How To Do Competitive Analysis
Every product or service that you can think of, is also sold by someone else. The good thing about competition is that, there is a customer demand. Customer demand means there is a potential for growth. The bad thing about the competition is that you will have to share the pool of customers. The question here is what you do to stand out and win the competition. Before going into details of how to do competitive analysis,
What is a Competitive Analysis?
Almost every market or industry has more than one seller or producer, providing similar products or services to similar type of customers.
A competitive analysis is a strategy to identify key players in the market, their strategies regarding product, sales and marketing. It also helps you to identify your own capabilities you can use to capture market.
Competitive analysis helps you to completely identify your competition, how they work, and their gaps. Through this you can also identify where you can out-perform them. It also helps you to stay competitive and meeting industry trends.
For competitive analysis, it involves four major key steps;
- Identifying your competitor in the business
- Collecting and gathering information about them
- Evaluate their strengths and weaknesses
- Identifying your own competitive advantage
By conducting competitive analysis, you will be capable to;
- Identify the market gaps
- develop new products and services
- unveil new and current market trends
- sale and market your products and services
Let’s take a look into how to do competitive analysis.
How To Do Competitive Analysis?
There are some steps you have to take to do competitive analysis and they are;
1. Identify your competitors
First of all, you need to identify your competitors.
There are two types of competitors. Direct and indirect competitors.
Direct competitors are those competitors, that are offering similar product or services and targeting similar customers as your business.
On the other hand,
Indirect competitors are those competitors that do not offer similar product or service as your business but they satisfy the same need or solve similar problem as your business.
Direct competition should be the first thing you should analyze for your brand. Because after it you will be able to;
- Evaluate product feasibility like this product is in demand, and
- Estimate barriers to entry like competing in a market sets some barriers, like you cannot sell similar product or service on lower or higher price as compared to your competitor.
You should also keep an eye on indirect competitors because they can change positions at any time and change market trends towards themselves. They can come into your direct competition.
This is the reason, you should continuously perform competitive analysis because market can shift at any time. If you are not coping with it you won’t be aware of these changes and it will be too late for you.
2. Identify competitor’s offerings
Determine your competitor’s;
- product line,
- the pricing of their products or services,
- their quality, and
- any additional benefit they are providing to their customers like any discounts or any other incentives.
From this you will be able to identify their market share, the characteristics of their customers, what is their pricing strategy, their competitive advantage (if any), and their distribution network.
3. Identify competitor’s pricing strategy
You need to identify your competitors pricing strategy for the similar products or service as yours. If you are going to offer similar product as of your competitor with no additional benefit, then you will have to charge the same price as they are charging.
But if you feel that your product offers more benefits in terms of features or any other thing. Then you need to justify your customers that how your product delivers superior value to them and why it is worth additional cost.
If you identify a gap in your industry regarding affordable products. Then you can offer a product or service on a lower price in comparison to your competitor and attract the price conscious segment.
To stay in the industry, you must ensure that your product pricing should attract the customers and they feel that they are getting the value against the price they are paying.
You can also check that if your competitor is offering any additional benefit like discounts, coupons, or any other perk. These additional benefits can be the reason you can lose your customers.
If this strategy matches with your brand, then you can also offer benefits in terms of price, or you can provide any other benefits if your competitor isn’t offering any to grab more customers.
4. Analyze competitor’s marketing strategy
In this regard, you can check for their online and offline advertising campaigns they are currently running. Analyzing and evaluating your competitor’s online platforms like website, and social media is the fastest ways to check their marketing efforts.
First of all when analyzing your competitor’s website, look;
- how much traffic they have on their website
- what is the layout of the website
- do they have blogs?
- do they post videos and podcasts?
- Do they post press releases, case studies, featured articles?
- Their FAQ’s section and how quick they respond on queries?
When analyzing your competitor’s social media, check their online presence on Twitter, Instagram, Facebook, Snapchat, YouTube, LinkedIn, Pinterest, Reddit or any other. Check their number of followers, posting frequency, content engagement, and virality of their content.
- Analyze how they respond to support queries.
- How they respond to questions regarding product.
- Check how they are responding to negative comments of customers.
- Read latest reviews, this will help you in identifying their weakness.
- You can see how you competitor engages with their audience.
- You can also what other brands people liked, who liked your brand.
- Check for competitor’s layout on Instagram.
- Are they following the trends like Instagram reels or shoppable posts.
- Check their views, check their authenticity, their comments to like ratio.
- Are they doing celebrity endorsement, if yes who are they working with and why?
You can also check competitors’ customers online reviews. Online reviews give a view of customer experience a company is providing.
By reading negative comments, you can identify their mistakes and weaknesses and you can strengthen your brand in those areas.
By reading positive comments, you can know about their strengths and how you can deal with their strengths by enhancing your overall customer experience.
5. Ensure meeting competitive shipping cost
Now-a-days shipping costs are the main reason of cart abandonment. Free shipping is an additional benefit you can offer to your customers and attract many other customers.
If you are in an ecommerce industry where shipping is major factor. You should look at your competitor’s shipping costs and ensure you meet those prices.
If your competitor is offering free shipping, then look what options do you have, offer free shipping.
If you cannot offer free shipping, look for other ways through which you can differentiate yourself and offer benefits to customers. It could be giving loyalty programs, giveaways on social media, discounts or any other.
6. Analyze your competitor’s sales strategy
Analyzing your competitor’s sales will be a bit tricky.
Analyze their;
- Sales process
- channels through which they are selling
- their locations and its advantages
- discounts that they offer on products or services
- their revenue and sales volume
- their sales people and their involvement is sales process
- customer’s reason for buying from them and reasons for not buying from them
7. Identify technology your competitor is using
It’s not about the technology but it is about it is being used. Many businesses rely on same ecommerce platform but they configure it in such a way they create a unique customer brand experience.
It looks like turning your tangible asset into intangible asset. While conducting research, you see the positive reviews of customers, and you learn that customers uses powerful tools and customer service software. From which you can also take advantage and it an opportunity for you.
You can find what technology and software your competitor is using by typing company’s URL into Built With. It will unveil which technology and third party plug-ins your competitor is using.
8. Identify your competitor’s strengths and weaknesses
After concluding all of your research, evaluate your competitor’s strength and weaknesses. You can use competitor’s weaknesses to improve your own business and focus on those gaps on which you can capitalize on.
Keep this research save and compare it with the another round of competitor analysis.
Here are top 5 competitor analysis tools;
Final Words
Here we conclude how to do competitive analysis. Competitive analysis helps you to learn about your competitors and it also helps you to identify the areas where you can make efforts. All the businesses have some expertise, skills, assets, competitive edge over others.
Invest in your intangible assets, that makes you different from your competitors. Intangible assets like personal expertise, market research and knowledge, selling skills, marketing skills or any other.
You can also compete in different area, like pricing, distribution channels, products and service offerings, their quality and features, shipping service, online shopping, overall customer experience or any other.
How To Do Competitive Analysis FAQ
1. What is included in a competitive analysis?
Competitive analysis focuses on identifying your competitors, their offerings, their market share, their pricing strategy, their sales strategy, their strengths and weakness, and customer reviews.
2. How do you write a competitive analysis?
8 steps to performing a competitive analysis;
- Identify your competitors
- Identify competitor’s offerings
- Identify competitor’s pricing strategy
- Analyze competitor’s marketing strategy
- Ensure meeting competitive shipping cost
- Analyze your competitor’s sales strategy
- Identify technology your competitor is using
- Identify your competitor’s strengths and weaknesses
3. Does competitive analysis take a long time?
It depends upon the size of your target market and the depth of analysis you are going to do. Simple competitive analysis can take hours in which you only cover your direct competitors. But if you are going to use advanced tools and techniques, this can take a longer time up to a month.
4. What happens if I don’t do competitive analysis?
If you don’t do competitive analysis, many things can go wrong for your business. Like you can risk introducing a product or service that has low or no demand due to any reason like high pricing or poor market fit.
