Competition has always been a great source of learning and gaining experience. Businesses often conduct a competitive analysis when formulating strategic plans. This provides in-depth knowledge about a competitor’s strengths, weaknesses, opportunities and threats.
What Is Competitive Analysis?
A study that helps an organization know their top competitors and understand their actions and behaviors is known as competitive analysis. Competitive analysis helps in identifying and evaluating competitors’ strategies and apparent future actions. It enables an organization to comprehend its competitor’s product line, sales figures and marketing plans.
Competitive Analysis Model
A competitor analysis model or tool is used to compare an organization’s marketing strategy or company plan with those of its competitors. You can create a graphic structure for an advertising analysis using this concept. As mentioned before, the competitive analysis outlines a company’s competitors’ revenues, business strategy and marketing initiatives. A competitor analysis model organizes the information gathered during the evaluation.
There are different competitive analysis frameworks that you can apply. Some of these are:
1. SWOT Analysis
The SWOT framework aids in assessing the internal (strengths and weaknesses) and external (opportunities and threats) variables that influence your business or a course of action.
In strategic planning, a SWOT analysis is frequently used to discover a potential competitive advantage. For example, because of your excellent ties with suppliers, you may price your product cheaper than your competitors. However, it can also be used in much more limited circumstances. For example, you can use it to assess a decision by considering your strengths, weaknesses, opportunities and threats in relation to the decision.
2. Strategic Group Analysis
Strategic group analysis is a strategic assessment approach that groups firms on the basis of similarity in strategy. You may obtain a feel of the impact of different strategic approaches by determining which cluster your company belongs to for each strategic dimension. You can also check who you’re competing with the most.
When you have a hypothesis about the impact of a business factor, this approach comes in handy. For example, you can construct strategic groups based on digital marketing strategies and see if there’s a link between the two.
3. Growth-Share Matrix
The growth-share matrix is a framework for analyzing your company’s products in relation to the competitive landscape of your sector. The approach, developed in 1970 by the founder of the Boston Consulting Group (BCG), has achieved significant support for assisting organizations in determining which items to invest in based on competition and market potential.
4. Porter’s Five Forces
Porter’s five forces is a framework for analyzing competitive market forces in a certain sector or market segment. It allows you to assess a market or industry based on five factors: new entrants, customers, suppliers, alternatives and competitive pressure. These are the primary elements that directly impact how much rivalry a business faces in a sector, according to Michael Porter’s model.
When analyzing the competitive structure of an industry, this framework comes in handy. Examining the five factors, for example, can reveal how appealing it is to enter a new market.
5. Perceptual Mapping
Perceptual mapping is a visual depiction of how people perceive your product compared to competing options. It’s also known as positioning mapping because it displays your brand’s, product’s or provider’s position relative to that of your rivals.
Perceptual mapping can help you figure out how your customers see your goods compared to your competitors’ offerings.
It’s important to know the various types of competitive analysis frameworks there are so that you can adopt the one that suits your purpose best. The next step in the process is knowing how to conduct a competitive analysis, which is discussed in the next section.
How To Conduct A Competitive Analysis
Now that you’ve figured out what is competitive analysis, let’s list the steps involved in a competitive analysis:
- Figure out who your rivals are
- Find out what your competitors offer
- Examine the sales strategies and outcomes of your competitors
- Examine your competitors’ pricing and the additional benefits they provide
- Make sure your delivery rates are competitive
- Examine how your rivals sell their goods
- Study the content strategy of your competitors
- Research the technological stacks used by your competitors
- Examine your competitor’s material for levels of engagement
- Pay attention to how they promote their marketing content
- Examine their social media presence, techniques and platforms of preference
- To understand their strengths, weaknesses, opportunities and threats, conduct a SWOT analysis
Having covered the meaning of competitive analysis, let’s read about its benefits. Studying the competition can significantly impact your company. Here’s a list of reasons you should undertake a competitive analysis.
Importance Of Competitive Analysis
Customer analysis plays a significant role in operating a business. It highlights benefits that can be useful to an organization. Listed below are points that signify the importance of competitive analysis.
Identifies Market Gaps In Your Industry
Entrepreneurs establish a business because they sense a potential for expansion that will have a significant impact on an industry and its clients. This potential can lead to higher profit margins. A competitive analysis uncovers new business prospects and ways to reach new customers.
Provides An Opportunity For The New Product And Service Development
A successful competitive analysis will provide you with more ideas for new products and services. To determine which items will resonate with your core demographic, conduct a SWOT analysis. You’ll be able to see what can be moved to the manufacturing phase this way.
Identifies Useful Trends
When you look at market dynamics and observe customer behaviour in your industry, you can find business prospects. If you manage a technology company, you may discover that more clients choose to buy your online services. As a result, you can make your site customer-friendly, generate leads and increase the number of purchases. Create a schedule for measuring specific customer behaviours to correctly identify and act on distinct findings from your research.
Demonstrates How To Run Effective Marketing And Sales Initiatives
When you’ve finished your competitive analysis, you should be able to examine the efficacy of your advertising and distribution initiatives with the information you’ve gathered. Include elevated marketing strategies in your sector in your study so that you can see how competitors connect with their customers. Performance measures used as key performance indicators (KPIs) for advertising projects may be visible. You can also observe how you can combine your advertising campaign with marketing efforts to gain new customers.
Determines Quantifiable Objectives
Competitive analysis can assist businesses establish specific objectives. Marketing departments can use competitor data to develop distinct, quantifiable productivity goals for the coming quarter or year.
Organizes Data From The Analysis
A framework organizes research and competitor information, making it easy to spot patterns and gaps.
Makes Data More Visually Attractive
Displaying data in a visually attractive manner may make it easier to explain your findings to an advertising department, financiers or business executives.
Examples Of Competitive Analysis
The following areas of interest make for some good examples of competitive analysis:
- Brand recognition: Brand recognition, which indicates the proportion of your target market that is aware of your competitor’s brand, can form a good basis for competitive analysis. Customers buy what they are familiar with, so challenging an established brand might be difficult
- Costs: Use financial documents to estimate the costs of a competitor’s products. In many businesses, the cost is a vital consideration. But, taking on a competitor who has successfully scaled is a different issue
- Products: Use sources such as product reviews to evaluate the advantages and shortcomings of a competitor’s product
- Experience with customers: Evaluate customer service and other aspects of the competitor’s customer experience
- Capabilities: Identify and evaluate critical business capabilities for your sector
- Financials: The competitor’s financial resources can be reviewed
- Workplace culture: Is the competitor agile and creative, or does it struggle with red tape and uninspired governance?
- Intellectual property: Patents, copyrights, trademarks, and licenses are examples of legal impediments to competition. Make sure you aren’t stepping on any toes in this regard
- Know-how: Unveiling your competitors’ know-how or knowledge resources can give you ideas to improve your processes.
- Relationships: Learn from your competitor’s connections with authorities, collaborators, customers and localities
- Distribution: Observe the distribution strategy of the competition
- Marketing: Evaluate the marketing strategies of competitors, such as promotions and prices
- Risks: Make a list of the challenges your competitors have faced and prepare for similar situations in your own business
- Opportunities: Dissatisfied clients, economic disadvantages and niches not supplied by competitors are examples of opportunities that you can grab
You must first set benchmarks before you can accurately assess your competitors. Examine your business, sales and marketing efforts objectively using the same measures with which you analyzed your competitors.
Harappa’s Making Decisions course will help you learn the fundamentals of wise decision-making, a skill that comes in handy in all walks of life. This powerful online decision-making course will provide you with tools to analyze, think and include diverse views to make educated decisions. Apply these skills to adopt the best competitive analysis techniques and grow your business. Never be unsure about your choices again!
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