A Straightforward Guide On Competitor Analysis (4 Simple Steps To Gain Market Insight And Get Ahead Of The Game)

Ever wonder what separates the good from the great in the world of business? 

Well, it’s not just about having a killer product or service (though that does definitely help), but it’s more to do with knowing your competition inside and out.

And this is where competitor analysis comes into play.

Whether you’re a small business owner or a big player in the market, understanding what your competitors are up to is crucial for staying ahead of the game.

For instance, imagine that you’re running a small, cozy coffee shop in a bustling neighborhood.

However, you notice a new café just opening up across the street from you, and suddenly, you’re faced with a whole new set of challenges. 

“Are they offering something I’m not? How are they pricing their products? Do customers prefer their place over mine?” 

With all of these questions popping up in your head, it can get pretty daunting to address every single one of them without a clear structure to follow.

But hey, you’re in luck because questions like these are exactly the kinds of questions that competitor analysis can help you answer.

In this straightforward guide, I’ll walk you through the steps of conducting competitor analysis, from identifying your rivals to analyzing their marketing strategies and everything in between. 

So, let’s dive right in!

What is competitor analysis and why is it important?

A wooden hand holding a question mark in front of a navy blue background.

Competitor analysis might sound like a fancy term, but trust me, it’s something that you’ll want to pay attention to if you’re really serious about growing your business. 

So, what exactly is it?

Competitor analysis is essentially all about taking a closer look at what your competitors are up to and assessing what’s working (and what’s not) in your chosen field of business.

But you may ask, why should you care about what your competitors are doing? 

Well, let me give you 5 reasons as to why determining where your competitors stand in the marketplace is actually an advantage for growing your own business:

  • You Can Gain Strategic Insights: By keeping an eye on your competitors, you can gain valuable insights into their strategies and tactics. This helps you understand what’s working well in your industry and what isn’t, allowing you to adjust your own approach accordingly.
  • Identifying Gaps In The Market Becomes Easier: Competitor analysis can reveal untapped opportunities in the market that your competitors may have overlooked. By identifying these gaps, you can develop new products or services that fulfill unmet customer needs, giving you a competitive advantage.
  • You’re Actively Benchmarking Performance: Comparing your business to your competitors can help you benchmark your performance and identify areas where you’re excelling at or falling short. This allows you to set realistic goals and track your progress over time.
  • It Forces You To Stay Alert: In today’s fast-paced business environment, adaptability is key. Competitor analysis helps you stay agile by keeping you informed about changes in the market, allowing you to quickly pivot your strategy in response to new developments.
  • It Sparks Your Sense Of Creativity: By analyzing your competitors’ offerings and strategies, you can spark new ideas and innovations within your own business. Whether it’s improving existing products or developing entirely new ones, competitor analysis can inspire creativity and drive innovation forward.

Now that you know and understand the what’s and why’s of competitor analysis, let’s now go over the steps on how you can apply this framework to evaluate the competitive landscape to become better prepared and distinguish your brand from the rest.

Step 1: Identify Your Target Audience

A woman in a teal-colored shirt, sitting on the floor in a criss-cross position while holding a board with a picture of a light bulb above her head.

As you might have guessed, knowing your target audience should be the very first thing that you have to determine before you even analyze your competition.

Identifying your target audience is like setting the foundation for an effective competitor analysis strategy. 

By honing in on the specific demographics and preferences of your audience, you can streamline your research efforts and make sure that every aspect of your analysis is aligned with the problems of your potential customers and how you can solve them

This targeted approach not only saves you precious time but also enables you to gather insights that are directly relevant to your business objectives, ultimately leading to more impactful decision-making and developing your overall business strategy.

Step 2: Curate Competitor Profiles

A man in a sleek business attire sitting in front of his clean desk.

After you’ve narrowed down your search for what audience you’re trying to reach, it’s time to get up close and personal with your competitors and get to know them inside and out. 

Competitor profiling, as the name suggests, involves creating detailed summaries of your market rivals, including their strengths, weaknesses, and strategies across various business aspects like their size, market share, and target audience. 

Then, once you’ve got that information, you can go even deeper by researching your competitors’ 4 P’s.

What are the 4 P’s exactly?

The 4 P's in marketing.

The marketing mix, also known as the 4 P’s, refers to a business or company’s product, price, promotion, and place, which are key elements when you want to bring a new or improved product to the market.

You can try and gain more insight by asking yourself these important questions for every rival that you have in the industry:

For Product: What exactly are they offering? What features make their product shine, and where does it fall a bit flat? 

(Side note: When researching your competitors’ products, scope out the reviews and testimonials left by their customers so that you can get direct input and ratings from the buyers themselves)

For Price: What’s the pricing model that they prefer using? How do their prices compare to competitors’? Do they give out sales or discounts, and how do these promos affect the perceived value of their products?

For Promotion: How do they promote their product or service, is it through social media, email marketing, or traditional like handouts and print advertisements? What unique selling points are they highlighting, and how do they narrate their brand story?

For Place: Are their products available online, in physical stores, or both? Do they directly sell to customers or collaborate with retailers or third-party platforms?

Feel free to customize them to suit your industry and goals for your business, and as you gather all kinds of valuable info, make sure to jot them down into bullet points so that you have a much easier time referencing your notes.

Step 3: Evaluate Your Competitors’ Marketing Tactics and Results

A group of people sitting in front of a laptop and discussing among themselves.

Let me switch it up a bit by giving you a real-life example to help you appreciate the diversity of marketing tactics between popular brands like Apple and Google and how it affects how their products are received.

So, Apple’s strategy is all about making you feel like you have to get your hands on their latest iPhone before it’s gone. 

They play up the whole scarcity angle, making you feel like you’re missing out on the next big thing if you don’t get one as soon as possible.

Google’s approach, on the other hand, is much broader compared to the former in terms of marketing its Android operating system.

They’ve got phones to fit every budget and style, from fancy, high-end ones to more affordable options. 

And it’s not just about their phones either because they’re all about giving you models to choose from so that you can find the one that fits you the best.

And guess what? It’s paying off big time because a recent 2023 analytics study shows that Android is miles more popular in the global market share by a whopping 70.29%!

Step 4: Perform a SWOT Analysis on Your Own Business

A list of questions that you can ask for each point in a SWOT analysis.

Last but not least, now that you know who and what exactly you’re up against, it’s time to turn the spotlight on yourself and perform a SWOT analysis of your own company.

Examining your strengths, weaknesses, opportunities, and threats may be able to help you understand where you stand in the competitive landscape and look at your business with no biases.

Take note of what sets you apart from the competition, the areas where you could improve, and what external factors could impact your business. 

By conducting a thorough SWOT analysis, it could serve as your roadmap to gaining valuable insights into your business’s internal and external factors that can shape your competitive position in the market, stay ahead of the curve, and thrive in the competitive landscape.

How often should you analyze your competitors?

It’s a good idea to conduct a comprehensive analysis of your competitors at least once a quarter.

This is to give you enough time to gather data, analyze trends, and make strategic decisions based on the insights that you’ve gathered.

However, in fast-moving industries where things can change in the blink of an eye, you might want to consider ramping up your analysis to once a month or even once a week!

After all, you don’t want to be caught off guard by sudden shifts in the market, do you?

Want to know if your products or services can compete with those at the top of the game?

So you’ve got your offer and are ready to launch it to the masses, but you’re backtracking and asking yourself if you can really set yourself apart from the rest.

I understand that it can be frustrating, but believe me when I say that even the most successful people have had their doubts and reservations.

If this is you right now, don’t worry because we can help you with that!

With our comprehensive and detailed audit, we’ll provide you with a thorough assessment and give your positive suggestions on how to enhance your product ideas so that you can boost your online presence and get ahead of the competition.

And the best part?

All of this is completely free of charge, so you won’t have to waste a single cent!

So what are you waiting for?

FAQs

What’s the main objective of competitor analysis?

The main goal of competitor analysis is to understand what other businesses in your industry are up to. Think of it like spying (but in a totally legal and ethical way) to figure out what your rivals are doing and how you can do it better.

What makes a good competitor?

Good competitors can spur innovation, raise the overall quality of products or services, and provide a positive consumer experience. They can also give valuable market input and act as a benchmark for other businesses to compare themselves to.

What is a competitive analysis framework?

This is a structured approach to examining your competitors, and usually involves gathering information about their products, pricing, marketing strategies, and market share to gain insights into their strengths and weaknesses.

What are the 3 c’s in competitive analysis?

The 3 C’s in competitive analysis stand for Customers, Competitors, and Company. It’s a framework used to analyze these three key aspects to understand the competitive landscape and make strategic decisions.

Can I use sWOT analysis to analyze my competitors?

Absolutely! Just like you use it to analyze your own business, you can flip it around and focus on your competitors strengths, weaknesses, opportunities, and threats to asses their position in the marketplace and industry.

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