In business, it is good to be able to anticipate well, know your sector and always be a few steps ahead of the competition. A tool to help you gain such an advantage is competition analysis. Let us look at why the analysis of competition is so important and what should not be missing.
What is competition analysis?
Competitive analysis is the process of identifying your competitors and evaluating their marketing strategy to identify their strengths and weaknesses compared to a large business, services, and products. The basic idea is quite simple, the better you know your competition, the better you will be able to prepare for it.
Why is competition analysis important?
Understanding what is doing your competition well and where it is failing is the first step to setting up your successful marketing strategy. Competitive analysis helps you in this process:
- Gain an overview of the latest trends and expectations in the following sectors.
- Gather information about the type of campaigns through which we gain customers from our opponents.
- Gain a better idea of what your potential customers like or dislike, so you can improve your products and services.
So, if you are not the market leader who determines new trends in the competition analysis in your sector, you can learn a lot.
Who is your competition?
The identification of your competition and the tools you can use are to some extent tied to the sector in which you operate. However, you should not focus only on your direct competition. Try to answer the following 3 questions:
Who is your target customer?
What basic problem are you trying to solve?
What solution do you offer?
Your direct competitors are companies and firms that sell to the same customers, the same solution to the same problem. However, competitors who offer your customers a similar solution to another problem or another solution to a similar problem can also be dangerous to you. These players may not be your direct threat today, but if they have the necessary capital and information about your target customers, you should not overlook them.
Competition analysis: How to get started and what data needs to be tracked?
Rank your competitors from the strongest to the weakest, and for everyone, determine what makes their brand, product, or service unique. Then start doing on a SWOT analysis and define their strengths and weaknesses, the opportunities you see for you and the risks you should anticipate. Get inspired by our infographics below.
Analyze the communication strategy of your competition. Subscribe to their newsletter or follow their social networks. You will see how your opponents communicate and how their customers react to it. (you can find out more about the communication strategy on social networks here)
Analyze your competition’s website and the keywords (SEO) that bring them the most traffic. For example, you can use the Ubersuggest tool, which will do the basic analysis for you.
Does your competition use advertising on television and in magazines or advertise on the Internet? An overview of active campaigns on all Facebook applications, including Instagram, can be found, for example, in Facebook Ads Libary. Google search will provide you with information on which PPC ads (acronym for pay-per-click) are currently active on the products and services you are looking for.
Gather as much information as possible about the financial situation of your opponents. Focus on the following: annual sales, total market share, cash flow, average annual costs, profit level and return on investment. This will give you a better idea of what your competitors can afford, and which costs are too high for them.
Are customers satisfied with the services and products of your competition? Online ratings and reviews will show you what customers are looking for and what they are complaining about.
After completing your analysis, you should have all the necessary information about what your competition is doing. Then use the results to analyze your own business and identify areas where you see space for improvement.
A detailed competition analysis can be your secret weapon to help you find a way to offer your customers even better products and services and ultimately outperform your competition.