Competitor analysis is a specific type of market research that focuses on understanding and analyzing the competition.
It involves looking at the strengths and weaknesses of competitors, as well as their strategies, products, and overall performance in the market. By conducting a competitive analysis, businesses can gain a better understanding of the market and develop strategies to improve their own performance and gain a competitive advantage.
In this blog post, we will explore the importance of competitor analysis in-depth and provide a step-by-step guide on how to conduct it.
Why is competitor analysis important?
Understand the market
By analyzing your competitors, you gain insight into the overall market and industry trends. This information can help you identify opportunities and understand the needs of your target audience.
For example, if you notice that all of your competitors are offering a specific product or service, it may be an indication that there is a high demand for it in the market.
On the other hand, if you notice that your competitors are struggling to attract customers, it could be an indication that the market is saturated or that there is a lack of demand for the products or services being offered.
Identify market opportunities
By studying your competitors, you can identify opportunities in the market that you may not have otherwise noticed. This can include gaps in the market for new products or services, untapped target markets, or new distribution channels.
Identify your strengths and weaknesses
By comparing your business to your competitors, you can identify areas where you excel and areas where you need to improve.
For example, if you notice that your competitors have a stronger online presence than you do, it could be an indication that you need to improve your digital marketing efforts.
On the other hand, if you notice that your competitors are charging higher prices than you are, it could be an indication that you need to re-evaluate your pricing strategy. This information can help you develop strategies to improve your business and gain a competitive advantage.
Develop strategies to differentiate yourself
By understanding your competitors, you can identify ways to differentiate yourself from the competition. This could be through pricing strategies, unique products or services, or a superior customer experience.
For example, if you notice that your competitors are all offering the same products or services, you could differentiate yourself by offering a wider range of products or services.
On the other hand, if you notice that your competitors are not providing a good customer experience, you could differentiate yourself by providing exceptional customer service.
Staying competitive
By monitoring your competitors, you can stay informed about changes in the market and adjust your strategy accordingly. This can help you to stay competitive and maintain or grow your market share.
When should you do a competitor analysis?
A competitor analysis should be conducted at various stages of a business. Here are a few examples of when conducting one may be beneficial:
- Before starting a business: Conducting a competitors analysis before starting a business can help entrepreneurs understand the market, identify opportunities, and develop strategies to differentiate themselves from their competitors.
- During the planning phase of a new product or service: Analyzing competitors can help a business identify gaps in the market and develop strategies to differentiate their new product or service.
- When launching a new marketing campaign: A competitor analysis can help a business understand how its competitors are positioning themselves in the market and develop a marketing campaign that stands out.
- During periods of growth or decline: Regularly conducting an analysis can help a business identify trends and patterns in the market and adjust its strategies accordingly. For example, if a business notices that its competitors are experiencing a decline in sales, it could be an indication that the market is changing and that the business needs to adapt its strategy.
- When introducing a new technology or innovation: A competitors analysis can help a business understand how its competitors are using new technologies or innovations and develop strategies to stay competitive.
It’s important to note that conducting this analysis is not a one-time task, it should be regularly conducted to stay updated with the market and the competition.
It’s also important to monitor the performance of competitors over time and adjust strategies as needed.
Steps to conduct a competitor analysis
1- Identify your competitors
So, how to do a competitor analysis?
Start by identifying who your main competitors are. This could be businesses that offer similar products or services or target the same audience.
It’s important to note that your competitors are not limited to businesses that operate in the same geographic location as you.
With the rise of e-commerce and online marketplaces, businesses now have the ability to reach customers from all over the world.
Therefore, it’s important to consider online competitors as well.
Here are a few ways to identify your competitors:
- Direct competitors: These are businesses that offer similar products or services to the same target market as you do. For example, if you are opening a clothing store, direct competitors would be other clothing stores in your area.
- Indirect competitors: These are businesses that offer products or services that can be used as a substitute for what you offer. For example, if you are opening a clothing store, indirect competitors could be online clothing retailers, department stores, or second-hand clothing stores.
- Online competitors: With the rise of e-commerce, online competitors should also be considered. These are businesses that sell similar products or services online and may target the same audience as you do.
- Potential competitors: These are businesses that could potentially enter your market and compete with you in the future. For example, if you are opening a clothing store, potential competitors could be businesses that are currently operating in a different geographic location but may expand to your area in the future.
Some helpful websites for this step are Crunchbase, Similarweb, and Google Maps for local competition.
2- Analyze their website and online presence
Take a look at your com