Competitor analysis is essential for effectively managing your business. By understanding what your competitors are doing, you can determine how to outperform them and gain a competitive advantage.

To conduct a successful competitor analysis, it’s important to follow these steps.

What is competitors’ analysis? 

Competitor analysis involves reviewing the activities of competing companies. By gathering detailed information about their products/services, pricing, marketing strategies, social media presence, customer service, and other aspects, you can draw valuable insights for your own business. It is a fundamental tool for managing the growth and operations of your company. Therefore, it is crucial to conduct competitor analysis before starting a new venture, whenever modifying your product/service, and at least once a year to stay informed about your competitors and respond to their market expansion attempts.

Step-by-Step Guide to Conducting Competitor Analysis

a. Identify Your Competitors: Start by identifying your direct and indirect competitors. Direct competitors offer similar products or services, while indirect competitors address the same customer needs through different means. Additionally, consider substitution competitors who offer entirely different products but compete for the same limited customer resources.
b. Gather Information about Specific Competitors: Collect as much information as possible about your competitors, categorizing them based on:

    • Products/Services: Evaluate and compare their offerings with yours.
    • Pricing: Examine their pricing structure, discounts, and factors influencing their pricing strategies.
    • Distribution Channels: Determine where their products/services are available.
    • Advertising: Analyze their advertising strategies.
    • Content Management: Assess how effectively they utilize channels such as websites, social media, catalogs, etc.
    • Customer Reviews: Consider customer opinions to understand why they choose your competitors’ products/services and identify areas of improvement.
    • Company Management: Examine their organizational structure, number of employees, and compensation practices.
    • Partnerships: Identify their collaborations with media providers, suppliers, courier services, etc.

c. Identify Strengths and Weaknesses of Your Competitors: Use a scoring system to evaluate each competitor based on the aforementioned categories. Also, assign scores to your own business to facilitate comparison. Document why your competitors are strong or weak in specific areas.
d. Highlight Your Competitive Advantage: Based on the analysis, determine and emphasize your competitive advantage. Maximize the use of your strengths, continuously improve them, and highlight them at every opportunity.
e. Perform SWOT Analysis: After gathering all available information about your competitors, conduct a comprehensive analysis using the SWOT framework (Strengths, Weaknesses, Opportunities, Threats). This analysis will help you answer questions such as:

      • What are the strengths of your business?
      • What areas can be improved?
      • Are there any untapped market niches?
      • What are the anticipated market trends and changes that you should prepare for?

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How to utilize Competitor Analysis?

  • Determine your competitive advantage and highlight it in your advertisements.
  • Stay informed about your competitors’ new offerings and respond accordingly.
  • Learn from your competitors’ challenges and take preventive measures if similar situations arise.
  • Avoid common mistakes made by new entrepreneurs or those entering a new industry.
  • Assess the difficulty of the market and adjust your marketing and advertising budget accordingly when facing strong competition.

By conducting a comprehensive competitor analysis, you will possess accurate knowledge about your industry, enabling you to make informed decisions, exploit market opportunities, and effectively position your business for success.