A competitive analysis is a strategy that encompasses researching a brand’s main rivals to receive insights into competitors’ sales and marketing strategies and product features. It helps a company develop effective tactics, strengthen the existing strategy, outperform competitors, and gain a bigger market share.
In this article, we’ll unveil the importance of competitive analysis and figure out how to do a competitive analysis.
Why is competitive analysis important?
Companies use many methods and tactics to stand out in the market and outperform competitors. However, they often forget about a deep competitive analysis. Running a quick familiarization with major competitors' websites and social media profiles isn’t enough. You can miss out on crucial insights into your rivals’ sales and marketing strategies. This is essential to make your business prosper.
A comprehensive competitive analysis means a lot for your business. It helps get acquainted with the work of your competitors, their product features, tactics, and sales strategies. By running an analysis, you’ll identify the gaps in your competitors’ work and use them to your advantage. This is a great opportunity for you to outperform them and capture a bigger market share. On the other hand, you can also determine their strengths to figure out your weaknesses and make improvements. Once you get all the important insights, you can stay relevant and up-to-date. Your product will always meet the high standards of the market and customers.
Besides the benefits mentioned above, a competitive analysis also allows you to develop your unique value proposition and the features that enable your product to stand out in an increasingly competitive market. Knowing your competitive advantage helps you plan your future marketing efforts and tactics. You’ll also be aware of the methods that will keep you ahead and stay relevant for consumers. Competitive analysis will provide you with customer reviews that discuss the drawbacks of competitors’ products.
Now that you know the reasons to implement a competitive analysis, let’s walk you through the steps necessary to do a competitive analysis effectively.
How to do a competitive analysis?
Running a competitive analysis requires you to do several mandatory steps. Since you need to conduct the analysis regularly, you should have a clear understanding of it.
- Identify your competitors. Before diving into the process, you need to determine your actual competitors. To do it, you need to name all competitors and divide them into two groups: direct and indirect. When running a competitive analysis, you need to assess the work of direct competitors. These companies operate in the same geographic area and offer a product that can be a substitute for your product. However, you still need to remember your indirect competitors (they provide a different product but it can solve the same problem). Their position within the market can change at any time.
- Define the products they offer. Unique product or service is the main advantage of every company. That’s why it’s crucial to examine competitors’ complete product lines and the quality of their goods. Pay attention to details that might help improve your tactics, such as pricing, discounts, special offers, loyalty programs, etc. You should also research their market share, their buyer persona, pricing strategies for online and in-store purchases, their competitive advantage, and ways to distribute products.
- Explore rivals’ sales strategies and their outcomes. A sales analysis might require you to spend much time and effort, but it’s worth it. Once you do it, you’ll receive valuable insights into your future strategy. To do it, you’ll need to have a look at competitors’ sales processes, the channels they use to promote their products, discounts they offer, yearly revenue, and the total sales volume they receive. Besides, figure out whether your rivals scale and implement partner reselling programs. Analyze customers’ reasons for not purchasing the product.
- Look through competitors’ pricing and benefits. To set a fair price both for you and your customers, you need to determine the price your competitors charge for similar products. After you know competitors’ products and their pricing well, you can judge whether your product is superior or inferior. For instance, if you and your competitors offer the same products, you know that your item has more unique features compared to others, you can make it more expensive. However, when doing that, be ready to explain why your product is worthy. If you don’t have some more useful features and the quality of the product isn’t higher than competitors’, you better charge less. If you sell subscription-based services, you can offer excellent customer support and a seamless user experience. You should also explore some additional rivals’ perks that help them take a superior position among customers. Competitors’ free trial versions, referral, and loyalty programs can be the reasons you lose clients.
- Study the way competitors market their products. The easiest way to explore competitors’ marketing approaches is to visit their websites. It can help you answer important questions and identify gaps in your business. You can uncover whether they have blogs, podcasts, features articles, webinars, ebooks, case studies, and media kits from the website. Moreover, you’ll receive information about their online and offline campaigns, press releases, the content they publish, and FAQ section.
- Pay attention to rivals’ content strategy. You need to look through the websites’ content to identify the type of content they publish and their frequency (once a day, week, or month). Then read their articles to evaluate their quality, relevance, and usefulness for readers. Assess content accuracy, grammar, brand tone, readability, and visuals. Once you analyze their content, you’ll have a clear picture of the benefits they offer and the reasons why customers value them. Use this information to your advantage.
- Figure out customers’ level of engagement with competitors’ content. To do it, you need to check customers’ responses to their posts. See the number of comments, likes, and shares. Also, look through the comments to find out whether the majority of them are positive or negative. You should also identify the topics that resonate with the target groups the most. Take note of these topics to write quality and informative articles for your blog. Don’t forget to check the competitors’ content for tags, share buttons, and social media following. The next step is to identify the ways competitors promote their content. Evaluate the keyword density and internal linking.
- Analyze competitors’ social media profiles and strategies. Nowadays, it’s a must to monitor social media profiles and see how your competitors promote their products. Get to know what helps them increase the level of engagement: social sharing buttons, links to social media, CTAs, etc. Check out the platforms competitors use for promotion and find out which of them you don’t use. Then, conduct an analysis: choose the platforms you don’t use and assess the level of engagement. To get the measure, you need to see the number of fans, content engagement, and virality. Once you analyze them, decide whether it’s a good idea to create an account for your brand as well.
- Conduct a SWOT analysis. It’ll also be useful to do a SWOT along with your competitive analysis. It will provide you with your opponents’ strengths, weaknesses, opportunities, and threats. Afterward, you can compare them with yours and decide what else needs to be done to become the industry leader.
Competitive analysis will serve you as a helpful tool in identifying your competitive advantage and evaluating competitors’ sales and marketing tactics. Its results will pave a path towards the more effective functioning of your business and improvement of strategies.
- In this article, you’ll find how to do a competitive analysis.
- This article defines the term.
- This article provides readers with reasons to do a competitive analysis.
Last Updated: 22.03.2023