The Competitive analysis describes a company's competitors and provides detailed information about their sales, business strategies, and marketing efforts.
When conducting research, it is worth assessing your competitors by placing them in strategic groups depending on how directly they compete for customer share. For each opponent or strategic group, their product or service provided, their profitability, growth pattern, marketing objectives, current and past strategies, organizational structure and costs, strengths and weaknesses, and size (in sales) of the competitor's business are listed.
Based on the results of a competitive analysis, you can answer questions such as:
- Who are your business competitors?
- What products or services do they sell?
- What is the market share of each competitor?
- What are their past strategies?
- What are their current strategies?
- What types of media are used to promote their products or services?
- What are the strengths and weaknesses of each competitor?
- What potential threats do your competitors pose?
- What potential opportunities do they present to you?
Who needs it and why
Competitor analysis is essential for the development of any product or service in the market, even if you appear to be a completely unique product, you need to know companies that meet similar consumer needs, but in different ways. Thus, the study allows:
- Understand competitor strategies
- Determine their strengths and weaknesses
- Find out what customers think of them
- Develop a competitive strategy suitable for your target market.
Methods
Based on your goal, you can use the existing competitive analysis framework or develop your own based on certain parameters. Some of the existing competitive analysis methods are:
- SWOT analysis: helps identify potential competitive advantage by examining strengths, weaknesses, opportunities and threats
- Porter's Five Forces: Uncovering the Competitive Structure of an Industry by Evaluating the Five Factors - New Entrants, Buyers, Suppliers, Substitutes, and Rivalry
- Strategic group analysis: to assess the positions of players in a competitive environment based on two variables
- Growth Share Matrix: To categorize the products in your company's portfolio against the industry's competitive landscape to determine which products are worth investing in and which are not.
- Perceptual Display: To visually represent how your products are perceived in comparison to alternatives.
Main stages
1) Identification of current and future competitors in the market
The best way to identify current and future opponents are to analyze your target positions. Based on the characteristics of the product and what consumer needs it satisfies, it is necessary to identify direct and indirect players in the market. To do this, you need to find companies that meet the demand in your market by producing a similar or similar product that meets the same consumer needs - analyze the entire line and quality.
2) Analysis of the market share occupied by competing companies
After you have identified direct and indirect opponents, you should calculate their market share. To calculate this indicator, you will need information about the size of the market under study and the indicators of revenue and production volume of each firm. If you are targeting sales in more than one region, then you should look at the shares of companies by geographic area, perhaps division by region or a major city. Pay special attention to companies that operate in several regions and provide delivery capabilities throughout the country, this is their advantage, which should be considered when promoting your own product. Other features of competitor companies can be learned through market research, it will help to identify factors that affect the success of sales from your rivals.
3) Perform a SWOT analysis
Above, we looked at several methods and strategies for conducting competitive analysis, but we will consider using one of the most popular frameworks. SWOT analysis should be carried out for each of the competing companies that are closest to your provided products or services. This tool is aimed at identifying the strengths and weaknesses of a competitor in various aspects of activity, from indicators of product characteristics and production volume to brand representation in social networks.
Once you know the market share and conduct secondary and primary analysis, you will need to identify the strengths, weaknesses, opportunities and threats for each of your competitors in turn.
SWOT is indirectly responsible for showing you the steps where you can capitalize and get ahead of your competitors.
Here are some questions that may be relevant to the analysis:
- What is your competitor really good at? (products, content marketing, product promotion in the media, etc.)
- What is your competitor's advantage over your brand?
- What is your competitor's weakest point?
- What is your brand's advantage over its competitor?
- What could they have done better?
- In what areas would you consider this competitor a threat?
- Are there opportunities in the market that your competitor has identified?
4) Building a portfolio of competitors
Once you have done a thorough SWOT analysis of your competitors, you will be able to build a competitive portfolio. It will present all the products and services of your competitors, logistics, tangible and intangible characteristics. This document needs to be updated in a timely manner.
5) Planning and executing your own strategy
Develop your unique strategy based on the analysis of competitors or use the best practices that already exist in the market. Apply the strategies you think are best and make sure you execute them effectively. At the same time, it is very important to have a contingency plan and anticipate the competitor's reaction.