When starting a business, it is of utmost importance to undertake competitive analysis to gauge the market and how your company will do after its establishment. Just as you cannot be unprepared before a large presentation, you cannot expect to start a business without researching it and the industry it is a part of. Therefore, you have to do a competitive analysis. You can accomplish this with SWOT analysis, competitor profiling, and competitor array.
The world of marketing is vast. It’s almost as big as the world, but you start in a small, localized place, at least at first. But still, you may find yourself thinking that there isn’t room enough for two #1 leading businesses in your industry! That’s where planning comes in. Business is a battlefield; lace up your marching boots and make your battleplans because making your way to the top isn’t going to be an easy climb.
Why examine the market?
You’re a business trying to get ahead of the competition. So you have to cover as many bases as possible! That means doing a lot of research, so you don’t make the wrong moves in business. Mistakes in business tend to be costly — in terms of money, popularity, even reputation! Know what you’re getting into before you set foot in it.
Benefits of competitive analysis
- It helps you determine why your product will be distinct from the competition, which will be your top selling point once you start marketing said product.
- You’ll find out the secrets to competitors’ success. “This information is critical for staying relevant and ensuring both your product and your marketing campaigns are outperforming industry standards,” says Hubspot.
- Inversely, you’ll also find out why they’re not performing well. It can open up opportunities for your business to fill that gap and thus gain more customers. Your uniqueness factor may very well be the key to doing it not only as your competitors would have wanted, but even better than they ever could have hoped.
- Additionally, after seeing competitors’ customer feedback, you can incorporate things consumers want, thus giving them more of a reason to purchase your products.
- You can gauge how far your company has come from the previous year!
Competitive analysis means “identifying your competitors and evaluating their strategies to determine their strengths and weaknesses relative to those of your own product or service.”
One shouldn’t jump into a random body of water without knowing how deep it is or what lies underneath; the same is valid for starting a business venture. However, you may already be a company in your own right, doing your very best to catch the attention of consumers.
Competitive analysis can help you find your product’s strengths to market to your demographics.
However, remember that no matter which industry you’re in, you’re going to have rivals — that is, competitors. You’re going to want to both stay one step ahead of them, yet make sure you don’t step on their toes. Stealing a concept is a bad look for your company. Having your own unique spin on products or services will get you noticed; it’s going to help you get to the top of the leaderboard in no time.
The important questions:
- Who are your rival companies?
- What are the products and/or services they offer?
- How good is their SEO? What are the keywords that they’re so successful with?
- How much of the market shares do they have?
- What were their past strategies? What are their current strategies?
- Optional: What are their future strategies?
- How many, and what channels do they use for marketing? (For example, the internet.)
- Also, how many hours a day do they spend marketing their products on each channel?
- How much money do they spend marketing their products on each channel?
- What are your rivals’ strengths and weaknesses?
- What are the opportunities and threats that your rivals represent?
These are the most pressing questions a business can ask when they have to appraise their competitors.
Next up: you’ve heard of competitive analysis, now get ready for —
Yes, it looks strikingly similar to ‘competitive analysis,’ but there’s one key difference: Competitor analysis looks directly at your competition, AKA your business rivals.
Business News Daily defines competitor analysis as “the process of identifying businesses in your market that offer similar products or services to yours and evaluating them based on a set of predetermined business criteria.”
To do a competitor analysis, Entrepreneur.com says: “For each competitor or strategic group, list their product or service, its profitability, growth pattern, marketing objectives and assumptions, current and past strategies, organizational and cost structure, strengths and weaknesses, and size (in sales) of the competitor’s business.”
We’ve all heard of SWOT Analysis. With it, you find the strengths, weaknesses, opportunities, and threats related to your business. You probably already know how to do a SWOT analysis for your overall business, but here are questions to ask when studying your competitors:
- How do your competitors excel? In what aspects are your competitors exceptional?
- What are their “intangible assets (e.g., memorable branding)”, as BigCommerce puts it?
- What aspects of them require an overhaul — by your business?
- Are they slacking on certain things? What are they?
- What can you do to improve on their processes based on your own offering?
- Could they replace you in the market, and how?
Competitor profiling, as ManagementMania says, “is part of the competition analysis. It consists in finding out and processing data about competing businesses or products in order to generate the key information about them, categorize them and identify their key competitive differences.”
If what they’ve got is more than what you’ve got, figure out how to replicate their success for yourself! So, create a profile of each of your competitors — it shouldn’t be a one-page deal. Then, be as thorough as possible — it will allow you to gain insight into what kind of change they can affect in the market. Ask questions like:
- What is crucial information that ties into your industry? What are the metrics that you can use to measure success or failure?
- Analyze why and how the competitor is successful.
- How does your competition react to any market changes?
- What are your critical success factors, or “what it is you need to do to remain a major force in your industry,” according to Mirum.net?
A competitor array “allows you to consider the factors most important in your industry, and then lets you rank your competitors based on these factors, showing you their strengths and weaknesses,” says Excell Design.
Here are the steps for a competitor array:
- Describe your industry, particularly its scope and nature.
- Establish who your rivals are.
- Establish who your customers are and what benefits they may expect
- Describe critical factors for success in your industry.
- Rank the factors by how important they are regarding success. Do this “by giving each one a weighting — The sum of all the weightings must add up to one.”
- Rate your competitors on how well they achieve each factor
- Multiply every value by the designated factor weighting.
- Add up the answers to get the “weighted assessment of the overall strength of each competitor relative to each other.”
You can get ahead of everyone else
Part of competitor analysis involves asking the question, “What do they (competitors) have that I (your business) don’t?” It also involves asking, “What do they not have that I can take?”
Competitor analysis requires a thorough strategy. Therefore, one should ask an extensive list of questions to get a clearer picture of where one stands in the grand scheme of marketing.
A business plan must account for competitors. One can investigate their potential influence with competitive analysis, particularly SWOT analysis, competitor analysis, competitor profiling, and lastly, competitor array. A SEO Company in the Philippines would know best how to do them.