Conducting a thorough and strategic competitive analysis of your business’s direct and indirect competitors can provide invaluable insights into their strengths and weaknesses, market trends and growth opportunities. By understanding how your business’s direct and indirect competitors are performing, you can gain greater insight into how to better market and capitalize on your own business’s competitive edge. In this blog, we will guide you through conducting a comprehensive business competitive analysis that will empower your company to make well-informed decisions, stay ahead of the competition and achieve sustainable growth.
What is a competitive analysis?
A competitive analysis is a strategic assessment of your business’s competitors’ strengths and weaknesses. Understanding your business’s competitors allows you to see more clearly how your business is performing in your market space.
Analyzing competitors is a multifaceted venture that takes time and intention, but it can lead to important discoveries and insights that can drastically improve your own business’s growth!
Competitor research is a science all its own, so before gathering all the information you can on your business’s competitors, it’s essential to understand what information is most important. Read on to learn how to do a competitive analysis!
Understanding the Importance of Competitive Analysis
Before diving into the analysis process, it's crucial to grasp why conducting a competitive analysis is essential for your business.
a) Identifying Market Opportunities: Analyzing your business’s competitors helps you spot untapped market segments, emerging trends and potential gaps in the industry that your business can capitalize on.
b) Benchmarking Performance: By comparing your company's performance against your competitors’ performance, you can identify areas where you excel and areas that need improvement.
c) Risk Mitigation: Understanding your competitors allows you to anticipate their moves and prepare for potential threats to your business.
d) Enhancing Strategy Development: Armed with competitive insights, you can create more effective and targeted business strategies.
1. Define Your Business’s Competitors
Identifying your business’s direct and indirect competitors is the first step in a competitive analysis. Direct competitors offer similar products or services within the same target market, while indirect competitors cater to a slightly different audience but might solve the same problem. Make a list of both types to have a comprehensive view of the competitive landscape.
2. Analyze Competitor Products and Services
Next, research your competitors' offerings in depth. Take note of their unique selling propositions (USPs), pricing strategies, product features and customer reviews. Understanding what sets them apart will help you refine your offerings and potentially find areas of improvement.
While researching your competitors online is a quick way to gather information, try more creative methods for gleaning information.If your competitor has a storefront, visit it. Talk to their employees as if you were a customer and purchase one or a few of their products to analyze further. Immersing yourself in their sales funnel as a customer can help you understand their marketing strategies and how they alleviate specific pain points.
If your competitor hosts an event, sells online or is a service-based business, make sure to attend and get as close to their products, services and inner workings as possible. You will quickly discover what they do well and what they don’t and how your business can close the gap.
3. Evaluate Market Positioning
Examine how your competitors position themselves in the market. Are they focusing on price leadership, product differentiation or catering to a niche market? Understanding their positioning can inform your marketing and branding strategies.
Pay attention to their slogan, where they run their ads and who their main customer base seems to be. Ask questions as to how your business can better serve the market!
4. Assess Online Presence
In the digital age, a strong online presence is crucial for success. Evaluate your competitors' websites, social media accounts and online marketing efforts. Look for the platforms they engage on, the content they share and how they interact with their customers. This analysis will help you refine your online marketing strategy.
Compare your business’s online sentiment analysis with what you find out about your competitors. Assess how people feel and talk about your competitors, and use that to your business's advantage.
5. Analyze Strengths and Weaknesses
Identify your competitors' strengths and weaknesses. Strengths can inspire ideas for your business growth, while weaknesses can reveal areas where you can outperform them. For example, if a competitor's customer service is lacking, you can focus on providing exceptional customer support to gain a competitive advantage.
Remember to analyze internal strengths and weaknesses as well as client-facing strengths and weaknesses. Do they allocate more budget to different areas than you? How are their teams structured? While this information might be more challenging to come by, the value it can offer your business is well worth the investment.
6. Understand Market Share and Growth Trends
Research market share data and growth trends in your industry. Understanding how your competitors are faring in the market will give you a sense of their market presence and potential areas for expansion.
Are there upcoming trends for which your business is positioned better than your competitors? How can you greater capitalize on that fact when the time comes?
7. Conducting a SWOT Analysis
Perform a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis for each competitor. This analysis will provide a clear understanding of how they stand in the market and how your business can capitalize on their vulnerabilities and safeguard your business from being overtaken.
Conducting a business competitive analysis is an ongoing process that requires continuous monitoring of the market and your competitors. The insights gained from this analysis will shape your business strategies and help you make informed decisions. Remember, successful businesses don't just react to the competition; they proactively stay ahead of the curve by being well-informed and adaptable. Following the steps outlined in this blog, you can position your business for sustainable growth and a strong competitive advantage in the marketplace.
Remember to regularly conduct competitor research and analyses to give your business the best possible opportunity for growth!
RevLocal is your business’s trusted digital marketing partner. We pride ourselves in offering personalized and effective digital marketing solutions for small businesses and multi-location brands that withstand rapidly changing landscapes and create flourishing companies. To learn more about how RevLocal can help your business’s online presence, contact us for a free consultation!