Competitor Analysis
What is competitor analysis?
Competitor analysis is the process of researching and analyzing your business rivals in order to understand their strengths and weaknesses, as well as their marketing strategies, in order to improve your own business and gain a competitive advantage.
If you're thinking of starting a business, or growing an existing one, competitor analysis is a key part of growing your business.
Importance of competitor analysis in marketing
Competitor analysis is an essential element of marketing that involves researching and studying competitors to gain a competitive advantage in the market. By analyzing competitors, businesses can identify gaps in the market and develop strategies to improve their products, services, and marketing plans. Understanding your competition can also help you make informed decisions about pricing, positioning, and targeting potential customers.
History of competitor analysis
The concept of competitor analysis dates back to the 1960s. The term was coined by Harvard Business School professor Michael Porter in his book "Competitive Strategy." Since then, the concept has evolved to include a more comprehensive analysis of competitors, including their strengths, weaknesses, opportunities, and threats (SWOT analysis).
Components of effective competitor analysis
Thinking of getting started with your own competitor analysis? You'll need to include the following:
Identifying your competitors
Analyzing your competitors' strengths and weaknesses
Assessing competitors' marketing strategies
Identifying your competitors' target audience
Identifying gaps and opportunities in the market
Analyzing industry trends
Benefits of conducting competitor analysis
Including competitor analysis as part of planning for a marketing campaign can have many benefits for your business and marketing opportunities, these include:
Identifying new opportunities for growth and expansion
Uncovering gaps in the market that can be filled by your product or service
Improving product development and marketing strategies based on what competitors are successfully offering
Identifying potential threats to the business, from competitors or external factors
Improving customer relationships and building stronger brand trust by responding to their needs better
Competitor analysis use cases
Some examples of how competitor analysis has been used effectively include:
Example 1: A hotel chain conducting an analysis of its competitors to determine what amenities and services they lack compared to them, and incorporating those into their own offerings to attract more customers.
Example 2: A technology company tracking competitors' marketing strategies to gain insights into how their products were positioned in the market and adjusting their messaging or strategies to better appeal to potential customers.
Example 3: A clothing retailer analyzing competitors' pricing strategies to adjust their own pricing and remain competitive in the market.
Best practices for effective competitor analysis
If you're thinking of conducting competitor analysis, it's important to consider these best practices:
01. Identify the key players in the market and analyze their strengths and weaknesses when it comes to their marketing, brand messaging, advertising efforts and other business strategies.
02. Understand your own strengths and weaknesses relative to your competitors. What successful strategies of theirs have you identified that you could potentially implement and make a success? Where are the areas they're not performing as well and you could fill the gap in the market?
03. Consider your target audience and how your competitors are targeting them. Are you both targeting a younger audience and your competitors are strong on social media platforms?
04. Analyze your competitors' marketing strategies to identify areas of opportunity and improvement in your own.
05. Be aware of industry trends and how they may impact your business, as well as how they may influence competitors to pivot their strategies and efforts.
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Challenges with competitor analysis
Competitor analysis can be a valuable process for businesses looking to understand more about how their competitors operate and succeed. However it's not without its challenges.
Some potential challenges associated with competitor analysis include:
It can be very difficult to obtain reliable data on competitors. This is not something most companies, for obvious reasons, give up willingly. There are a number of tools that can help - from keyword research, to audience research tools.
The time and resources needed to conduct thorough and detailed analysis. Even if you only have a few key competitors, it can take time just to figure out how you're going to perform competitive analysis on then, it then needs to be conducted, then analyzed and finally applied to improving your own strategies.
Analysis paralysis which is where too much information can be overwhelming and make it difficult to come to a decisive conclusion and decision. This can be true if you have two or more strong competitors, each of which has a different successful marketing strategy.
To overcome these challenges, you can consider outsourcing the analysis process to a third party or utilizing technology platforms that can automate portions of the analysis. Tools like Ahrefs, Semrush and SparkToro to name just a few.