An analysis of competitive landscape is an essential step when starting up any business. While this process will differ depending on your industry and business goals, ideally it should include direct competitors as well as possible substitute competitors that could rob customers away.
Create a spreadsheet outlining each competitor’s strengths, weaknesses, opportunities and threats; conduct this analysis at regular intervals (once a year for large companies and quarterly for smaller ones).
Know Your Competition
Competitor analysis (also referred to as competitive research) is an indispensable resource for business owners, marketers and start-up founders. It involves researching similar brands in your industry in order to gain insight into their branding, sales and marketing approaches; using this data you can identify existing competitors as well as any new potential ones so your business stays relevant in its field.
At any level of business operation – online storefront or physical location – your competition plays an integral part. Knowing who they are will enable you to identify an edge that sets you apart and stay one step ahead in the market.
When conducting competitor analysis, it’s crucial to include as many competitors as possible. One way is by conducting research on what existing platforms offer similar products or services as you. Or if you’re creating new product development initiatives, speak to existing customers to ask if any alternatives have been tried in the past and make notes of those.
One key metric when it comes to analyzing competition is their market share – or percentage of total market they control – which can easily be obtained by searching Google or other search engines with company name + “market share.” If the company is publicly traded, you could also view their quarterly earnings reports for further insight.
Once you’ve created your list of competitors, it’s time to assess their strengths and weaknesses. Begin by considering features of their products or services before moving onto marketing strategies they use to promote their brand. Tools like Ahrefs and Semrush will enable you to gain deeper insight into content they produce as well as which keywords drive their organic traffic.
Finally, another way to assess market size is by reviewing where competitors’ products or services rank on Google Search results. This will give an indication of how saturated the market is and can assist in shaping your growth plans for the future.
Analyze Your Competitors
An analysis of your competitors provides you with a wide-ranging view of their position within the market, providing context for your strategy, identifying areas of opportunity or threat, and helping inform how best to approach customers. Locate your competitors and the products they offer. By understanding who your competition is, you can more accurately compare data points such as revenue, market share and customer acquisition costs as well as distinguish direct from indirect competitors. Direct competitors provide products and services that could serve as direct replacements for those offered by you and operate within the same market, employing similar marketing channels. Meanwhile, indirect competitors provide products which do not directly compete but could meet similar needs or resolve similar problems.
Once you’ve compiled a list of competitors, the next step should be analyzing what makes them successful and gaining insight. There are various approaches you can take in doing this research. One way is to use a competitive analysis template with specific categories like marketing tactics, product offerings and customer acquisition costs. Another approach would be researching your competition with online tools or research methodologies. Google Analytics’ competitor report allows you to easily review basic company data about competitors such as industry they operate in, amount raised in funding rounds and website traffic. You can also utilize SEO and content marketing tools to gain more insight into them such as keyword rankings, backlink profiles or social media presence.
To gain insight into your competitors’ marketing strategies, it’s beneficial to visit their social media pages and see which types of posts they are making and which are getting the most engagement. Tools like Ahrefs or Semrush allow you to view which websites link back to them while Google Alerts lets you monitor when competitors are mentioned in news and which influencers mention them.
Once you have gained a comprehensive understanding of your competitors, it is time to formulate a strategic plan based on what you have observed. This may require revamping products, developing marketing campaigns or altering how customers are approached.
Analyze Your Market
When writing a business plan to present to investors or lenders, market analysis must be included as part of your proposal. Even for newcomers to the business world, this tool can help identify whether there is a viable market for your idea and understand how best to compete within it.
Market analysis provides you with all of the knowledge you have on your industry and customers, competitors, sales potential and marketing strategy – it provides a clear vision of where your business fits within its target market while uncovering blind spots that require further investigation before launch.
Begin your research by identifying your competition. This can be accomplished using basic Internet searches with keywords relevant to your product category, or conducting phone interviews of related businesses that serve similar products but operate under different business categories or serve different audiences (indirect competitors). Analysing competitors will also give insight into overall market size and trends within your industry.
Once you’ve assembled a list of competitors, study their materials, advertising campaigns, and promotional efforts. If possible, visit their physical locations and make purchases (incognito if needed). Evaluate each competitor’s strengths and weaknesses so you can identify opportunities for your own business to differentiate itself from its rivals.
Examining their strategies for product, price, place and promotion can reveal gaps in your own strategy that you need to address. For instance, iHeartRaves realized through their competitive analysis that during the COVID-19 pandemic they needed to alter their business model to remain relevant in this changing marketplace – moving their target market from music festivals to everyday wear as well as adding face masks into its offering in order to stay competitive and relevant in an otherwise shifting marketplace.
An effective market analysis requires using relevant, impartial data and statistics, illustrated with charts and graphs that highlight essential metrics. Be concise; avoid repetition and fluff, and have someone else read over your market analysis to check for errors before submitting it.
Create a Strategy
Competitor analysis can be an invaluable asset when making business decisions, whether that means setting prices, upping marketing efforts or investigating why orders are going elsewhere. Josh Rovner’s “Unbreak the System: Diagnosing and Curing Ten Critical Flaws in Your Company,” details nine essential components that comprise an effective competitive analysis.
Step one is to identify competitors. Your competitors should include companies offering products or services similar to yours that might appeal to customers in your target market, providing viable alternatives they might consider when making decisions among available options. A search engine or survey can be useful in finding these competitors; alternatively, existing customers could help reveal any other products they might have considered before choosing what’s available to them. It is ideal if both direct competitors as well as indirect ones who may attempt to take market share away from you are included as competitors.
Once you’ve identified your competitors, create a competitor matrix or spreadsheet to record all the information about each. Divide it up into rows or columns to represent different data points and assign each competitor a category; this will make comparing research easier while also helping identify trends.
Once your data is compiled, analyze each competitor’s strengths and weaknesses as well as how they compete with your company in terms of price, quality, market dominance, service levels and missed opportunities. Compare each factor against those present within your own strategy to see where improvements or adjustments may need to be made accordingly.
As part of your competitive analysis, it is also essential to determine how well your competitors are reaching their target markets, using techniques such as assessing marketing strategies (which incorporate all four Ps of marketing mix such as product, price, promotion and place).
Once you’ve conducted an analysis of your competitors’ strengths and weaknesses, it’s time to develop a plan to overcome their shortcomings while capitalizing on unique opportunities that you hold as an individual. But remember: copying competitors blindly won’t get you anywhere; sometimes zigging when others zag can work to your advantage!