s the supplier bargaining power look like?
- And what substituted products could customers use?
Of course there are many other questions you can ask. Answer these and similar. You’ll have an understanding of your competitor’s market position. A market position is how it positions itself in the marketplace to establish its:
Knowing your competitive standing within your marketplace is essential. This standing determines your competitive level. You can now set the price and position for promotion more confidently.
It should be possible to review each competitor’s online and offline presence. Describe their marketplace position.
4 . Identifying competitors’ strengths and weaknesses
Ranking up the previous phases should have given you an idea about your competitors’ offers. Their marketing, target consumers, and how they position themselves in the market.
It’s time for some analysis in Step 4. You must evaluate this information to isolate what competitors are doing well. And not so well, of course.
The goal is to identify precisely what the competitors are great at. The purpose of discussing weaknesses is to determine what competitors are doing poorly. Also, think about how you can exploit those weaknesses. And if they are poor at it. Are you the same? And no, you can’t be better than them in everything you do. Blind faith and positive attitudes have killed my idea and business.
So when evaluating a company’s strengths and weaknesses, there are many things to consider. For instance, the location of headquarters, their logistics, or the senior team’s decision-making style may be viewed as a strength or a weakness. And you know, sometimes nothing beats a human mark one eyeball. Particularly within a manufacturing arena driving to and having a look at what’s going on can reveal many things.
5. The fifth step is conclusions, opportunities, and threats.
All the legwork has been completed. Steps 1-4 were about research, data collection, and analysis. Now you can make some strategic decisions based on this information.
Having surveyed your competitors, you should be now well-informed about the market. You may now examine your business model and decide whether you are distinct. Or if it’s time to change directions to stand out. Looking at your competitors will help identify any neglected market opportunities. But you may be able to seize these opportunities and enhance your competitive advantage.
Having gone through this competitor analysis framework, you’ve essentially performed a benchmarking exercise. So now you can assess how you fit into the market. You can see how your strengths and weaknesses compare to your competitors.
The competitor analysis framework reveals immediate and future dangers. But it’s crucial – you can avoid potential hazards if you see your competitors coming. Turning your disadvantages into strengths can turn your weaknesses into advantages.
So why competitor analysis frameworks are important when wanting to grow
In conclusion, competitive analysis frameworks are the foundation for developing your business plan. And ultimately succeeding. Without it, you can’t know who your competitors are or how best to compete with them. Why? To succeed in the future, you need to know where your company stands in the present. This gives you an edge over your competitors. And because you can better take advantage of emerging trends. Respond to new challenges, and redesign your business model to meet customers’ needs. Move through the steps. And you’ll identify and understand their strengths and weaknesses. And find any opportunities and risks associated with them.