It is said that when you know yourself and your enemy, you win every battle. That can be true in business, except that your competitors are not your enemies.
Competitor analysis would help you make improvements in your marketing strategies and could give you a competitive edge in your industry. But what is competitor analysis, and how can you run an effective competitive analysis to give you a unique selling point.
What is competitor analysis?
Competitor analysis is the research you do on your competitors to find out what they’re doing and find out how you can make it better. It also involves looking at their marketing strategies to measure your company’s strengths and weaknesses.
Before you perform a competitor analysis, you have to know who your competitors are.
Who are your competitors and how do you find them?
Your competitors are companies who either offer similar services as you or serve a similar audience as your business.
Here’s an example to illustrate the difference between these two types of competitors.
Consider a company that sells female clothes. Their direct competitors would be another company that sells female clothes.
But a company that sells shoes can be classified as a competitor because they serve the same audience as the clothes company.
You don’t have to find and analyze every company that competes with you directly or indirectly. I’ll talk about that in a bit.
Here’s why you shouldn’t overlook competitive analysis.
Importance of competitor analysis
Effective competitive analysis has several benefits to your business;
- It gives you an insight into your customer’s needs.
- Competitor analysis helps you understand why your potential customers choose your competition.
- It makes you know how to position your business to attract clients and customers
- It helps you know how to position your offer to get the most traffic
- It gives you insights into industry trends
- Helps you know the strengths and weaknesses of your competitors and craft a winning strategy
- Knowing your indirect competitors would open avenues to reach a wider audience
Now that you know why you need to analyze your competitors, let’s get to the nitty-gritty of how you can make good use of this technique.
How to conduct an effective competitor analysis
It is important to note that no matter the level your business has gotten to, you need to do competitor analysis time after time.
You have to know where your competitors are, and see if your business is doing well or not.
Here’s how to make a fulfilling competitor analysis.
#1. Identify and make a list of your competitors
The first thing to do is to make a list of your competitors. Like I explained earlier, your competitors can be direct or indirect.
You don’t have to list every direct and indirect competitor to make this work. Instead, make a list of ten or fewer companies.
Among the ten, mix it up with well-established companies and startups.
The established companies would help you to see how successful your company can be over time. It’ll also help you set goals for your business.
The “smaller companies” or start-ups would also give you an idea of the companies that’ll be competing with your brand.
After you’ve found and listed the companies, it’s time to learn about them.
#2. Learn about their business
Now is the time to gather information about the companies on your list. You can start with the basic information, like location, when it was established, the company size, and the number of employees.
This information can be accessed from the company’s website or the About Us page. You can also learn about them from their news articles and social media profiles.
Whatever you do, just make sure to gather as much information as possible. In other words, know the company from the inside out.
What about their customers?
#3. Research about their target customers
Knowing your competitor’s audience would help you know your customers. What gender and age group are they focusing on? What’s their occupation? What are they interested in? How are they engaging with your competitors? What are they thinking regarding the company?
Having real answers to these questions would help you know your customers better than they know themselves.
That’ll also help you speak in a language that your customers understand.
It’ll also help you build several buyer personas for your company.
#4. Focus on what your competition is offering
What products and services are your competitors offering? You need to know exactly what their products are, the benefits to customers, the pricing, how and where they’re promoting their products, and customer reviews.
Knowing their products well, especially that of your direct competitors, would help you spot differences and similarities.
This would help you choose a different or probably a better angle to market your products.
#5. Analyze their strongest value proposition as well as where they fall short
You don’t want to copy everything your competitor does. But knowing their strengths would help you know what’s working in your industry, and based on that, you can make informed decisions in your business.
Analyzing their weaknesses would also help you identify gaps in their product and service. This newfound insight would give you a chance to fulfill those needs to solve your customer’s problems.
Remember that the main aim is to be useful to your customers. When you solve a unique problem with your products and services, your customers would love you.
Final thoughts on competitor analysis
Competitor analysis is needed if you want your business to succeed. Several software and tools can help you run an effective competitor analysis. Ahrefs, SEMrush, and Quick Search are all great examples.
So go out there with all the information in this post and start outsmarting your competitors.