Competitor Analysis is the process of researching competitors, unpacking their strategies and assessing how they might affect your business. It is an important step for any business.
Conducting a competitor analysis on a regular basis will help you stay ahead of the competition, as well as identify opportunities and threats that may be lurking.
Know Your Competitors
Identifying your competitors is one of the most important aspects of competitive analysis. Not only does it help you understand your audience's needs, but it also allows you to develop and implement strategies that will differentiate your products or services from the competition.
Besides your direct competitors, also study indirect or replacement competitors that serve a similar market niche (such as video game makers or fast-food restaurants). In addition, keep an eye on new entrants that could shake up your industry in the future.
Get to know your competitors by assessing their product features and marketing tactics. Keeping this information organized in a spreadsheet is a great way to analyze your competitors' performance and plan for your next steps.
Know Your Market
You need to know what your competitors are doing right to compete with them. Competitive analysis provides this insight, along with a road map of how to level up your marketing strategy and capture market share faster.
To perform a competitor analysis, start by selecting competitors who offer similar products and services to yours. Include both direct and indirect competitors. Indirect competitors sell products that serve a different purpose but are still relevant to your audience. For example, takeout pizza restaurants are indirect competitors of McDonald's. Replacement competitors are outside your product category, such as video games, but satisfy the same customer need.
Know Your Strategy
Defining your business goals can help you narrow your competitive analysis to focus on areas where you want to see a difference in the marketplace. Often, this is done in a group session, such as a white-boarding or sticky note process that involves the whole team to brainstorm ideas about strengths, weaknesses, opportunities and threats.
This can be especially useful when you're deciding on how to respond to an unexpected market change, like rising material costs or unpredictable product demand. It's also helpful when comparing your business to competitors to evaluate the effectiveness of your marketing strategy.
Know Your Strengths
Just as a sports team spends time researching their opponents before the big game, marketers need to invest in learning about their competitors' strengths and weaknesses. This knowledge is essential to building a marketing strategy that will set them apart from the competition.
The best way to do this is through self-reflection. Reflect on experiences that went well for you and ask yourself what skills/strengths contributed to those positive outcomes. Then look at experiences that didn't go as well and ask yourself what weaknesses may have played a role.
Know Your Weaknesses
Just like a football team does research and game footage on their opponent before a big match, businesses need to conduct competitor analysis. This helps them understand their strengths and weaknesses compared to the competition, which can help them design a winning strategy.
When answering questions about your own weaknesses, it is important to be honest and avoid making generalizations. Provide a detailed description of your weakness in context and how it affected you at work, then describe the steps you took to overcome it. This showcases your self-awareness, problem-solving abilities, and commitment to personal growth.
Know Your Opportunities
Just like a football team prepares for a game by studying its opponents, businesses should regularly use competitor analysis to evaluate their current marketplace and where they stand in relation to their competitors. This helps you design a strategy that will allow your business to succeed.
For example, if you are competing against direct competitors that offer similar features, try to find new opportunities to differentiate yourself. In the case of Southwest, it may have been offering frequent departures that traditional airlines didn't.
You can also look for opportunities in indirect competitors that offer substitute products or services. This can help you expand your audience or increase market share.
Know Your Threats
Organize your research into a competitor matrix or spreadsheet to make it easier to spot patterns and trends. Use the data to identify each of your competitors' strengths, weaknesses, opportunities and threats.
Strengths are things you can control, such as who is on your team and the intellectual property you own. Opportunities are things you can take advantage of, like new market trends or a changing economic climate. Threats are external factors that can negatively impact your business, such as an increased competition or a pandemic.
For example, a storefront worker's strengths would be showing up on time for shifts, helping keep customers satisfied post-purchase and getting along well Competitive Analysis with other departments. Their weaknesses could include missing breaks, poor technical skills and spending too much time chatting with colleagues.
