When it comes to strategic planning, you need to consider the external factors of your business for coming up with effective ideas. The external factors are mainly influenced by the other players in your respective industry. To do a thorough competitive analysis, you need to know who your competitors are, their unique selling proposition, and how related their products or services are to the ones you offer.
The major part of your competitor analysis is done to gather this information. All you need to do next is plan out how to prevent any threats that these competitors are directly or indirectly posing on your business. Successful marketers conduct competitive analysis right at the beginning of their business. Companies do a competitive analysis even before launching their first product in many cases. They want to know the chances of their product performing well by evaluating the potential risks in the market. This competitive product analysis needs to be conducted again every time you plan to target a new customer segment for the product.
An excellent competitive analysis often becomes the roadmap for aspiring entrepreneurs to check out the market conditions they want to break into. Other times, it helps established businesses to fine-tune their strategic directions. If you can understand the benefits of competitor analysis for business, you’ll be able to take your organization’s strategic plans to a higher level.
This post will talk about the benefits of effective competitor analysis. But to understand any marketing concept, it is best to define it first.
What is Competitive Analysis?
A competitive analysis is an action plan that involves researching the key players in the industry you operate in to gain insights into the kind of products they sell, the level of sales they make, and the marketing tactics they use. The better your competitor analysis is, the easier it will be to ward off competition and capture more market share. Businesses that implement robust marketing strategies often do a competitive analysis regularly.
Marketers can learn most of the ins and outs of the market through detailed competitive product analysis. They can also identify the potential opportunities and market gaps that the industry has when they know what their competitors are offering and what they are not. They figure out areas to out-perform the other players by staying on top of industry trends. A comprehensive competitive analysis enables them to meet and exceed the industry standards.
Why is it Important to Conduct Competitive Analysis?
There are several benefits of conducting a detailed competitor analysis. Let’s dive into a few of those right away.
1. Find Market Gaps
One of the benefits of quality competitive analysis is that it enables aspiring entrepreneurs and strategic planners to build matrixes for identifying the underserved and unserved market gaps. They do this by creating a competitor map first, which is a tool to lay out the names of all competitor businesses in terms of their unique selling points, pricing strategies, and product quality. They then create the matrix by placing each competitor in its respective place. This practice is highly useful in determining which player your firm will face the greatest competition.
When you conduct competitive analysis, you can figure out the price levels prevailing in your company’s locality, the companies offering products with higher quality than yours, and the market segments that are still underserved. You can also use competitive analysis tools to find market gaps for businesses like retail stores, restaurants, and other brick-and-mortar organizations.
2. Do Better Product Development
When running a business, you are continually racing with your direct competitors to develop new blockbuster products. By doing competitive analysis, you can gain a massive advantage by doing competitive analysis by learning what your competitors are developing. You can also learn about the mission statements that they grow to improve the sales of their existing products.
Knowing these directions can guide you in your new product development processes and help you steer your strategies in the most profitable path. Your job is to develop products that can trump your competitors in terms of price, quality, and functionality. Having all the data in your hands can boost your efforts by making your actions cost-effective.
3. Identify Market Trends
Competitive analysis reveals the broad trends in your target market, giving you the advantage of identifying any growth opportunities. The options can be in new product line ideas, improvement in service quality, product line extension, or penetrating an entirely new niche. Sometimes going against the grain can help you attract a small but loyal customer base.
4. Have Better Marketing Communications
The 21st-century marketers are more focused on selling value and benefits than products or services. The perceived value of a product has more meaning for a business than its features. When a customer buys something, what they think they are getting out of it is more important than what the merchant is offering in the literal sense. It is, therefore, advantageous to know what your customers think about the products being offered by your competitors.
Take the example of a software developer. He may be aware of the products his competitors are selling. Still, it’s more valuable for him if he finds out through market research and competitive analysis that his competitors are mainly promoting their products in terms of ease of use. This developer could then gear his marketing efforts to counter this and revamp his own software to prove that it’s the most user-friendly.
5. Acquire More Customers
Competitive analysis reveals why some of your customers are shifting or have already switched to your competitors’ products. By comparing your product quality and features to those of the substitutes, you can drive your manufacturing to cater to the missing aspects in your products. You can then re-strategize your marketing messages and channels so that your customers can resonate with them more closely.
A good marketer is one who never gives up customer acquisition. Competitor analysis can act as a catalyst for such marketers, as they strive to maintain their existing customer base intact and reach out to new audiences.
6. Establish a Brand Benchmark
Benchmarking is the process of building a point of reference for measuring the performance and growth of an entity or item. In terms of marketing, benchmarking means building a foundation with which a company would compare its products or services to confirm that they are up to mark for industry standards. Both new and established organizations can benefit from competitive analysis, as it gives an outlet to them to benchmark their products and services. By unlocking the historical data and trends about your competitors, you can determine how your customers view your product about your competitors’ products. This will give you a better understanding of your company’s potential for growth.
7. Keep Up With the Latest Tools and Technology
Researching your competitors through a competitive analysis study allows you to come across any latest tools and technology for running their business operations efficiently. For instance, if you find out that one of your competitors with a beautiful and professional website got it created on a website building platform, you can use the same platform to create yours.
These days, many growing businesses build their website on Strikingly, which is relatively cheap and awesomely feature-rich. It has an easy-to-use interface that enables any layman to build a website independently. The outcome is a fancy website that looks as good as those created by high-priced, full-time, experienced website developers.
Image taken from Strikingly
How to do a Competitive Analysis?
Here is a simple step-by-step process that explains how to do a competitive analysis.
Find out who your major competitors are. It is best to create a list of the companies and brands that are your direct competitors so that you know which ones to focus on the most as you proceed with your competitive analysis study.
Determine what products and services these competitors are offering. This is important for you to compare their products with yours.
Research their marketing and sales tactics, and look their the results. The more thorough you are in your research, the more valuable your study.
Take a look at the pricing of all your competitors, with special attention to any perks that they offer to different categories of customers. You need to be on top in terms of the perks that you offer to your customers.
Ensure your shipping costs are not higher than those offered by your competitors. Many organizations provide free shipping to large portions of their customers during this pandemic. You wouldn’t want to be left behind in this competitive arena.
Perform a SWOT analysis to learn about your strengths and weaknesses, and explore the opportunities and threats in your external environment due to your competitors’ presence.
If you want your brand to be the top priority for your customers, you need to have a solid online presence in the form of a professionally built website. To create a low-priced, highly efficient, and beautifully designed website, browse on to our landing page and sign up for your free Strikingly account. We make the process of building websites straightforward and smooth by providing you with ready-to-use templates and a user-friendly editor interface.
Many of our users kill it in this highly competitive world using our tools and features to keep their websites up to date with the ever-changing market trends.