Competitive analysis refers to the process of identifying your competitors and analyzing their strategies. Why? Well, the goal is to gather as much intelligence as possible so that you can find out your competitor’s strengths and weaknesses in order to develop an effective marketing strategy to make sure your voice is heard above theirs.
Why should you use competitive analysis?
Competitive analysis enables you to learn from your competitor’s mistakes and strive to improve in areas where they may be better than you. Conducted properly competitive analysis will help you:
- Develop new products and features,
- Identify gaps in the market,
- Uncover trends, and
- Market and sell your business more effectively.
Competitive analysis helps you develop a deeper understanding of market dynamics so you can find the best way to reach your target customers.
How to conduct competitive analysis
First of all, you need to divide your competition into two groups: direct and indirect.
Direct and indirect competitors
A direct competitor is a business with a product or service similar to yours, which operates in the same geographic location. An indirect competitor provides products that aren’t quite the same but could meet the same customer need or solve the same problem as your product. If you’re comparing your brand, it’s important to focus mainly on your direct competitors. However, this doesn’t mean you should completely drop your guard around indirect competitors, they could quite easily become direct competitors in a very short space of time.
Get to know your competitor’s company
Use your competitor’s founding date, fundraising rounds and employee count as a benchmark against your own growth. If your company’s been around for two years, where were your competitors at the same age? How fast was their growth? How much revenue did they generate? You can find this information on websites like LinkedIn, AngelList, Crunchbase and Owler. You can also use this data to set goals and projections for the year. It’s not easy to find out information on market share, but it’s something that’s worth looking into. Big companies spend millions investigating competitors, we know that’s not a viable number for the majority of SaaS companies or start-ups, but there is a way you can get a ballpark figure without spending a ridiculous amount. Conduct a survey with a decent sample size of respondents and ask them which solutions or tools they’re currently using, if the same products or companies keep popping up you've got a solid estimation of their market share.
Get to know competitors’ products
You'll need to analyze your competitor's complete product line along with the quality of the product or services, looking at the competing product’s strengths and weaknesses. How do customers perceive your competitor’s product design, quality, and price? Make a list of your competitor’s core product features and compare them to your own, looking at which features your competitors offer that are unique to their product. How do your same features measure up? Look at pricing and whether or not they’re offering discounts to users. Ask yourself the following questions:
- How are the products distributed?
- Which methods are used to differentiate products from competitors?
- Does the company offer a budget or premium product?
- How do customers perceive the product’s design and quality?
- What are their customers’ needs?
- Is their online pricing different from their in-store pricing?
Check out their marketing methods
Scoping out your competitor’s website is the easiest way to gauge their marketing methods. Do they publish regular blog content? Do they make Vlogs? Podcasts? What advertising campaigns are they using? Is there an FAQ section? Look at the company’s about us page, what story are your competitors telling customers? How do they position their product? How do they describe its value proposition and benefits? What’s their tagline? As well as products and marketing, it’s important to research other areas, including:
- Sales tactics
- Content strategy
- Customer success approach
- Social media presence
You’ll want to look at the kind of topics they cover on the blog and how their customers engage with it. Are they commenting? Sharing? Liking the content? We published this really informative guide to getting results with competitor analysis, which you can check out for further inspiration. It’s packed full of tips to get you started.
How do you compare?
It’s really important to establish an internal baseline before you compare your competition. Look at your sales, business, and marketing methods through the same lens you’d view your competitors. Record the information and use this to compare across the board, the information you gain can also be really helpful when the time comes to perform a SWOT analysis.
Ready to start getting results from competitive intelligence? Head to our guide to getting results from your intelligence and analysis.