Competitor Analysis: Key Concepts and Best Practices

In the age of digital innovation, no business is able to remain stagnant in time and expect to be successful. A company can disappear overnight if it does not pay attention to new trends.

Therefore, analysing competitors is essential.

What is meant by competitor analysis?

Competitor analysis, also known as competitive analysis, involves identifying competitors within your industry and investigating their diverse marketing strategies.

Who are your competitors?

Competitors are businesses offering similar products or services, and they can be classified into various types, including direct and indirect competitors.

Direct competitors are those that provide identical products/services to the same target audience as yours. Indirect competitors, on the other hand, are companies that offer alternative products capable of meeting your customers' needs and objectives.

The competitors you select for a competitor analysis will shape the insights you gain. Therefore, it's crucial to include various types of competitors: large, small, direct, and indirect.

Think about them like this:

Why is a competitor analysis useful?

A competitor analysis is an essential component of your company's marketing plan. Through this analysis, you can determine the distinctive features of your product or service, which enables you to emphasise specific attributes to appeal to your target market.

The benefits of a competitor analysis are:

• Identify strengths and weaknesses: By discovering areas where you excel over your competitors, you can tailor your marketing efforts accordingly. In contrast, understanding your weaknesses allows you to pinpoint areas in which your products or services can be improved.
• Navigate the competitive landscape: While you may be familiar with some competitors, you may not be aware of all of them. Identifying primary competitors, along with potential upcoming challenges, and determining how they differ from your business, is crucial for staying ahead in the market.
• Explore trends: If you observe your competitor's strategies, actions and products/services, you are able to identify current trends.
• Define your Future plan: With a competitor analysis, you will be able to gather valuable insights that will help you achieve your growth objectives.

What should be included in a competitor analysis?

For a thorough competitor analysis:

• Compare product features to understand how your competitors differ.
• Assess market share to pinpoint key competitors.
• Analyse their pricing strategies.
• Examine their marketing tactics, including social media and website presence.
• Identify their unique selling points and advertised strengths.
• Evaluate their strengths and weaknesses.
• Consider their geographical reach.
• Understand their goals and culture as well as company overview, funding and revenue.
• Review their feedback from customers and social media to understand the overall sentiment.

How to do a competitor analysis?

A simple and efficient method to compare your product or service with others on the market is to create a competition grid.

Begin by listing four or five competing products or services. To generate this list, consider what alternatives your customers might choose if they didn't choose your offering. Next, outline the key features and attributes of each product or service. This may include factors like the target market, pricing, size, distribution channels, and level of customer support. A look at the competition grid provides a clear overview of where your product stands within the broader market landscape.

An alternative method for conducting competitor analysis involves:

1. Determining the products or services selected for evaluation, typically those driving significant revenue or showing notable growth potential.
2. Identifying direct competitors, entities vying for the same market share with similar offerings (e.g., accountants competing against other accounting firms).
3. Recognising indirect competitors, which cater to the same market but with differing products or services (e.g., accountants versus bookkeeping services).
4. Assessing replacement competitors, entities offering distinct solutions for the same consumer needs (e.g., apps aiding entrepreneurs).
5. Evaluating key aspects of competitors' operations, such as pricing strategies, distribution methods, market share, upcoming product launches, customer demographics, post-sale support quality, and preferred marketing channels.
6. Conducting thorough research on identified competitors, leveraging available financial and operational data, customer targeting tactics, product features, staffing approaches, and pricing structures.
7. Compiling findings into a comprehensive written analysis, ensuring it is both informative and actionable, employing comparison tools like charts and graphs for enhanced visualisation.
8. Identifying areas for enhancement and implementing strategic changes, potentially refining product features, adjusting pricing strategies, or enhancing customer support mechanisms.
9. Monitoring outcomes closely, utilising profit and loss statements to measure the efficacy of implemented changes and tracking sales performance over time.

One more method to accelerate the process is by utilising the following tools for competitor analysis:

• Similarweb

• Brandwatch

• SEMrush

• Funnel

Is SWOT analysis the same as competitor analysis?

Let's begin by defining SWOT Analysis: it's a strategic tool used to assess internal and external factors impacting a business's performance and objectives.

SWOT represents Strengths, Weaknesses, Opportunities, and Threats. Strengths and weaknesses refer to controllable internal factors like resources, capabilities, and reputation, while opportunities and threats denote uncontrollable external factors such as market trends, customer preferences, and competitors' actions.

While both SWOT Analysis and Competitor Analysis are valuable strategic tools, they have different purposes and offer different insights.

SWOT Analysis provides a broad overview of a company's strategic position, helping understand internal and external environments and developing effective strategies.

In contrast, Competitor Analysis is more focused, offering insights into the competitive landscape and assisting in the development of competitive strategies. By analysing competitors, businesses can anticipate their actions, spot unique opportunities, and gain a competitive edge.

Identifying opportunities

The aspect you need to keep in mind is that competitive analysis isn't about copying competitors' strategies but rather about comprehending your market position and identifying opportunities to set your products/services apart.

Finally, prioritising customer needs and identifying gaps in supply and demand will provide additional benefits than solely focusing on competitors. The essence of competitor analysis lies in discovering avenues to enhance customer service and satisfaction.