Digital businesses are a breed of their own. They benefit from the opportunities technology provides, but they also have to contend with a fast-paced, competitive environment. In such an environment, staying ahead of the curve is crucial. Businesses are relying on data now more than ever to make informed decisions and keep abreast of trends and competitors.
When you start your business, it can seem like you’re at the bottom of a digital mountain. Running it often involves going up against other players in your field. This competition will be felt differently depending on which industry you are in. However, it’s worth remembering that having competitors means more demand than what your company can serve by itself, which means more opportunities to achieve success.
In addition, your competitors are a constant source of insight that you can use to improve your product and performance further. By analyzing what they do well and where they succeed, you can find opportunities for improvement and future growth, leading to more successful SEO, PPC, and content marketing campaigns.
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What Is Competitor Analysis?
Competitor analysis is a method of gathering useful information about your competitor’s market position, strengths, and weaknesses, as well as gaining insights into competitor behaviors to explore opportunities and threats.
Source: Business Make Over
The main goal of competitor analysis is to define what your competitors are doing, how they are doing it, and why. By conducting an analysis, you will be better able to determine how to create value for your customers and position your company as a leader in your industry.
Competitor analysis is a tool entrepreneurs, business owners, startup founders, product managers, and marketers use to understand their competitors better. It works very well for these individuals by placing them in an advantageous position and providing them with insights about the best practices and techniques they can apply to their business model.
Comparing competitor characteristics with your own can also help you identify areas where you can improve your marketing strategy and provide you with methods to enhance your success. It involves a comparison of actual performance metrics (sales, costs, margins, etc.) against a selected market benchmark. The results of this analysis are used to determine a company’s strategic positioning in relation to its competitors.
As Victor Kiam, the CEO of Remington, once said:
“In business, the competition will bite you if you keep running. If you stand still, they will swallow you.”
Victor Kiam, CEO, Remington
That is why you must regularly analyze competitors to stay afloat and constantly support your company’s development.
What Is the Purpose of Competitor Analysis?
Source: Clootrack
To understand the market and economic climate
The purpose of competitor analysis has evolved into gathering data to determine the progress of the industry as a whole, making conclusions about the viability of your own business in it, and understanding the market in general. This understanding can help you realize how to adapt your business accordingly. Competitor analysis is typically conducted regularly to help business owners understand shifts in market demand.
To analyze competitors’ mistakes and fill the gaps
A good business practice to make your business successful is analyzing your competitors’ products and finding loopholes to cover any gaps. It will help you to create an exclusive product that may have far more advanced features than your competitors.
To develop your unique value proposition
Competitor analysis is the process of understanding why competitors are successful. By analyzing your competitors, you’ll know where you can improve your product or service to perform better than the competition. The goal is not to copy the competitors but to find a way to make your product different from theirs while still fulfilling the same needs.
To gather competitor data to make strategic marketing decisions
Competitor analysis can help define or redefine your marketing strategy and make strategic decisions regarding pricing, promotion, and processes within an organization or business.
To identify threats and opportunities for your business
The purpose of competitor analysis is to help you identify new opportunities, threats, and drivers of change. Understanding the key competitors in your industry can be a helpful tool for identifying opportunities to make your business stand out and can slowly help you make more effective business decisions in marketing, sales, product development, operations, and customer service.
What Are the Important Steps to Include in Competitor Analysis?
1. Identifying your top competitors
Before analyzing the competition, you first must identify them. There’s no universal list of industry competitors, so it’s best to figure out your top 5 direct and indirect competitors based on how active they are in the field and how they pursue their marketing strategy. The most common method for identifying competitors is through secondary research, which involves publicly available information about your competitors, such as reports, journals, and websites.
- Your direct competitors are typically companies offering a product or service similar to yours with a similar business model.
- Those competitors that offer products and services that fall into similar categories but are not the same are indirect competitors.
Source: Sherpa Blog
To make it more tangible, let’s look at the example:
- If you sell flowers at the most popular florist shop in town, it’s obvious that your direct competitors are other florists in town. On the other hand, if you sold plants instead of flowers, your direct competitors would be other local plant shops (which are different from florists). However, your indirect competitors might include flower shops.
When looking at competitors, it can be tempting to focus only on direct competitors, as opposed to both direct and indirect ones. The problem is that you may get a distorted view of how your business compares to its rivals because you consciously keep indirect competitors out of sight. This can lead to failure since indirect competitors can shift positions at any moment and become main competitors. The best strategy is to keep track of both direct and indirect competitors.
Nowadays, identifying the top competitors of any business online has become surprisingly simple. All you need is to use competitor search, such as SE Ranking offers, to get a list of top search engine competitors who have bid on the same keywords and appear on search engine result pages (SERPs) under the same search query.
You’ll receive valuable SEO and PPC insights on your competitors’ online marketing activities in just a couple of clicks. Find out keywords and pages that bring the most traffic to them, analyze their PPC ads and backlink profile to build the powerful strategy that will outperform your rivals.
Source: SE Ranking
2. Product or service analysis
On its own, competitor analysis means that you need to review your direct and indirect competitors’ offerings to better understand where you can compete within a market. This will give you an idea of positioning your current (and future) products or services and will help you with your marketing efforts.
All you need to do is to review the competitors’ entire product line and the quality of the products and services they provide. Just because a product or service has been on the market for several years doesn’t necessarily mean high quality. Sit down with one (or more) of your competitors’ marketing materials, like a catalog, and analyze it from head to toe.
It will give you an idea of the products they offer and some insight into how they’re framed to their buyers and what they look like on a page. Nowadays, websites are the crucial touchpoint customers have with you, especially for digital businesses. That is why you should also focus on the competitive usability testing of your competitors’ websites to uncover how easy or difficult it is to use them. This will help you find gaps and places to improve your websites or benchmark them with the average ones on your market.
Knowing your competitors’ advantages and disadvantages can help you better plan your service or product strategy. You should also take note of the pricing, discounts, and other incentives the competitors offer customers.
Product Analysis
Source: GHB Intellect
Moreover, do not forget to find out what kind of technology the competitors use and how it’s built, as well as check out similar services to define the features and benefits so that you can include them in your marketing strategy. That’s what consumers always do, namely, seek the benefits.
Imagine:
You would like to purchase a computer and want to know more about the products to make a sensible decision. Your research begins with an in-depth analysis of information about the vendor, their product or service, benefits, add-ons, as well as any additional features or functions.
— Similarly, your potential customers need to be convinced that there is a specific need for your product or service that your competitors cannot fulfill.
3. Marketing
To get a clear picture of competitors’ marketing strategies, it is important that you ‘dig’ as much competitor data as possible. Here are some crucial steps that you can take to do a thorough competitor analysis:
Content Strategy
If you’re going up against an established competitor, they’ve likely been using content marketing for a while. This has given them a chance to build many content assets you can learn from. You need to see what works for them, what resonates with the audience, and how you can apply those same concepts to your own business. You can develop an approach to your content marketing campaign, similar to theirs in its objectives but different in every aspect.
Your website should be more successful than other organizations’ websites, so examining your competitors’ successes and shortcomings is a way to gauge your success. Find out what topics are trending in your niche, which channels your competitors use for promotion, how many people click on their ads, etc. In order to get insight into your competition’s activities and optimize your content strategy, you should also know what keywords they’re targeting, what their websites look like, and how engaged their readers are.
Social Media
While there are no exact numbers of how many businesses have a social media presence, we can safely assume that most businesses are present on at least one of the major platforms (Facebook, Twitter, Instagram, LinkedIn, etc.). Your next step will be to analyze what, when, and how your competitors are doing on social media. Understanding your competitors’ activities will help you find opportunities for collaboration (cross-promoting one another’s content) and determine what they’re doing well and what they aren’t so you can better map out your own strategy.
Beyond just learning about what your competitors are doing on social media, you also want to know more about their fans and followers, for example, who is most likely to engage with their posts. Also, remember to get a snapshot of the demographics for each social network. By doing research like this, you’ll get competitor insights that will be key in optimizing your content strategy.
Advertising
Gaining a deep understanding of your competitors’ marketing activities is crucial for widening the gap between you and them. Digital advertising is crowded, so it’s important to spend time researching your competitors before spending any money on it. When appropriately executed, ads can attract new users to your content, enhancing your reach and increasing awareness for your product or service.
Paid advertising is where many assume the journey of growing a business ends, but in fact, it’s only just the beginning. It can open doors for other opportunities if you embrace it, but it is essential to know how your target audience perceives advertisements so you can avoid alienating them.
Analyzing your competitors’ audience and marketing strategy can lead to significant insights into where exactly you should be advertising. To assess your competitors’ advertising efforts, start by looking at their websites, social media, and industry websites. Moreover, if your competitors are involved in a niche that allows for native ads, you can dig deeper by searching for them on platform-specific media (like Facebook).
Newsletters and emails
Familiarizing yourself with their emails will help you understand who subscribes to them, which will help you decide what kind of newsletter format works for you. You may also want to check out or subscribe to a couple of their newsletters on different topics. It can teach you what to avoid and show you how to create better emails.
How often do they send emails and newsletters? How large are their lists? What times of day do they send best? How is the content spread out over a week, month or year? Also, how does it flow from one offer to the next in their autoresponders?
Analyze all of this information!
Events
Have you ever wondered about the secret to your competition’s success at running events? Whether it’s a meetup, conference, or any other event, understanding how they do it will help you improve your success.
It isn’t just about their webinars, it’s also about what makes these events so unique that people want to attend them. You can participate in your competitors’ events to check them out for yourself. See what they are handing out at the event, if they are running Google Hangouts during the event, or if they are handing out chicken wings instead of fliers. Creating a mental image of their event allows you to compare it to your own and find weaknesses in your current setup.
4. Information from the customers and your sales team
Our customers can help us immensely by identifying our competitors. But you can learn more than just the number of competitors you have by talking to your customers and sales team. Learn about their concerns, how the product is used, and where the customer experience falls short.
At the same time, the salespeople involved in the negotiation process are in a position to be able to identify the potential weaknesses of your competitors. You can use this information to strengthen the profile of your own company or product.
Information from your customers and sales team can be invaluable when determining your competitive position. The customer is the most qualified person on your team. They have gone through the entire cycle of evaluating and selecting a product or service from a company and have provided valuable insight into what was important to them in their decision to buy from a particular supplier.
5. Analyze the results and create a plan
Competitor analysis is a fancy term used to describe the process of understanding your competitor’s strategies, performance, and operations. Comparing your company’s performance with your competitors gives you valuable insights into improving your company’s performance.
There are a lot of companies that don’t analyze their results. Much of it has to do with a lack of time and experience. But if you want to be efficient in your work, you must do it. After you have taken the time to analyze your competitor’s website, you will probably have a good idea of what can be done to outrank them. That is where you can hatch a plan for further action.
Conclusion
In short, competitor analysis is the process of gathering business intelligence about the strengths and weaknesses of your competitors with the intention of studying their practices and using that information to optimize your business to stay ahead of them. This competitor data can make better choices, maintain a distinct advantage over competitors, get more clients, increase revenues, and measure success. You may not be doing the legwork to find out exactly what is pushing your competitors ahead of you. Start investing some time in competitor analysis so you can catch up!
At Brandshark, we have the expertise to help you with competitor analysis to find real insights and push your brand ahead of your competition. We are a creative digital marketing agency specializing in SEO, social media, and content marketing that helps you create a differentiated positioning so that your brand can stand out from the competition.
Interested to know how we can help? Contact us today.