As a business owner or digital marketer, you must know your competition and understand your market to grow your business. One way to achieve this is by conducting a thorough market analysis and competitive analysis. In this article, we will discuss what market analysis and competitive analysis are, why you should conduct them when to do them, and how to complete a competitive analysis.
What are Market Analysis and Competitive Analysis?
Market analysis and competitive analysis are essential components of any business strategy. Market analysis involves researching and evaluating the overall market in which a business operates, including factors such as the size of the market, demand for products or services, and so on. Competitive analysis, on the other hand, involves researching and evaluating the business’s direct and indirect competitors, including their strengths, weaknesses, and market positioning.
Together, these analyses help businesses understand the current state of the market and identify opportunities for growth and differentiation. By conducting a thorough market analysis and competitive analysis, businesses can gain insights into the needs and preferences of their target audience, identify potential obstacles to success, and develop strategies to outperform the competition.
Why to do a competitive analysis?
A crucial aspect of conducting a thorough competitive marketing analysis for any business. There are several reasons why businesses should invest time and resources in performing a competitive analysis.
Firstly, a competitive analysis helps identify the strengths and weaknesses of your competitors. This information can provide valuable insights into areas where your own business can improve or differentiate itself from its competitors. By understanding your competitors’ strengths and weaknesses, you can better position your own business in the market.
Secondly, a competitive analysis can provide insights into your market. By analyzing your competitors, you can better understand the demographics, psychographics, and purchasing behaviors of your target audience. This knowledge can be invaluable in developing effective marketing strategies that resonate with your audience.
Thirdly, a competitive analysis can help identify industry trends. By studying your competitors’ products, services, and marketing campaigns, you can gain insights into emerging trends in your industry. This knowledge can help you stay ahead of the curve and ensure your business remains relevant and competitive.
Finally, a competitive analysis provides benchmarks for growth. By analyzing your competitors’ financials, sales data, and market share, you can set realistic goals for your own business and track your progress over time. This information can be used to create a roadmap for growth and development and help you identify areas where you can improve your business operations.
When to do a competitive analysis?
Determining when to conduct a competitive analysis can be crucial in helping your business stay ahead of the curve. Here are some scenarios in which a competitive analysis should be performed:
- Launching a new product or service: Before launching a new product or service, it is important to assess the market and understand your competition.
- Entering a new market: If you plan to expand your business into a new market, a competitive analysis can help you identify the key players and evaluate their strengths and weaknesses.
- Changes in the industry landscape: Changes in the industry landscape can present new opportunities or challenges. Conducting a competitive analysis can help you stay up to date on the latest trends and adjust your strategy accordingly.
- Declining performance: If your business is experiencing declining performance, it may be time to assess your competition and identify areas for improvement.
- Regularly scheduled assessments: It is recommended to perform a competitive analysis regularly, whether it is annually or quarterly, to stay informed on the latest trends and competitors in your industry.
How to do a Competitive Analysis?
- Identify your Competitors: The first step in conducting a competitive analysis is to identify who your competitors are. Your competitors can be classified into two categories: direct competitors and indirect competitors. Direct competitors are those who offer the same products or services as you, while indirect competitors offer different products or services but compete for the same market share.
To identify your competitors, you can use the following methods:
- Your Industry: Conduct market research to find out who your competitors are. Look for companies that offer similar products or services in your industry.
- Customer feedback: Gather feedback from your customers about who else they have bought from or considered buying from.
- Social Media & Online Communities: Check social media platforms and online communities to see which brands are being discussed or recommended.
- Organic Search: Use search engines to find companies that rank for similar keywords as your business.
- Paid Search: Check for companies that are bidding on the same keywords as your business.
- Local SEO research: Look for businesses that appear in local search results for your target keywords.
- Your Community: Identify any local businesses or community organizations that offer similar products or services.
- Gather Background Information: Once you have identified your competitors, the next step is to gather background information about them. This includes:
– Company History: Research the history of your competitors, including when they were founded, how they have evolved, and any major milestones they have achieved.
– Location: Find out where your competitors are located and whether they have multiple locations. This information can help you understand their reach and target markets.
– Company Size: Determine the size of your competitors in terms of revenue, number of employees, and other relevant metrics. This information can help you understand their resources and capabilities.
- Research Your Rival’s Products: To complete a thorough competitive analysis, you need to research your rival’s products or services. This includes:
- Product: Identify the features and benefits of your competitor’s products or services.
- Price: Determine how much your competitor is charging for their products or services. You should also consider whether their prices are higher or lower than yours.
- Reduce your price: If your competitor’s prices are lower than yours, you may need to consider lowering your prices.
- Raise your price: If your competitor’s prices are higher than yours, you may be able to increase your prices.
- Match your competitor’s pricing: If your competitor’s prices are similar to yours, you can maintain your pricing strategy.
- Place: Determine where your competitor is selling their products or services. This could include physical locations, online stores, or third-party retailers.
- Promotion: Analyze your competitor’s marketing and advertising efforts to understand how they are promoting their products or services. This includes direct marketing, referral marketing, search engine marketing, social media marketing, and paid advertising.
- Examine Your Competitor’s Websites and Customer Experiences: Another important aspect is doing proper website competitive analysis and customer experience. This includes:
- Website Design and User Experience: Analyze your competitor’s website design and user experience. Look for any features or functionality that could be replicated or improved upon.
- Content Marketing: Analyze your competitor’s content marketing efforts, including their blog, social media, and other content channels.
- Customer Experience: Analyze your competitor’s customer service and support processes, including how they handle inquiries, complaints, and feedback.
There are some competitive analysis tools also available in marketing to make it easy for you to examine your competitor’s websites and customer experiences, these tools can also provide more accurate results.
- Determine Your Competitors Market Positioning: Once you have gathered enough information about your competitors, it is important to determine their market positioning. This means identifying where they stand to other players in the market. Some key questions to ask when determining your competitors’ market positioning include:
- What is their unique selling proposition (USP)?
- How do they differentiate themselves from their competitors?
- Who is their target audience?
- What marketing channels are they using to reach their audience?
Answering these questions can help you understand how your competitors are positioning themselves in the market, and how you can differentiate yourself to stand out.
- Perform a SWOT Analysis: Performing a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis is an essential step in completing a competitive analysis. This analysis can provide a comprehensive overview of your business and your competitors’ positions in the market.
To perform a SWOT analysis, you need to identify your company’s strengths and weaknesses as well as the opportunities and threats present in the market.
- Strengths: Start by identifying the areas where your business excels. Consider factors like your team’s expertise, the quality of your products or services, your brand reputation, and your company culture. Identifying your strengths will help you determine your competitive advantage and leverage it to stand out from your competitors.
- Weaknesses: Identify the areas where your business falls short. These could include things like limited resources, lack of brand awareness, poor customer service, or inefficient processes. Recognizing your weaknesses will help you improve and grow your business.
- Opportunities: Analyze the external factors that could provide opportunities for your business. This could include changes in technology, new market trends, or emerging customer needs. By identifying these opportunities, you can tailor your business strategy to take advantage of them.
- Threats: Finally, identify the external factors that could pose a threat to your business. This could include changes in government regulations, shifts in consumer behavior, or new competitors entering the market. By identifying potential threats, you can proactively develop strategies to mitigate their impact.
By conducting a thorough SWOT analysis, you can gain a better understanding of your business’s position in the market and the competitive landscape. This can help you make informed decisions about your business strategy, marketing, and sales efforts.
How often should you do a competitive analysis?
Competitive analysis is not a one-time task, but an ongoing process. Your competitors, market trends and consumer behavior can all change over time, so it’s important to regularly review and update your competitive analysis. In general, it’s a good idea to conduct a competitive analysis at least once a year, but you may need to do it more frequently if you operate in a rapidly changing market.
How can a competitive analysis help small businesses?
Competitive analysis can be a valuable tool for small businesses as it can provide them with a clearer understanding of their position in the market. Moreover, it can help them identify areas of improvement. By conducting a thorough analysis of their competitors, small businesses can gain insights into their strengths, weaknesses, opportunities, and threats. Consequently, this information can be used to develop strategies to improve their products or services, price them competitively, and target their marketing efforts more effectively. In addition, a competitive analysis can help small businesses stay ahead of the curve by identifying emerging trends and keeping track of changes in their industry. Overall, a competitive analysis can help small businesses make more informed decisions and take proactive steps to grow and succeed in a competitive marketplace.
In conclusion, conducting a thorough competitive analysis is a crucial step in developing a successful digital marketing strategy. By identifying your competitors and gathering background information about them, as well as researching their products and market positioning, you can gain valuable insights into the market and your own business. Furthermore, performing a SWOT analysis will enable you to assess your strengths, weaknesses, opportunities, and threats. Consequently, this information can help you differentiate yourself, capitalize on opportunities, and address potential threats. Ultimately, these insights can drive growth and success for your business.