Egular competitive analysis can help you spot opportunities to innovate, promote your business, enhance your products or services, and outshine your competition.
- You may learn where your company is succeeding, where you need to make improvements, and which trends you need to anticipate by doing a competitive study.
- When your business isn’t developing as quickly as you’d want it to or when rivals are obtaining orders from your target clients, conduct a competitive study.
- A competitive study should look at the attributes, market share, prices, marketing, differentiators, strengths, and weaknesses of your rivals as well as their locations, cultures, and consumer feedback.
- This article is for small company owners, both new and experienced, who wish to research their rivals to enhance their goods or services.
Your business competes for the same clients as its rivals. You both provide equivalent goods or services. You’re not really clear why you succeed on certain orders but fail on others, though. A competition study may provide you the blueprint you need to take a bigger market share and gain a better understanding of the trends that will impact your industry in the future.
The best way to finish a competitive analysis
We learned nine stages for doing a competitive analysis from Josh Rovner, business expert and best-selling author of Unbreak the System: Diagnosing and Curing the Ten Critical Flaws in Your Company (Lioncrest Publishing, 2020).
1. Decide the goods or services you wish to review.
The majority of evaluations will focus on the goods or services with the biggest revenues or the greatest growth potential.
2. Look for immediate rivals.
With similar goods or services, these businesses compete for the same market. An illustration would be accountants competing with one another.
3. Identify unrelated rivals.
The same market is the focus of these businesses, yet they provide various goods and services. For instance, bookkeepers and accountants are in competition.
4. Consider substitute rivals.
These businesses address the same problem as yours but provide a different item or service (for example, apps that assist entrepreneurs).
5. Select the aspects of your rivals’ companies that merit further research.
Pricing, distribution and delivery plans, market share, newly released goods or services, the identity of their most valuable, long-term clients, the standard of their post-purchase assistance, and the sales and marketing channels they employ are a few examples of these factors.
6. Investigate each cited rival.
Most rivals, especially private enterprises, have few financial and operating records. It will be simpler to locate other valuable information, such as target clients, product characteristics, the kind of staff members employed, and pricing points.
7. Provide an analysis of your research in writing.
Don’t make your paper too lengthy so that your team won’t read it, but make sure it is meaningful and actionable. Graphs and comparison charts may be helpful in helping you and your team understand where you are in respect to your rivals in the market.
8. Define areas for improvement and put the improvements into practice.
Could you enhance the quality of your goods or services by introducing a new feature, reducing the cost to make them more accessible, or enhancing the post-sale support? Could investing in a more sophisticated CRM for better lead handling help you obtain a greater return on your marketing investment?
Rovner advises doing so to get a more thorough perspective of the overall competitive environment, as well as details regarding similar trends in your industry and area. “Document the hazards that may exist that might harm your company, and document the opportunities that may exist that you may be able to seize before your rivals.”
9. Monitor your outcomes.
A profit and loss statement may be used to gauge your sales to see if the modifications were effective.
Explaining competitive analysis
An evaluation of your company’s performance in relation to other businesses in your market offering comparable goods or services is done through a competitive analysis, sometimes referred to as a competitor analysis.
A competitor study identifies each participant’s operational strengths, substantive shortcomings, product offers, market domination, and lost opportunities, according to David Taffet, CEO of Petal, and focuses on finding market competitors positioned to intrude on your potential.
These are some ways competitor analyses aid in business improvement:
- Determine your advantages and disadvantages. Knowing where you have an edge over the competition allows you to concentrate your marketing message on driving home that point. Knowing where you fall short can help you make the necessary improvements to your offerings to beat out the competition.
- Recognize the environment you work in. Many of your rivals are known to you, but you probably won’t know them all straight once and you might not be aware of the newest market entrants. The key to defeating them is understanding how your main rivals (as well as any impending threats) vary from your company.
- Analyze the trends in your industry. Which brand-new or enhanced good, service, or attribute do rivals provide to obtain an edge? What patterns have they noticed that you haven’t yet? You may assess if other businesses in your industry are on the correct path and whether you should compete with them by looking at their behaviors and activities. 7 E-Commerce Trends to Watch in 2022 is related content.
- Make plans for future expansion. Do you want to be the third-largest company in your industry rather than the fourth? You may find out how much more you need to sell, which demographics to target, and whether your company has any talent shortages by doing a competitive study.
Considerations for your competition analysis
The following ten elements were suggested by Colin Schacherbauer, executive marketing assistant at Investor Deal Room, for a successful competitor analysis.
Identify all the attributes that each product or service offered by a direct rival has. To see how businesses compare to one another, save this information in a competitor intelligence spreadsheet.
Percent of market share
Finding the top rivals in your region is made easier by evaluating the market on a percentage basis. Larger rivals shouldn’t be completely disregarded because they may teach you a lot about how to thrive in your sector. Instead, use the 80/20 rule: Pay attention to 80% of your direct competitors (businesses with comparable market shares) and 20% of your top rivals.
Determine the prices your rivals are charging and where they stand on the quantity vs. quality spectrum.
What kind of marketing strategy does each rival use? Examine the websites of your rivals, their social media tactics, the events they sponsor, their SEO tactics, their taglines, and their most recent marketing initiatives. [Use these suggestions to make a fantastic company marketing plan.]
What distinguishes your rivals from one another, and what do they tout as their strongest features? What distinguishes that from your business?
Determine what works for your competition and what they are doing successfully. Do customer reviews suggest they have a better product? Do consumers know much about their brand? Can you personally examine a competitor’s goods to identify where they excel?
Determine what your rivals may be doing more effectively to give yourself a competitive advantage. Do they employ a subpar social media plan? Does it not have an internet shop? Their webpage is it out of date?
Take a look at the areas that your rivals serve and where they are located. Do they operate mostly online or are they brick and mortar businesses?
Analyze the goals, employee happiness, and corporate culture of your competition. Are they the kind of company that promotes the year it was founded, or are they only recently founded? For more information on the corporate culture of competitors, see employee reviews
Examine the client feedback of your rivals, both favorable and unfavorable. Look at the 5-star, 3-star, and 1-star reviews in a 5-star system. Three-star ratings are frequently the most truthful.
Advantages of doing a competitive analysis
No company can remain static in a time of digital innovation and expect to thrive. If businesses ignore emerging trends, they risk going out of business suddenly. The disastrous mistake Blockbuster made when it originally disregarded Netflix’s offerings is a prime illustration of this. Blockbuster is all but defunct now, whereas Netflix is a titan.
Even if your industry is not vulnerable to this kind of seismic shift, it is still important to understand the factors that influence your clients’ choices. You’ll also be aware of the following tendencies by routinely doing a competitive study of your market:
- alterations that improve the current goods or services of rivals and make them more enticing
- You might also provide or change new complementary goods or services from your rivals.
- the danger presented by fresh competitors or game-changing products
When you are at a competitive disadvantage, you may need to adjust your strategy in order to preserve your sales volumes, according to Rovner. In other situations, you can discover that you have a benefit that could allow you to adjust anything to boost your sales or profit.
How frequently should you conduct a competitive analysis?
The key is consistent competitive analysis. On a big scale, you might wish to do the analysis annually, and on a smaller one, periodically.
Schacherbauer continued, “Too many organizations conduct a competitive study early on and then disregard it after their brand is established. “Industries are always evolving, and every time a new business enters your market, they are analyzing your competitors. It’s critical to regularly assess your rivals.
Regularly comparing your company to its rivals can help you identify chances to enhance your offerings, better serve your target market, and boost profitability. To further examine the competition, you might want to think about utilizing a different model, such as Porter’s Five Forces.
Taffet stated that knowing one’s rivals “enables one to separate oneself from the competition, focus on the neglected market prospects, define the services to offer, find the best practices to adopt and isolate the worst practices and rotten players.”
Why comparative analyses are beneficial for small firms
If you don’t keep an eye on the competition, your successful business today could not be successful tomorrow. You may assess the current market and where you are in relation to your rivals by doing a competitive analysis. With such information, you may make changes to position your business for long-term success.