A competitive market analysis is key to successful marketing. Knowing how to do a competitive analysis allows you to identify your top rivals in your niche and evaluate their strengths and weaknesses. This empowers you to position your own company’s strengths so that you can stand out from competitors and draw customers to your brand. It also lays a foundation for a solid marketing strategy that communicates your brand’s selling points to your target market.
But a surprising number of companies launch into business without writing a competitive analysis report, or even a business plan. Failing to study your competition puts you at a major marketing disadvantage. Without an understanding of your competition, you don’t know why customers are buying from them or why customers are complaining about them or leaving them. This leaves you without vital business intelligence you need to position your company to exploit competitors’ weaknesses and showcase your strengths. It also prevents you from optimizing your marketing strategy to emphasize what makes your brand unique.
To avoid these issues and maximize your brand’s performance, you need to do due diligence by researching your competitors. Here’s what you need to know about how to write a competitive analysis that evaluates your business rivals, identifies your brand’s strengths and positions you for marketing success.
Why You Need a Competitive Landscape Analysis for Successful Marketing
Successful companies place a high premium on information about the competition. The global market research industry is worth $76 billion, according to an analysis of the latest data by Consultancy.org. Leading market research companies such as Nielsen, Kantar and Gartner generate millions of dollars in revenue by producing reports that help companies analyze their competitors. Companies are willing to pay thousands of dollars for these reports because they recognize the value that business intelligence on rival companies represents.
Why do leading businesses place such a high value on data about their rivals? A competitor analysis report provides you with information that is critical to your company’s business success. By studying your competitors, you can learn:
- What products and services their customers are buying. This can help you spot market trends that represent an opening for your own products and services.
- How large the market is for a particular type of product or service. This can let you know whether entering a particular market is worth your while.
- How market leaders are positioning their brands. This can help you determine how to shape your own brand’s unique identity so that you stand out from the crowd.
- What benefits other companies are emphasizing to sell their product and service lines. This can save you tremendous time in designing your own marketing and sales material by letting you know what sales tactics are working successfully.
- What complaints customers are making about your competitors. This can help you identify niches where you can offer something the competition isn’t.
- How other companies are pricing their products and services. Knowing this is critical for pricing your own brand competitively, which is why successful companies such as Amazon make such extensive use of price-matching software.
- What type of content market leaders are using to promote themselves. This can help your marketing team design content to publicize your brand.
- What marketing channels competitors are using to distribute their content. This can help you identify how and where to reach potential customers.
- What keyword strategies your competitors are using. This can empower you to develop a competitive SEO strategy for distributing your content.
- What lead generation strategies market leaders are using to transform their content into leads. This can help you increase the effectiveness of your content to grow the size of your social following and your email list.
This wide range of benefits underscores why it’s so important to have a competitive analysis framework. Having this type of business intelligence can give you a major advantage over competitors, helping you zero in on their weaknesses, while not having it is like trying to hit a target in the dark.
How to Select and Evaluate Your Competitors
When doing competitive analysis in marketing, the first step is to identify your competitors so that you have some data to analyze. You can then evaluate your competition’s strengths and weaknesses and other useful information about them.
To gather information about your competitors, there is a wide range of resources you can use:
- Searching on your own business name or market and seeing which companies come up on top of the results
- Surveying your own customers or your competitors’ customers to learn who they have bought from
- Interviewing industry peers and suppliers
- Visiting competitor websites
- Signing up for competitors’ mailing lists and subscribing to their social media channels
- Obtaining competitors’ annual reports and other publications
- Gathering ads, press releases, articles and other content published by companies in your market
- Studying market research reports and government publications on your market or niche
- Reading trade publications
- Attending trade shows, seminars and conferences
- Searching patent applications
You don’t necessarily need to use all these resources. You may find that you have gathered enough information after exploring just a few sources of data.
After collecting some data sources, the next step is to rank your competitors to identify which ones to prioritize. To approach this systematically, first create a spreadsheet or database to enter basic information about each company under consideration, such as their name, location, marketing emphasis and product and service line. Then create a checklist or scoring system that takes into account key variables:
- Which companies are selling products or services closest to yours?
- Which companies have the largest market share?
- Which companies have the most visible presence in search engines and social media?
- If you are targeting local customers, which companies are doing business in your area?
By ranking companies on these categories, you can identify which companies represent your greatest competition. You may also find some companies that represent secondary competition, such as companies that sell something similar to you but to a different audience, or at a different price point, which may give you ideas for how to branch out into new niches.
You may further find some companies that don’t sell exactly what you’re selling but may sell something related, which can help you identify new markets. For instance, you may find a company selling a hot product or service that you’re not offering right now, but could be with minimal adjustments.
After identifying your top competitors, you can focus on dissecting their marketing strengths and weaknesses by studying items such as:
- What keywords do they target in their marketing campaigns and their on-site SEO?
- What type of content do they use to promote their brand?
- What is their brand’s unique selling proposition (USP)?
- What benefits do they emphasize in their sales pages?
- How do they price their products and services?
- What calls to action do they use?
- How does their site perform for user-friendliness and customer service?
Analyzing these areas can help you see where competitors are performing well, as well as where they’re underperforming. Pay special attention to problems you notice with areas such as:
- Overlooked SEO keyword niches
- Failure to develop content on relevant topics
- USPs that fail to communicate important benefits or address relevant niches
- Neglected benefits that are underemphasized or not mentioned
- Overpricing or underpricing
- Calls to action that could be strengthened
- Poor website design and customer service
Weaknesses such as this can help you identify areas to exploit.
How to Determine Your Competitive Core Differentiators
A major purpose of learning how to do a competitor analysis is to help you determine your brand’s core differentiators. Doing this will help you position your brand so that you outshine the competition in the eyes of your market niche.
To identify the core of your brand, start by verbalizing your current unique selling proposition.(8) A USP succinctly expresses what your brand offers, why people should want to buy it and what makes it more appealing than what your competition offers. How would you sum up what your brand currently offers in 90 words or less? Your USP can include elements such as:
- What types of products or services you sell
- Who you sell them to
- What benefits you offer your customers
After verbalizing your USP, consider ways you can strengthen it. There are four major methods of improving your USP:
- Change your price point by lowering it to be more competitive, or raising it to target a luxury market
- Emphasize the superior quality of your product or service by highlighting an appealing benefit
- Emphasize superior customer service
- Change your marketing focus to target a niche your competitor isn’t adequately serving
Applying these methods will help you create a powerful USP that positions you strongly against the competition.
How to Translate Your Competitive Analysis into a Successful Marketing Strategy
When learning how to do competitive analysis, the ultimate purpose is to apply your analysis to improve your marketing campaigns. Once you have a well-crafted USP, you can integrate it into all of your marketing efforts to optimize them. Build your USP into:
- Your logo design and letterheads
- Your word-of-mouth marketing
- Your website home page
- Your sales pages
- Your advertising
- Your social media profiles
- Your email taglines and subject lines
You can also use your competitive analysis to improve other elements of your marketing, such as:
- Targeting SEO keywords your competitors are neglecting
- Developing content campaigns to address topics your competitors aren’t covering
- Optimizing your sales process to make your conversion rate higher than rival sales pages
- Improving your customer service to address issues your competition isn’t handling well
These are just a few examples of ways that learning how to do a competitive analysis can improve your overall marketing.
A competitive analysis provides you with vital business intelligence you need for strategic marketing decisions, such as market size, brand positioning and pricing. Knowing this information empowers you to zero in on competitors’ weaknesses and identify how you can stand out in your niche. This lays a foundation for a solid marketing plan that sets you apart from the competition.