How to perform competitive analysis - classical and modern methods
To develop your company's development strategy, you need to clearly understand who else is working in similar industries, what ideas coincide with yours, and what are the advantages and disadvantages of each. Without a proper understanding of competitors, it is difficult to anticipate possible threats and determine who may become the main rival in your market segment. Competitive analysis is an important basis for developing your company's development plan. After a detailed study of external factors, marketers can take into account the specifics of your product or service and propose a marketing strategy that will allow you to stand out from the competition.
What is competitor analysis?
Competitive analysis is a means of obtaining additional information about how other companies offering similar products or services in the marketplace operate. This analysis helps to identify the strengths and weaknesses of competitors, examine their product range and pricing strategies, understand their business approaches, and much more. Based on the information obtained, you can develop a unique offer for customers and attract more customers, standing out among other brands and companies.
Why do you need to analyze competitors?
Some entrepreneurs, taking risks, may enter the market without conducting sufficient research on their direct competitors. At the initial stage of its existence, such a business may function, but in the long run it is likely to fail. An in-depth analysis of the customer lifecycle, how they interact with such a brand, may indicate that the indicators are quite low and that another company is likely to attract more customers. For example, it can offer better service or apply more attractive pricing. To stay ahead of such competitors, it is important to understand their weaknesses and identify the strengths of your own brand. Analyzing the competitive situation helps to find answers to these questions and contributes to the formation of the company's values.
Conducting a detailed market analysis is of great importance when a company is planning to launch a new product on the market. In fact, competitive analysis helps you understand how to attract customers to your offer that has not yet been implemented on social media. This is especially important at the project launch stage. In the future, you will be able to offer innovations both in the product itself and in its marketing strategy.
It is also important to determine how your closest competitors are represented in the online environment. In today's environment, being visible in the digital space is extremely important. For many consumers, online shopping has become a necessary part of their lives, so in digital communications, it is necessary to stand out from direct competitors and stand out from their presence.
We offer to draw up a plan for your activities while analyzing the competitive environment of your company.
Benefits of competitor analysis
After conducting a competitor analysis, a business gains a number of benefits, including the following:- Identify a unique product or service offering. This means identifying what distinguishes a product or service from similar competitors' offerings and makes it attractive to the target audience. Competitive analysis helps to identify strengths, weaknesses, opportunities, and threats, as well as to determine which aspects of your product or service need to be improved or highlighted.
- After analyzing competitors, the company can develop an effective marketing strategy that will meet the needs and expectations of the target audience and stand out from the competition.
Competitor analysis allows us to identify new opportunities for growth and innovation. By researching competitors, you can identify gaps in the market, i.e., the needs of potential customers that are not yet satisfied or not satisfied properly. These gaps can be used to develop new products or services, as well as to expand the company's geographic presence.
In general, this analysis helps a company to better understand its position in the market and achieve increased competitiveness and profitability.
Make a list of competitors
First, it is necessary to analyze the market in a specific topic area, taking into account the geographical area, a certain industry and the specifics of this particular type of activity. In addition, it is important to investigate the level of competition in this area. If you have a large number of offers, you will have to actively look for ideas that will help you stand out among other players in the market. In the case of a low level of competition, there is a risk of losing customers due to price competition for goods or services. This should also be taken into account.
All competitors can be divided into several categories:- Direct competitors: there may be more points of overlap with them, such as the same pricing policy, segmentation by territory, etc.
- Indirect competitors: often target the same target audience, but provide services or goods of a different kind.
- Implicit competitors: usually offer a different type of product or service, but may become competitors if they develop related businesses.
To compile the most complete list of competing firms, you should use these areas and divide them according to these categories.
Google search
The easiest and most effective way to identify direct competitors is to create a list of websites from the first page of search results. It is enough to enter a search query that interests customers. You can also use tools like SemRush or Google Analytics to get more detailed information. These reports will show important details.
Reviews and ratings
When people search for information about different businesses on their own, they often use specialized resources. In each specific topic area, you can find sites that specialize in that area. For example, for tourist destinations, reviews and ratings are relevant and can be found on the TurPravda resource. In the insurance sector, the ratings of companies presented on the pages of the specialized online magazine Forinshurer are important. For digital agencies, specialists can find information on the IT Rating of Ukraine website, and so on.
This approach can also be useful when creating an initial list of potential competitors.
Directories and maps
If the business is location-based, for example, an offline store, maps and regional directories can help you determine who else is working in the industry and is nearby. A detailed analysis of the map will answer the question of which area does not yet have similar companies. Then it can become a growth point for the brand.
Semantics and announcements
Various tools can be used to analyze the quality and volume of competitors' ads. It is also recommended to study what keywords they use, how their ads are designed, what emphasis is placed on semantic, and what is the effectiveness (how many clicks per month, etc.).
The brands identified in this way are the most dangerous competitors, as the company will be forced to compete with them in advertising campaigns.
In terms of semantics, it is important to note that the frequency of using a brand name in key queries is an indicator of the importance of this competitor.
Marketplaces
If a company operates in the commercial sphere, you can easily create a list of competitors or expand the existing one by using marketplaces. On such marketplaces, you can find stores by selecting the appropriate product category of interest.
Specialized services
In digital marketing, it is important to identify not only competitors in your niche, but also those who become your rivals in advertising promotion. To achieve this goal, you can use various resources that will provide information for further reflection and action.
Unlike traditional marketing tools, specialized services can show which domains dominate online and where key queries intersect. Services such as similarweb.com and serpstat.com offer the most opportunities for specialists. They can help you not only compile a complete list of competitors in your industry, but also further track the performance of your own company.
Reports from the sites
To compile a list of competitors, you can use reports from Google AdWords. On this service, you can set up the receipt of data on Auction Statistics, which will display the position of your company among others that have launched contextual advertising. It's important to note that this information will only become available after you activate your own ad campaign.
Target audience and customer surveys
Valuable information from the target audience can be obtained by ordering a special survey among potential users. Analyzing the responses will show you how closely you match your customers and whether you've missed out on competitors. The key questions to ask your target audience may include the following:- What influenced your choice of product?
- What criteria were most important in making your decision?
- Have you used the services or dealt with similar offers from other companies?
- What would make them interesting to you, etc.
The study of the answers to these questions will allow us to conduct a comparative analysis of competitors in both quantitative and qualitative terms in the future.
It is possible to identify your target audience and conduct in-person surveys at various events in different topic areas, such as fairs, conferences, and online meetings.
Target audience and customer surveys
To simplify the analysis of the competitive environment, you can use the method proposed by the American economist Porter. He proposes to determine the company's position in the market among others, taking into account the factors that affect the organization in its interaction with the external environment:- The number and degree of development of competitors in the industry play an important role. A segment in which there are a significant number of strong competitors and sales volumes are not growing is considered less attractive. In such cases, it is necessary to consider large investments in development and prepare for possible information and price conflicts.
- An important factor that affects the situation in a particular market segment is interaction with suppliers. In the case of a supplier monopoly, they have enormous control over the industry. Their options in terms of prices, quality of goods, and supply volumes are virtually unlimited. To develop your business in such conditions, you will either have to establish mutually beneficial relationships with suppliers or look for new sources of supply.
- One of the key aspects is the level of organization and the number of customers in a particular segment. The situation can lose its appeal when customers have significant influence that allows them to influence pricing and product quality. When developing a strategy for this segment, it is important to focus on building long-term relationships with regular customers and offering products that meet their needs.
- An important aspect is the likelihood of similar services entering the market or the emergence of substitutes for goods. In industries where this probability is higher than average, starting a new business becomes very risky. First, price control disappears, and second, the likelihood of making a profit in the long run becomes very low.
- The risk of new competitors is a factor that helps determine the existence of barriers to entry and exit from a particular market segment. An attractive segment is one where it is difficult to enter (i.e., there are significant barriers, such as strong competition, large market size, high distribution control, etc.) but easy enough to exit or retrain if the need arises. In this segment, you can count on a high level of profit. If the barriers on both sides are low, then revenues will be stable but not too high.
- After completing this important stage of competitive analysis, you can accurately assess the influence of the most important players in the market and obtain basic information for developing strategies for interacting with consumers, suppliers and direct competitors.
- At the final stage of the analysis, an understanding of the number of direct and indirect competitors, market growth rates, the dynamics of new offers and methods of cooperation with suppliers and consumers will be achieved. This will make it possible to forecast the industry's development prospects over the next three years.
How to make a competitor map
An effective analysis of competitors can be conducted by creating a map of their position in the market. This method allows you to identify the leading players, estimate their market share, and assess the success of their strategies.
There are different approaches to creating a competitor map. Analysis and correlation of all data will provide the most complete picture of the market situation.
Experts recommend using the following criteria for comparison:- The ratio of price to product quality.
- Geographical coverage of the chosen niche.
- The volume of investments in the industry.
- Growth rate and market share held by the company.
Analyzing the industry by these parameters will help to graphically display which companies are dominant and determine the direction of new product development, as well as who uses the best sales methods. All this will help you find growth points for your own business.
Classical methods of competitor analysis
The example of competitive environment analysis is based on the idea that firms in competition take different measures to achieve their goals and advance in the market.
One of the well-known and effective methods of competitive analysis is SWOT analysis. Its main purpose is to identify the strengths and weaknesses of your own company and its competitors, as well as to identify opportunities for development and potential threats.
The analysis tries to answer the following questions:- What are the company's advantages? How can they be used to gain an advantage over competitors?
- What are the brand's weaknesses and can they be turned into opportunities?
- What are the most promising opportunities for growth and development?
- What risks are considered the most dangerous?
The data obtained is usually organized in a table and used to develop strategic measures aimed at:- maximizing the use of strengths;
- strengthening weaknesses;
- mitigating risks and threats.
This described method of competitive analysis helps to identify and make a qualified assessment of the key factors for the company's development.
Product, Price, Place, Promotion, People, Process, Physical evidence - a comprehensive competitive analysis using the 7P method
When deciding whether to analyze competitors, marketers should not forget about the classic 7Ps. To use this methodology, it is easiest to define the parameters for comparison in each area and provide scores for all brands to be analyzed. The "seven P's" include the following factors:- product. It is important to compare the characteristics of goods and services, their quality and range.
- price. We collect the necessary information and conduct a comparative analysis of prices and payment options.
- place. The place of sale and presence in the online environment are extremely important.
- promotion. It analyzes advertising progress, studies the state of PR communications, and compares promotional offers.
- people. We consider the qualifications of our staff and study the availability of employees in competitive companies with unique certificates.
- process. We conduct a comparative analysis of business organization methods, investigate who the main suppliers are, and study the organization of logistics processes.
- physical evidence. We study the methods of receiving the service and how customers react to it, as well as analyze the feedback left by customers.
Based on the analysis of competitors, we can compile a comparison table with rating scores. This table is used to determine the areas of business development and formulate a unique selling proposition.
Digital analysis of competitors
Traditional marketing tools and methods may not always help you understand the position of competitors in the digital world. Therefore, analyzing competitors in the digital environment becomes especially important. To perform this analysis, you can use special services such as Google Ads, SpyWords, SimilarWeb, and others.
Analysis of competitors' websites
To conduct an in-depth analysis of competitors in this context, you need to select 3-5 companies from the previous list and compare their official websites. The main issues for comparison can be divided into categories:- User friendliness: For further development, it is important to study how user-friendly the site is, whether it has a clear structure, a pleasing design, and whether it is easy for visitors to find the necessary sections.
- Textual content: Evaluation of the interest of the texts, the usefulness of the information provided, the absence of spam and grammatical errors.
- Technical characteristics: Checking the website loading speed, adaptation for mobile devices, and identifying technical flaws.
- Marketing aspects: Determining whether the website contains calls to action for potential customers, maintaining the loyalty of existing customers, offering guarantees, etc.
Methods for analyzing competitors can vary, but to start with, you can set a score on a 10-point scale in each of these categories and create a heat map to visualize the competitive situation in the industry.
To get a more accurate picture of the situation in this segment, you can contact SEO specialists who will assess the company's competitiveness based on compliance with the requirements of search algorithms.
Analysis of advertising and marketing activity
Today, there are special tools that allow you to analyze competitors and their advertising promotion strategies. We offer you a table that displays important indicators for assessing the level of promotion of your organization and services, and shows which tools can be used effectively:
| Показник для оцінки маркетингової активності в мережі | Інструменти |
|---|---|
| Обізнаність клієнтів про бренд | Wordstat, KeywordPlanner |
| Видимість пошуковими системами | Seorate, Allpositions, Serpstat, Semrushe |
| Рекламні оголошення та запити на їх показ | Spywords |
| Органічна видача | Spywords |