Businesses require observing their competitors for success. A healthy competitor analysis helps study competitors better, whether developing products or services, implementing marketing channels, and understanding customers.
Herein you will know what competitive analysis is? And how it is crucial for business growth.
What is competitive analysis?
Competitive analysis is understanding how your business stands in the market relative to the competition. Such analysis helps to create a plan helpful in generating information for business growth. An effective competitive analysis enables creating loyal customers.
Know the competitors
A quick way to know the competitors selling similar products is to perform a Google search. However, competitor analysis requires knowing various types of competitors.
These competitors directly compete with you, and they sell products similar to yours. For instance, if you are into manufacturing soft drinks, these competitors also manufacture identical soft drinks.
Indirect competitors do not manufacture similar products as yours. However, they meet a common purpose. For instance, your restaurant prepares fast food items such as noodles, while your competitor prepares pizza. Both of them meet the common goal of fulfilling hunger.
How to find your competitors?
The first step to finding your competitors is to perform research. Use the keywords that depict your company in Google search. Search with the relevant terms and their combination to find your competitors.
Look at the top search results relating to your products and services. Compare your offering with theirs, and identify the differences. Mainly, study the following aspects to study your competitors better:
A notable suggestion would be to talk to the current and former employees to gain valuable insight into competitors’ business strategies, practices, and pitfalls.
Perform SWOT analysis
Post identifying competitors and assess their capabilities and business strength. SWOT analysis discusses four main areas to determine businesses’ potentiality: Strength, weakness, opportunities, and threats.
Represent each competitor as a box on the whiteboard. Divide the box into four equal parts. The top two boxes represent strength and weakness, while the bottom two represent opportunities and threats.
Strength and weakness mention the tangible assets influencing a business. Here is the list of them:
- Income, investments, and funding
- Equipment, facilities, and location
- Human resources, employees, and customers
- Variable and fixed costs
- Copyrights, trademarks, and patents
Opportunities and threats talk about external factors that can positively and negatively influence businesses.
- Launch of new products into the market
- Technological transformation or redefined customer needs
- Latest business trends
- Changes in demographics
- Change in government rules and regulations
Once you have completed performing SWOT analysis on the competitors, perform the same on your business.
Having gained competitors’ strengths and weaknesses, analyze the products and services. If your products are similar, what features match, how are they better than yours, how are they lacking? If found identical, how do they generate customer value?
- Start analyzing the products and services considering the following metrics:
- Customer service
- Business reputation
- Market visibility
- Give the ratings to your competitors’ products and services
- Identify areas where your product is better than your competitors and competitors are better than you
- Learn from the above points, and try to develop refined products to fill gaps in the market.
How frequently to conduct competitor analyses?
Businesses require an understanding of customers and the existing market trends to thrive. We recommend conducting competitor analysis once a quarter or once a year, depending on the industry. Meanwhile, you will have sufficient time to respond to your progress.
Market place continuously evolves. As a result, competitive analysis is a never-ending process. Businesses following the stated points will be successful. Also, optimize the tools to gain better competitive analysis. ONPASSSIVE’s AI CRM tool, O-Desk, helps perform market analysis and understand customers better.