Sizing up your competitors is a big part of small business success. In a nutshell, that’s what a competitive analysis is all about. This research will help you understand the strengths and weaknesses of direct competitors. Doing this kind of competitive research will give you a leg up in your target market.
This article will cover some of the boxes you’ll need to check to do a thorough competitive analysis.
What is a Competitive Analysis?
A competitive analysis is the assessment and study of your competitors. By identifying a competitor’s strengths and weaknesses, you can improve your small business efforts. There are quite a few different areas covered. These look at aspects like marketing strategies and target markets. They also cover digital aspects like social media. Usually, there is also a strong content section.
It’s important to take the time to plan one of these carefully. They can supply a road map for where your business can improve. Competitive analysis can also point out market weaknesses you can capitalize on.
Why Do a Competitive Analysis?
There are some big benefits to this kind of competitive analysis. Read on to find out how your small business can stay on top of your market share with one.
Alex Azoury, Founder & CEO, Home Grounds, offers up some other insights on why an analysis like this is important.
“There are two good reasons for one of these,” he writes. ” If you haven’t started your business analysis gives you a clear insight into the demand for your product or service. It makes you think about how to differentiate yourself in the market.”
The other reason has a lot to do with getting a handle on other competitors. Azoury explains.
“For an existing business, you must stay informed about your competitors’ marketing campaigns and activity online. Figure out whether you could exploit gaps in their strategy. Use the analysis to measure yourself against the same criteria. Then take an objective look at your business to find areas for improvement.”
How to Do a Competitive Analysis
The idea sounds simple. However, putting together an analysis template that works is a little more complicated. There are several steps you need to go through. You can use these to get a better understanding of your target market. You might be an established business or start-up. Either way, putting this data together gives you an accurate picture of what your competitors are up to.
There are other advantages. It can help you pivot in the marketplace and fill in any gaps. These analyses are also useful for deciding when to develop new products and services. Or they can help you decide when to cancel ones that aren’t working.
Here are some boxes to check for accurate competitor analysis.
1. Use The Web
Getting started with your competitor analysis means getting off on the right foot. Start on the Internet with the search engine you’re most comfortable with. That’s where you’ll find most of the competitor business information you need. However, the starting point might be different than what you’d expect. Instead of searching for a competitor’s name, you can start with your business name.
Google will supply a list of other business competitor names. That’s a good place to start your analysis. The Google search engine results page (SERP) will display a knowledge panel on the right. Check out the bottom. That’s where you will find the names of competitors. Keep in mind that it’s a mix of the three different kinds of competitors. However, it gives you a jumping-off point for your analysis.
Here’s another trick you can use to find more information for your competitor analysis. Try using a keyword that’s related to your business. If you make a list of these and keyword phrases, you can plug them into any search engine and get a list of competitors.
Corinne McCarthy is an SEO & Online PR Specialist with Web Talent Marketing, has some other suggestions.
“Use third-party tools (such as SEMRush.com or Ahrefs.com) to find keyword data on your competitor,” she writes. “It’s helpful to export the keyword data in an Excel file. SpyFu is great for looking at competitors’ paid keywords.”
It’s important to take a look at how your competitors are using search engine optimization. Google Analytics is a great tool to be able to engage in how any competitor is using SEO.
Mia Ballan is the Founder, of Money-Minded Millennial, and she provides some added advice.
“Make sure the competitor you choose is closely related to what you do. To check that they’re an authoritative source, you can use measures like Moz Domain Authority,” she writes. “There should be clues on their website that tell you that they’re legit (years in business, customer reviews, etc).
Finally, there’ s no point in taking notes from a competitor that isn’t successful. Check their website rankings, the quality of their content, and industry awards to confirm that you want to follow their lead.”
2. Put Together a List of Your Competitors
First things first as they say. If you want to know how the competitors in your market are working, you’ll need to know who they are. That’s why the first step is to put together a list of competitors. You may think you already have a good idea. But you need to consider the following to make sure you consider all your competitors
Like the different kinds your business needs to deal with. There are direct and indirect competitors. Understanding the differences between the two can help you put together a good competitive analysis.
Direct Competitors
These are the folks that are selling the same goods and services as you. Either directly in the same geographical area or in the same online space. Essentially, you and your direct competitors are offering exactly the same thing.
Follow this link for some examples in the wireless market. You’ll see that Verizon and Sprint compete directly with T mobile and quite a few others. That should give you an idea about how to put together this part of the competitive analysis.
Azoury has some excellent suggestions.
“Set up a tool to record the information you find. I prefer a spreadsheet, but a table works too,” he writes.
Next, he says you need to enter the names of your main competitors across the top. He suggests three names. Be aware that your competitors may not be who you think. Start with the competitors you compete with directly.
“They’re the ones with very similar products or services who are targeting the same audience demographic or customer persona.”
The left-hand side of the sheet should have the following: He lists the following:
- A summary of what you know presently. Use any search engine to get this information from their website. Social media sites can be helpful too. Look for their tagline, unique value proposition and anything highlighting strengths/ weaknesses. Don’t leave any detail out like the email address.
- Target audience. Who are they targeting? One example might be men between 30-50 who purchase custom-tailored suits.
- Products or services – what are they offering?
- General marketing strategy – This is an important part of the competitive analysis you’re putting together. Find out what kind of content they’re using.
- Online marketing strategy – How do they promote themselves? Note your observations about their website and social media accounts. How do they generate traffic and leads, what do they post, do they have reviews or testimonials? Unearth the content strategy.
- Strengths – Look for good content like great product descriptions, a valuable free resource, professional images.
- Weaknesses – Do they respond to complaints? Is the business hard to contact? Things like poor site navigation work against any marketing efforts.
- Competitive advantage – Do these competitors manufacture their own products? What kind of media coverage do they get? What about free resources?
Here’s another helpful piece of advice about how a competitive analysis like this works. If you’re working on your brand, you should only focus on these types of competitors. Find out if their content marketing efforts include a blog. Take a look at their social media to see what they focus on. The chances are you can tweak the content templates they are using for your product or services. A lot of this information is on competitors’ websites.
Indirect Competitors
These are businesses that sell goods and services that are similar in the same market. The idea here is you and your competitor might appeal to the same target audience. If you sell shoes, and company B sells boots, they could be considered an indirect competitor.
These folks are important because they sell different products to the same niche market. Paying attention to how they use marketing can help you out with your content. Working through the content marketing these companies use can give you insights into new markets.
Some people think these competitors can actually make excellent partners. Here’s an example. If you sell curling irons you look for a business selling hair care products. Staying competitive at the same time means looking to see if these competitors are scaling up or down.
Tertiary Competitors
These folks are at the bottom of the list. Why? Because they don’t pose an immediate threat to your product or service. However, they do offer something different that might be considered a replacement. A proper competitor analysis here could include the local ice cream shop if you sell doughnuts. That kind of business could change marketing strategies quickly and include similar products.
Deciding which area the competition falls into depends on your individual company. For example, if you sell hammers and nails, it won’t be hard to categorize the competition. That won’t be the case for a software company with different features and plans.
3. Compare Marketing Strategies
Taking a look at your competitors’ marketing strategy is an important step. There are a few things that go into a complete competitor analysis. Remember, this part of the analysis is content-based. Take a look at several different factors including how many blogs competitors are using.
McCarthy has some more advice on looking at your competitors’ marketing.
“Look at the content on your competitor’s website. Focus on key pages like the homepage and service or product pages. Analyze the headings and look for keywords in the page copy. Evaluate the tone, style, and length. Compare to your own website content. ”
“Don’t underestimate website speed,” she writes. “Use Google’s PageSpeed Insights to see how fast your competitor’s website loads compared to yours’. Make sure you aren’t losing potential customers due to a slow website.”
4. Compare Websites
Any good competitor analysis needs to consider what the other business is doing online. You can get some good information from the content on their website. Social media is important too ( see below) but the website is a treasure trove of good info on your competitors.
There’s a whole industry that can help here.
Still, there’s some good information that you can get for your competitor analysis from the website.
- It might start a little like detective work at first. Even if you only get one email address to an employee or customer, you can get some information to follow.
- The website can give you some information about webinars and other social media events. These can be helpful to learn more about competitors’ business.
- The website is a great place to get links to interviews competitors have done in the media.
There are several things that you should consider here. For example, what tone does your competitor use on their homepage? Take note of the images they use. It’s also a good idea to focus on name email of any clients found in testimonials.
5. Compare Social Media
Social media is an important part of understanding what competitors are up to. Important information like how people are talking about that competitor is here. Here are a few boxes you should check to get the most from your competitor’s social media channels.
Take a look at who they are talking to and interacting with. That gives you a reinforced idea of the target market. Take a look at the platforms that are working for your competitors. Not all social media channels work for all small businesses.
For example, YouTube is an excellent social media channel if your goods and services need assembly and explaining. Checking out other platforms like Instagram makes sense. You’ll want to take a look at the language your competitors use on other platforms like Facebook.
Check out how a competitor’s business uses influencers. Make sure to gauge the emotional content of the posts for each social media channel. Don’t forget to check out any LinkedIn channels. The content found there usually tells you something about B2B marketing.
6. Consider Pricing
There are lots of areas to cover. While some look at social aspects like content, others look at figures like pricing. If you are comparing your pricing to the competition, there are a few things to consider. It’s all pretty straightforward if your goods and services are similar. Start adding on features like those with software, and things can become more complex.
The first step here is to benchmark your prices against the competition. You might be able to get some numbers off the website. If not, you’ll need to dig down a little deeper. Try looking for name email info from testimonials to contact.
If you have direct competition selling at the same prices, you can drop your price to increase sales. Dropping your price can force competitors to innovate in order to reduce costs and keep pace.
7. Use a SWOT Analysis
After you’ve gathered up the data you need, your business needs to put everything together. That’s where a competitor SWOT analysis comes in handy. The word is an acronym. It stands for Strengths, Weaknesses, Opportunities and Threats. These are flexible. They can be built to analyze your own business or that of your competition. Some companies use them as a baseline. The analysis points to their own company and gives them a starting point for the competitor analysis
There are many advantages. One big one is businesses can see areas to take advantage of in the market through their competitors using SWOT analysis.
Ty Stewart, CEO & President of Simple Life Insure, adds a reason for using these .
“The best tip I have to perform a successful competitive analysis is always to have a specific end goal in mind,” he writes. “Without that fixed, concise purpose fueling an analysis, you’ll end up with a whole lot of data but little direction to run with it. ”
He says you can shape findings by having a specific question or project that competitive analysis answers. That way you’ll get a lot more from the work. These SWOT analysis tools can help.
Competitive Analysis Template
Being able to corral all this information together in a template is good. There is some flexibility here. However, a good template will have all of the following content.
- Revenue – The clearest path is checking the website of the competition, or look for press releases.
- The Target Market – Look through the content on social media platforms.
- What makes their products different and unique.
- The number of employees.
- Their products and services with pricing.
- The marketing strategies they use.
- The social channels and websites they operate in.
- Content on the history of the company.
Here are a few tips on getting a competitive analysis template. Looking for an online worksheet is a good idea. But you’ll need to be careful to make sure it has all the categories you want. There are some industry leaders offering them, like Shopify.
If you’re making your own, don’t forget to include sections for social media and website content. You won’t be able to get an accurate analysis without considering digital marketing.
Conclusion
Understanding what a competitor is doing can help your business to succeed. That’s what a good competitive analysis is all about.
Mia Ballan the Founder of Money-Minded Millennial, provides a good definition.
“The key to performing an effective competitor analysis is to choose the right competitors. The criteria you should look out for are: 1) are they relevant 2) authoritative and 3) successful,” she writes.
Maddie Bishop, Senior Brand & Communications Strategist at Jacob Tyler, has the last word:
“The best competitive analysis research is not only interesting but useful. It should offer an insight into how your brand can grow, pivot, or innovate within and beyond its marketplace.”
Before you start, Bishop says, you need to ask three questions. Here is the list Bishop supplies.
Define what you need to learn. Do you just need an overview of the market, or are you looking to see how you can dominate it?
Decide who your competitors actually are. It may not be as obvious as you think. Are they the leaders in your market? Those making a similar product or offering a similar service? Or, those who have made a strategic move you aspire to?
Question whether you really need a traditional competitive analysis. It’s unlikely you could achieve market-leading success simply by copying their tactics. Of course, sometimes you just need an overview of where you stand. But if you’re trying to inform your next strategic move, there might be a better way. Perhaps you could actually learn more from some thoughtfully chosen category case studies?
Remember there are several things that a good competitive analysis should do. First and foremost it should identify gaps in any marketplace.
A good analysis can also be the first step in developing brand-new products and services. Done right, it also helps to identify important market trends. In the end, it is designed to help you sell and market your products and services more effectively.
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This article, “How to Do a Competitive Analysis” was first published on Small Business Trends