Competitor Analysis: What to Consider?
Competitor analysis helps businesses understand the market environment, assess the strategic positions of competitors, and improve their own strategies.
In this article, you will learn how to properly conduct competitor analysis, what tools to use and what key aspects to consider.
So, competitor analysis is the process of collecting and evaluating information about the companies that compete with you in the market. It helps you identify their strengths and weaknesses, understand their marketing strategies and pricing policies, and identify opportunities to improve your business.
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What is competitor analysis and why is it needed?
Competitor analysis is a must-have for any business strategy. It is important to understand which companies are your direct competitors, how successful they are in attracting customers, how they conduct marketing campaigns, and what their strengths and weaknesses are.
This allows:
Find out how competitive your products or services are.
Identify niches for improvement and new opportunities in the market.
Develop more effective marketing strategies.
Increase your attractiveness to customers.
It is important to remember that the competitive environment is dynamic – therefore, regular monitoring and analysis of competitors should become an ongoing practice.
Key Elements of Competitor Analysis
For competitor analysis to be truly effective, there are several key elements that need to be taken into account.
Here are the main steps you need to go through:
Identification of main competitors.
Start by identifying your direct and indirect competitors. Direct competitors offer the same products or services as you; indirect competitors offer products or services that meet the same customer needs.
Use tools to find competitors, such as Google, social media, industry publications, and various analytics platforms.
Collecting information about competitors.
Official websites of competitors are the main source of information. Pay attention to the product range, prices, marketing strategies, unique selling propositions (USP).
Social media analysis: This is a source of fresh data on current marketing campaigns and customer interactions.
Evaluation of competitors' marketing strategies.
Analyze the content on their website, blogs, and social media. Identify the key messages used in their advertising.
Find out what channels they use to promote themselves and how successful their campaigns are.
Methods for assessing the competitive environment
To deeply assess the competitive environment, it is necessary to use various analytical methods.
Here are some of them:
SWOT analysis — allows you to evaluate:
Strengths of competitors of the armored position in the market.
Weaknesses of competitors that can be used to your advantage.
Opportunities that can be realized in your company.
Threats your business may face.
PESTEL analysis – helps to consider external factors that may affect the competitive environment:
Political
Economic
Social
Technological
Ecological (Environmental)
Legal
Porter's Five Forces – This analysis helps to understand the structure of competitive pressure in the industry:
The threat of new market entrants
Buyer Influence
Influence of suppliers
The threat of substitute products
Intensity of competition between existing players
Analysis of competitors' marketing strategies
Analyzing competitors' marketing strategies is an important element in assessing their effectiveness and identifying their ability to adapt to market conditions.
Here are the basic steps to follow:
Study of promotion channels:
Assess what marketing channels your competitors are using (SEO, contextual advertising, social networks, email marketing).
Collect data on how effectively these channels work. For example, which content engages the audience more, which campaigns generate more leads.
Analysis of advertising campaigns:
Analyze the text and especially the offers in the advertisements. Indicate which of them work best.
Use tools like SEMrush or Ahrefs to understand which keywords are leading to high rankings for your competitors.
Content Marketing Evaluation:
Research the variety and quality of content on competitors' websites (articles, blogs, videos, podcasts).
Pay attention to the tone of the content, its regularity and audience reaction (likes, comments, shares).
Analysis of competitors' strengths and weaknesses
Analyzing your competitors' strengths and weaknesses allows you to not only understand their current market position, but also identify areas where you can outperform your rivals. Here are the basic steps to help you conduct such an analysis:
Strengths:
Research your competitors' unique selling propositions (USPs) and evaluate how they compare favorably to their competitors.
Identify key success factors such as high quality products, a wide distribution network or successful marketing campaigns.
Assess the financial stability of your competitors and their ability to invest in innovation.
Weak sides:
Find user reviews and comments across various platforms to identify complaints and grievances.
Analyze areas where competitors are lagging behind, such as outdated equipment, poor customer service, or lack of advertising efforts.
Identify weaknesses in your competitors' strategies that you can exploit to your advantage.
Example of a table for analyzing the strengths and weaknesses of competitors:
Competitor | Strengths | Weak sides |
|---|---|---|
Competitor 1 | Wide range, high quality products | High prices, slow service |
Competitor 2 | Aggressive marketing strategy, developed distribution | Poor customer service |
Competitor 3 | Successful advertising campaigns, excellent reputation | Lack of innovation, limited range |
Competitor 4 | Financial stability, high brand awareness | Low involvement in social projects |
It is important to update the table regularly to stay abreast of changes and adjust your strategy in a timely manner.
Analysis of competitors' pricing policies
The pricing policy of your competitors has a significant impact on your business, so it is important to analyze it carefully and adapt your strategy in a timely manner.
Price data collection:
Conduct regular monitoring of competitors' prices on their websites and online stores.
Use special tools for automatic price tracking, such as Price2Spy or Competera.
Price comparison:
Compare prices of similar products or services to understand how your product is positioned relative to the competition.
Pay attention to promotions, discounts and loyalty programs offered by competitors.
Analysis of pricing strategies:
Determine whether competitors are using low price strategies to attract customers or are focusing on the premium segment.
Assess how often competitors change prices and adapt to market conditions.
Example: If you have identified that one of your key competitors offers its products at a lower price but often has quality issues, you can highlight the high quality of your products in your marketing campaigns, offering customers more value for their money.
Analysis of competitors' products and services
Analyzing competitors' products and services helps you understand what solutions they offer, how their products are perceived by customers, and what innovations can be adopted.
Assortment assessment:
Analyze your competitors' product range, assess its breadth and depth. Consider whether your competitors have unique products or services that you do not have.
Compare product specifications, functionality and quality.
Quality comparison:
Read customer reviews and test competitors' products yourself to assess their reliability and compliance with the stated characteristics.
Evaluate the packaging, design and ease of use of products.
Identifying opportunities for improvement:
Identify what innovations and improvements can be introduced into your products based on an analysis of competitive offerings.
Study your competitors' user experience features and find elements that can be improved in your product.
Example: If your competitors offer similar products but with poor design or insufficient functionality, you can improve your products by adding the missing elements and highlighting these improvements in your marketing materials.
Analysis of competitors' customer base
Understanding your competitors' audiences allows you to better tailor your marketing strategy and increase the effectiveness of your advertising campaigns.
Defining the target audience:
Use analytics tools to analyze data about competitors' customers (age, gender, geographic location, interests).
Assess which audience segments your competitors are attracting and what they might be interested in.
Analysis of customer feedback and satisfaction:
Review customer reviews on popular platforms to assess their satisfaction level with their services.
Identify the root causes of negative reviews and pay attention to complaints that are frequently repeated.
Using data to improve strategy:
Tailor your marketing campaigns to attract customers who are unhappy with your competitors.
Develop offers and promotions that will attract more attention and meet the needs of your target audience better than your competitors.
Using Competitor Analysis Tools
Modern tools for competitor analysis help automate the collection and processing of data, which significantly simplifies the analysis process.
Popular tools:
SEMrush – offers keyword analysis, organic and paid search traffic, link reports and PPC research.
Ahrefs — a powerful tool for link mass analysis, competitive research and keyword search.
SimilarWeb — analyzes the source and quality of traffic on competitors’ websites.
Interpretation of data:
Use reports to understand which keywords are driving traffic to your competitors.
Identify the most popular pages and content on your competitors' sites.
Analyze your link structure and determine where your competitors are getting their highest quality external links.
Comparison of functional capabilities:
Evaluate the key features of each tool and choose the ones that best suit your needs.
Use a combination of tools to get a more comprehensive analysis.
Stages of applying the results of competitor analysis
Once you have completed your competitor analysis, it is important to interpret the data correctly and implement improvements in your business strategy. Below are detailed steps to help you use the results of your analysis effectively.
Interpretation of data:
Create a report on each aspect analyzed (prices, products, marketing strategies, target audience).
Assess which of your competitors' identified strengths and weaknesses may impact your business.
Developing strategies:
Identify opportunities in the marketplace that can be exploited to improve products and services based on competitors' weaknesses.
Implement changes to your marketing campaigns by focusing on unique offerings and gaps identified by your competitors.
Implementation of improvements:
Make necessary changes to your product line and services to meet current customer requirements and preferences.
Optimize pricing strategies by focusing on the values that matter to your target market.
Monitoring and evaluation of the effect:
Continuously monitor the results of implemented changes by analyzing key performance indicators (KPIs).
Re-analyze at regular intervals to correct direction as needed and stay ahead of the competition.
Tips for Successfully Using Competitor Analysis
In order for competitor analysis to yield maximum results, you should adhere to the following recommendations:
Use an integrated approach. Combine multiple analysis methods (SWOT, PESTEL, Porter's five forces) to get a complete picture of the competitive environment.
Pay attention to the details. Study your competitors' weaknesses in detail, because they are where opportunities for your business lie.
Adapt strategies. Assess the needs and behavior of your target audience and adapt your strategies accordingly.
Get your team involved. Form a cross-functional team to analyze competitors and implement improvements. The more points of view are taken into account, the more accurate the assessment will be.
Possible Mistakes When Analyzing Competitors and How to Avoid Them
Avoid common mistakes to make your competitor analysis truly useful.
Insufficient attention to information sources. Conduct your analysis only based on verified and reliable sources. Do not rely solely on guesswork and assumptions.
Focus only on big competitors. Don't ignore small and medium-sized competitors. They may be more flexible and innovative, which can create unexpected risks.
Lack of regular monitoring. The competitive environment is constantly changing. Conduct analysis on a regular basis to adapt to changes in a timely manner.
Underestimating the importance of competitors' weaknesses. Pay attention to your competitors' weaknesses and turn them into your strengths. This will help you gain a stronger position in the market.
Negative copying. Don't blindly copy your competitors' strategies. Instead, adapt them to your unique needs and market.
Summarizing
Competitor analysis provides invaluable information that can significantly impact the success of your business. By following these steps and recommendations, you will be able to gain a deeper understanding of the market environment, identify key opportunities and threats, and develop effective strategies to improve your competitiveness.
Implementing the results of competitor analysis requires a systematic approach and attention to detail. Formulate clear goals, monitor changes in the market and constantly adapt your strategy. This way, your business will not only maintain its position, but also significantly strengthen it.
