Doing a competitive market analysis of your business can give you a much-needed advantage. Here’s a 7-step method you can use for competitor analysis:
- Identify your competitors
- Research competitor products and services
- Analyze your competitors’ marketing and sales strategies
- Study your competition’s use of technology
- Appraise your competitors’ customer service
- Evaluate competitor reviews
- Do a competitive assessment
Learn what business competitor analysis is and how to do effective competitive market research.
What Is a Competitive Analysis?
A competitive analysis in marketing is a type of market research where you review rival companies’ products and services, marketing strategy, sales strategy and other key differentiators. After conducting this review, you compare the results with how they stack up against your own brand.
The goal of this type of research is to identify your competition’s strengths and weaknesses so that you can seize opportunities to gain an advantage in your niche, as well as protect your brand against threats to your own position.
A Competitor Analysis Example
To give a competitor analysis example, let’s say you’re a startup company that sells an innovative smartphone app to healthcare providers. You would begin your competitive assessment by identifying other brands that sell apps similar to yours. After identifying your main competitors, you would research their app’s features and benefits and what marketing and sales angles are being emphasized to promote the app.
To round out your analysis, you would study what technology your competitor is using to develop and promote their product, what customer service policies they are following and how customers are evaluating their brand. After performing this analysis, you would conclude by comparing the results with what your own brand is doing in these areas to identify where you might gain an advantage and where you need to address any disadvantages.
For example, you might discover that your top rival is doing well with Apple users but neglecting Android users, giving you an opportunity to gain ground in the Android market. Alternately, you might discover that they have just released an upgrade that threatens your position in the Android market, requiring you to step up your game.
How to Do Competitor Analysis
What goes into a competitive analysis? The process can be divided into 7 major steps:
1. Identify Your Competitors
The first step in doing competitive analysis is identifying who your leading competitors are. There are a number of methods you can use to do this:
- Study market research reports on your industry and niche to identify who holds the most market share
- Read product review sites
- Search on terms related to your market and note which brands turn up at the top of the results
- Notice which brands are treated as competitors by other top brands
- Read what social media users in your niche are saying
- Survey your customers about other brands they’ve used or considered
- Talk to industry peers
- Attend trade shows
- Hire a market research firm
After creating a list of competitors, focus on the top brands which most directly compete with you for your target market. This will yield a short list of brands you can prioritize in your analysis.
In some cases, you may find that you have different categories of competition that can be grouped and analyzed separately. For instance, you may have some competitors who sell to businesses and some who sell to consumers. You might elect to list a handful of competitors in each category, or you might decide to stick to your top rival in each grouping.
2. Research Competitor Products and Services
After identifying your top competitors, you can begin analyzing their products and services. Seek to answer key questions relevant to your competitors’ marketing and sales strategy:
- What are their noteworthy features?
- Which of their products and services directly compete with yours?
- What are their practical applications?
- What are their main benefits?
- Who do these benefits appeal to?
You can answer these questions by visiting your competitors’ website, reading their sales literature or sampling their product or service yourself. Trying an actual sample may yield insights your competition has overlooked in their own sales analysis.
For instance, you may notice a practical application that they’ve overlooked, or you may discover a flaw in their design. Set a goal of understanding your competitors’ products and services better than they do.
3. Analyze Your Competitors’ Marketing and Sales Strategies
Reviewing your competitors’ products and services positions you to analyze their marketing strategy and sales plan. Consider key components of their promotional strategy:
- How do they position their brand?
- What do they offer their market which is distinct from their competitors (unique selling proposition)?
- Who do they address as their target market?
- Who do they portray as their competitors?
- Where do they promote their brand online or through offline channels?
- What types of content formats do they use to attract leads?
- What topics does their content cover?
- Which keywords and hashtags do they target?
- Where do they advertise online?
- How do they capture leads?
- What is their sales process? (For instance, do they sell directly from their website or do they use a multi-step process such as offering a free quote?)
- What benefits do they emphasize?
- How do they address sales objections?
- What bonuses or guarantees do they offer?
- How do they price their product?
- What payment options do they offer?
- What delivery options do they offer?
As you analyze your competition’s marketing strategy, think about ways you could improve upon it if you were selling their product or service. This may spark ideas you can apply to promoting your own brand.
4. Study Your Competition’s Use of Technology
Innovative use of technology can give a company a competitive edge. In your competitive analysis, consider:
- Does their product or service rely on an innovative use of technology?
- Are they using a marketing technology that gives them a competitive advantage?
- Are they using a sales technology that gives them a competitive advantage?
Be on the lookout for emerging technologies that your competitors are leveraging that you’re not. Also, keep an eye out for technologies they’re failing to use which could give you an advantage.
5. Appraise Your Competitors’ Customer Service
Superior customer service can give a company a marketing edge, while poor service can drive away customers and generate negative publicity. Studying your competition’s customer service can provide valuable insights into what they’re doing well or poorly. Review key components of their customer service policy:
- Is their website mobile-friendly, easy to navigate and otherwise easy to use?
- What customer service channels do they provide, and what do they exclude?
- Do they make it easy or difficult to get help from a live representative?
- Do they provide support during the checkout process?
- How long does it take them to respond to a support issue?
- Do they offer free or expedited shipping?
- Do they allow in-store pickup for online purchases?
- What is their return policy?
- Do they offer free trials or guarantees?
Look for customer service strategies your competitors are performing well, as well as places where they’re falling short.
6. Evaluate Competitor Reviews
Your competitors’ customers can tell you a lot about them. Study reviews from sources such as:
- Your competitors’ social media profiles
- Other social media sites in your niche
- Online review sites
- Blogs from thought leaders in your industry
- Digital marketplaces with review sections, such as Amazon
- Better Business Bureau complaints
Listen to what customers are saying your competition does well, and to what they’re complaining about.
7. Do a Competitive Assessment
After completing the previous steps, you’re in a position to assess your competition’s strengths and weaknesses in relation to your own brand, and to identify corresponding opportunities and threats. This type of assessment, known as a SWOT analysis, which stands for:
- Strengths: Internal qualities which give a business an advantage, such as a strong product or superior marketing strategy
- Weaknesses: Internal qualities which place a business at a disadvantage, such as a weak digital marketing strategy
- Opportunities: External factors in the market environment which a business could exploit, such as competitors failing to create content for an important keyword
- Threats: External factors in the market environment which could disrupt a business, such as competitors releasing a next-generation product
A SWOT analysis can be simple, or it can involve a very sophisticated procedure when performed by a professional business analyst. Consider hiring a consultant if you need a very detailed analysis.
Do Competitor Research to Give Your Company a Winning Edge
Doing a thorough competitive market analysis gives your business a big advantage.
When you’ve researched your competition’s products and services, marketing and sales strategy and technological infrastructure, as well as their customer service and engagement, you gain valuable insight into their strengths and weaknesses. You can identify opportunities for you to capture their market share, as well as threats they pose to your own position. This empowers you to take action which can put your company ahead.
Competitive analysis can be done on a shoestring budget, but for best results, it’s worth investing in in-depth research, which is what industry leaders do. If you need financing to cover the costs of doing a complete competitor analysis, consider tapping into small business financing resources such as working capital loans.