If you’re a business owner or aspiring to be one, you’ve likely come across the term “competitor analysis,” also known as competition or competitive analysis. But have you ever paused to consider what this analysis truly entails and why it might be crucial for your brand’s success? Understanding and utilizing competitor analysis tools can unlock insights that go beyond simply knowing who your rivals are; it can reveal the strategies they employ, the gaps in the market, and the opportunities your business can seize to outmaneuver the competition.
What does competitor analysis mean?
In essence, a competitor analysis is simply the process of utilizing competitor analysis tools to examine similar brands in your industry to gain a better understanding of their branding, sales, offerings, and overall marketing approaches. Having this understanding is important, especially in highly competitive industries, because it can inform your decisions for how to move your brand forward and choose what paths you should and should not take.
Additional benefits include knowing how to stand out in your market, recognizing gaps in how the competition solves problems, becoming familiar with industry standards to meet and eventually exceed them, and having a benchmark against which to measure your brand’s growth.
Undergoing competitor analysis
Competitor analysis is a useful way to understand your brand’s place in the market and how it can be improved. However, the actual steps that go into carrying out this analysis can prove somewhat complex and require honest reflection of yourself, your company, and your competition, so be mindful of these elements before diving in.
First and foremost, you need to establish who your competition is. Take note of what your company’s branding, goals, services, and products are before making any comparisons. Once you’ve clearly outlined that information for yourself, plug your results in online to see what other companies come up in search results. For example, if you sell luxury backpacks, what products and companies come up in that web search? Make a list of the most relevant brands in relation to your own.
Now that you know who your competition is, you need to understand how their business is structured and why a customer might choose that company over yours. For information on their structure, look into the size of the company in terms of the number of employees and leaders. You’ll also want to check how long the business has been operating and what kind of job openings it has available on online job listings.
To find out more about a competitor’s value propositions and why they sell what they do, be sure to examine the given company’s “About Us” page on their website or social media. This section should highlight key information like what problems their products solve, what desires their products fulfill, what benefits/outcomes the product delivers to customers, and so on.
Next, examine your competitor’s marketing efforts and brand identity. Knowing this information can help you better understand your own company and where it’s positioned within your industry.
When looking into another company’s marketing efforts, check what types of content they put out, what kind of paid advertising presence they have both online and traditional, and who the company partners with. Notably, a company’s partners can reveal much about that company’s values, priorities, and relationship with their customers.
Understanding a competitor’s brand identity can be done simply by imagining that brand as an actual person. How would that person speak and behave? What would their values be? What kinds of emotions or effects would they leave on someone they’re talking with?
Finally, you’ll want to consider your competition’s customers and audience. What kind of person does your competition attract and why? How does the company interact with its clientele? Are there any noticeable rough spots in the interactions between a competitor and their customers for you to capitalize on?
For this step, it can help to take on the role of a customer and go through your competitor’s customer journey, or the process the customer must go through to obtain a product or service. Pay attention to each part of that journey and how it makes you feel while being mindful of what the company is actually doing to move you through the process.
Utilizing the analysis
By this point, you have all of your information, but as is, it’s simply data with nowhere to go. It’s ultimately up to you how to apply this analysis, but it’s almost always useful to do a general comparison between your company and the information you gathered from the competitor. What differences do you see in strengths and weaknesses? Are there any opportunities present for you to take advantage of? And so on.
Once you understand where you sit in relation to your competition within your industry, it becomes much easier to devise a clear direction for your own company, either by improving the weaker aspects of your brand or highlighting its strengths.
Here’s a brief list of prompts to consider to better apply your new-found knowledge:
- How can you modify your brand’s customer journey to outshine your competition’s?
- What can you do to make customers notice your brand over another?
- How can you differentiate your product’s features to stand out in the market?
- What changes can you make to your social media marketing/campaigns?
- Within your market, where does it look like your competitors are least prevalent?
- How can your company address issues in the market that the competition either ignores or goes around?
These are just a few of the different applications for a competitive analysis, so make sure to experiment and get creative with the data. Most of all, it’s important to stay updated on this information — your competition may be making similar analyses, after all — and reevaluate the data on a regular basis. Depending on the size and rigor of the analysis, you might want to look over the information again every quarter, six months, or year, to accommodate for changes in the competition.
In a progressively digital world, information is among the most useful resources available to business owners. Having information, however, is not enough if you don’t know what to do with it. While collection is important, analysis and implementation will always be the determining factor in deciding which brands come out on top in their respective industries.
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