To quickly identify emerging trends and marketing strategies, anticipate market shifts, and ultimately maintain and expand a competitive edge and increase market share, it is essential to keep a careful watch on rivals. Competitive analysis can help you to get ahead of your rivals and create a better Go-To-Market strategy.
What is Competitive Analysis?
The competitive analysis involves identifying your rivals and analyzing their business strategies to find their strengths and weaknesses in comparison to your own operation, products, and services. The purpose of the competitor analysis is to acquire the information required to identify a strategy of attack and create your go-to-market strategy. It is one of the important factors in Market Analysis.
A competitive analysis is a key component of any business’s marketing strategy. With the help of this assessment, you may determine what makes your product or service special and, consequently, what qualities you emphasize to draw in your target market.
A competitive analysis should look at the attributes, market share, prices, marketing, differentiators, strengths, and weaknesses of your rivals as well as their locations, cultures, and consumer feedback.
8 Important steps of Competitive Analysis
- Feature Matrix: Find your niche by using a feature matrix to analyze the market. A feature matrix is a table with a feature in each row and a competing offer in each column.
- Competitors’ market share: Finding the key rivals in your segment is made easier by calculating the market share as a percentage. Watch out for 80% of your direct competitors (whose market shares are comparable) and 20% of your top rivals.
- Pricing: Make a list of all the products your competitor provides including quality and quantity.
- SWOT Analysis: Compare each competitor’s strengths, weaknesses, opportunities and threats. It will help you to decide what competitive advantage you have.
- Marketing strategy: List down all the marketing tactics of each competitor like social media strategy, SEO, paid ads, and PRs.
- Differentiators: Noting unique selling propositions (USP) of all the competitors.
- Geographical Landscape: Is it an online business or a brick-mortar office? A number of offices and regions your competitors are serving.
- Customer Feedback: Check both the positive and negative reviews and ratings of your competitors.
Importance of Competitive Analysis
- To Understand market shifts and changes in demands
- To identify your’s and competitors’ strengths and weaknesses
- Understanding market dynamics enables you to choose the most effective means of connecting with your target audience and create a Go-to-Market strategy
- Evaluating trends in your sector
- To plan future growth
Methods of Competitive Analysis
- SWOT Analysis: It separates the data of a company into the following groups:
- Strengths: Internal factors that offer advantages, such as highly skilled staff.
- Weaknesses: Internal elements that are detrimental, such as a limited marketing budget.
- Opportunities: External variables, such as increased demand for a product offering, can offer opportunities.
- Threats: outside forces that create problems, including rising supply prices.
- Porter’s Five Forces: The five main market forces in any given industry are examined by this competitive framework, including:
- The intensity of competitive rivalry
- Threat of new entrants
- Bargaining power of new buyers
- Bargaining power of suppliers
- Threat of substitutes
- Strategic Group Analysis: It groups competitors into categories according to how similar their strategies are.
- Growth-share Matrix: A growth-share matrix is a chart divided up into four quadrants to classify products or business units into:
- Stars: Products with high growth and high market share
- Question marks: Products with high growth, but low market share
- Cash cows: Products with low growth but high market share
- Pets: Products with low growth and low market share
- Perceptual Mapping: Perception mapping is an excellent way to see how clients see your business in comparison to your rivals. With that information at hand, your business may see market trends and gaps and make changes to strengthen its current positioning strategy.
There are constantly fresh, creative ways to broaden your strategy in a constantly evolving field so that you may stay one step ahead of your competitors while also retaining your customers’ interest.
It is impossible to overestimate the significance of competitor analysis. To make sure you are keeping up with and matching the efforts of others in the field, one straightforward yet effective marketing strategy is to analyze your competition.
Thus, you can design a marketing strategy that will improve your online rank and broaden your online footprint without getting “lost in the cacophony” of your competitors’ efforts.