What is a Competitive Analysis? What does it mean? How should I go about conducting a competitive analysis?
A competitive analysis (CA) is a tool used to evaluate competitors and determine their strengths and weaknesses. The goal of a CA is to identify opportunities for improvement and develop strategies to take advantage of them.
It involves examining the competition, analyzing its strengths and weaknesses, and determining whether they pose a threat or opportunity to your company.
A CA can be done by:
Analyzing market trends
Identifying industry leaders
Comparing products and services
Evaluating marketing channels
Conducting research
Developing strategies
Conducting interviews with customers
Analyze Market Trends
Market trends are important because they help you understand what people want from a product or service. They also help you decide which direction to move in as well as how much effort to put into developing a new product or improving an existing one.
Identify Industry Leaders
Industry leaders are companies that have established themselves in the marketplace. These companies have proven that they can make money selling their goods and services.
They may offer better technology or more customer-friendly features than other companies. However, this doesn’t necessarily mean that these companies will continue to grow at the same rate in the future.
Compare Products and Services
When comparing two or more products or services, consider the following factors:
Features/Benefits – Are there any unique benefits that set one product or service apart from another? If so, why do people choose that product or service over others?
Price – Is the price right for the value offered? Can you get similar value elsewhere for less money?
Quality – Does the quality match the price? For example, if you pay $100 for a high-quality car, would you expect to receive a low-quality car for free?
Service – Would you recommend this product or service to friends and family?
Customer Satisfaction – How satisfied are current customers with this product or service?
Marketing Channels – Which channel(s) are most effective in reaching potential customers?
Technology – How technologically advanced is the product or service?
Research and Development – Has the company invested in R&D to improve the product or service? Have they made any major changes recently?
Innovation – How innovative is the product or service compared to those already on the market?
Brand Image – How well known is the brand name among consumers?
Distribution Channel – Where is the product sold? Is it available only through certain retail outlets?
Product Life Cycle – How long has the product been around? Will it still be around when you need it?
What is competitive market research?
The purpose of competitive market research is to gather information about your target audience. This includes understanding who your audience is, where they live, what they like, and what they don’t like. It also helps you figure out what kind of product or service you should create.
Why Conduct Competitive Research?
If you know your audience, you can design a product or service that meets their needs. You can also find ways to reach them and keep them coming back.
You might not know exactly what your audience wants until you talk to them.
You might think that your idea is great, but you need to test it before you launch.
Competitive analysis can help you determine whether your competitors are doing something right or wrong.
How to Conduct Competitive Research
There are many different methods for conducting competitive research. The method you use depends on your budget, time constraints, and resources.
Market Research
Market research involves gathering data by talking directly to your audience. This could include surveys, focus groups, interviews, or even observation.
Surveys
A survey is a way to collect information about an issue. Surveys typically ask questions such as “What do you like about our product?” or “Which feature did you enjoy using the most?”
Focus Groups
A focus group is a type of meeting in which participants discuss issues related to a particular topic. Focus groups allow you to hear directly from your audience.
Interviews
An interview is a conversation between a researcher and someone who knows something about a subject. Interviews usually involve asking open-ended questions such as “Tell me more about…” or “Can you describe how you feel about…?”
Observation
Observations are similar to interviews, except that you watch people instead of listening to them. Observers may ask questions such as ‘Who uses this product?’ or ‘Where does this product get used?’
Data Collection Methods
Once you have collected data, there are several ways to analyze it. Some of these methods require specialized software while others can be done manually.
Software
Some software programs can automatically compare two or more products or services. These programs can tell you which one is better based on quantitative measures (such as price) and qualitative measures (such as customer satisfaction).
Manual
A manual comparison requires you to look at each product or service individually. For example, you may want to consider:
• What features do both products offer?
• Which features are important to customers?
• Are the prices comparable?
• Does either product come with additional costs?
• Who would buy the product?
• Why would they buy it?
• Where would they buy it? (Location matters!)
• When would they buy it? Is there a seasonal factor?
• What problems will they encounter?
Analyzing Data
After collecting data, you must decide if you found enough information to make a decision. If so, you can start analyzing the data. Here are some steps to follow:
1. Identify the Problem
The first step is to identify the problem. Once you understand the problem, you can begin thinking about solutions.
2. Define the Solution
A solution is any action that solves the identified problem. It doesn’t matter what kind of solution you choose; all that matters is that it works for your business.
3. Develop Your Idea
Now that you know what the problem is and what the solution looks like, you can develop your idea.
4. Determine Whether Your Idea Works
To determine whether your idea works, you’ll need to evaluate its strengths and weaknesses.
5. Test Your Idea
Testing means trying out your idea before investing too much time and money into it. You might test your idea by conducting a pilot program, talking to potential customers, or even doing a small market research study.
6. Evaluate Results
When evaluating results, think critically about how well your idea worked. Did it solve the problem? Was it easy to implement? Were there any unexpected side effects?
7. Make Changes
If necessary, you can modify your idea to improve its effectiveness.
8. Implement and Measure
Finally, you must implement and measure your idea. This includes making sure that your idea actually solved the problem. Also, you should continue measuring to see if it still works.
9. Repeat Steps 1 Through 8 As Needed
Repeat steps 1 through 9 until you find an idea that works.
10. Document
Documenting your findings helps you remember everything you learned during the process. A good way to document your work is to write down notes in a notebook or create a spreadsheet.
11. Share With Others
Share your ideas with others. They could help refine them or give you new insights.
How to do a Competitive Analysis
Competitive analysis is the process of comparing different products or services to determine which one is best suited for your needs. The main purpose of competitive analysis is to increase sales. To be successful, you need to analyze three things:
1. Market
This refers to the group of people who use your product or service.
2. Product
Your product is anything you sell. In other words, it’s whatever you provide to your customers.
3. Process
Your process is how you get from point A to point B. For example, when you go to the grocery store, your process involves getting from your car to the cash register.
Once you have these three pieces of information, you can compare them against each other.
Market Size
You want to learn as much as possible about your market. First, you need to figure out where your target audience lives. Next, you need to know what their income level is. Finally, you need to know how many people fit this profile.
Product
Next, you need to examine your product. Are there any features or benefits that set it apart from competitors? What are they? Is it easy to use? Does it have enough functionality?
Process
Lastly, you need to look at your process. How long does it take to complete? Can you customize it? If so, how?
Analyzing Your Competition
The first step in analyzing your competition is to identify what you know about them. Here are some questions to ask yourself:
1. Who are my competitors?
Who else sells the same thing I do?
2. Where are they located?
Where do they operate?
3. How big is their market?
How large is their customer base?
4. What do they offer?
What makes them unique?
5. How do they make money?
How do they generate revenue?
6. How will they grow?
How will they expand their business?
7. Who are their customers?
Who buys their products or services?
8. How often do they change their prices?
How frequently do they raise their prices?
9. How do they advertise?
Do they advertise on television, radio, print media, Internet, etc.?
10. How do they promote themselves?
Do they have websites? Social media pages? Blogs?
11. How do they deliver their goods/services?
Do they ship directly to consumers? Or do they send packages via mail?
Competitive Product Analysis
To perform a competitive product analysis, you must understand both the strengths and weaknesses of your own product. You should also consider the strengths and weaknesses of all your competitors. This allows you to see how well your product fits into the market.
Strengths
Here are some examples of positive attributes that might describe your product:
• It has high quality
• It provides lots of value
• It offers convenience
Weaknesses
Here are some examples that describe your product’s shortcomings:
• It lacks features
• It doesn�t work properly
• It�s not user-friendly
After you have identified your strengths and weaknesses, you can then compare your product with those of your competitors.
Compare Strengths
When you compare your product�s strengths to those of your competitors, you can easily spot areas where your product excels. You can also find ways to improve your product by making changes to its design.
For instance, if you notice that your competitor�s product is more expensive than yours, you could lower your price to match theirs. However, be careful not to undercut your competitors too much; doing so may cause them to lose sales.
In addition, you can also try to differentiate your product by offering special discounts for certain groups of customers or by providing free shipping.
Compare Weaknesses
If you notice that your product�s weaknesses are similar to those of your competitors�, you may want to think about improving these aspects of your product.
For example, if your competitor�s product seems better suited for children than adults, you could add an adult version of your product.
However, you should avoid copying your competitors� marketing strategies because this could backfire. Instead, you should focus on differentiating your product from your competitors�.
Once you have completed a competitive product analysis, it is time to develop a strategy.
Developing a Strategy
The purpose of developing a strategy is to help you decide which direction to take your business. A good strategy helps you achieve your goals while avoiding pitfalls along the way.
A successful strategy includes the following components:
• Goals
Your goals are the reasons why you decided to start up a business in the first place. For example, you may want to earn money, build a brand name, or gain recognition.
Your goals will determine what you need to accomplish as part of your business plan.
• Objectives
Objectives are specific tasks that you set out to complete. They are usually broken down into smaller steps.
For example, one objective might be �to increase my client base.� Another objective might be �to sell $5,000 worth of products per week.�
You should make sure that each step in your objectives leads to another step. If you don�t do this, you may end up taking a detour that takes you away from your main goal.
• Strategies
Strategies are plans that you use to reach your goals. Each strategy includes a series of actions that you take to get there.
You can choose between two types of strategies: long term strategies and short term strategies. Long term strategies involve setting goals and building a solid foundation over several years. Short term strategies are used when you need to move quickly.
Long Term Strategies
Long term strategies include the following steps:
1. Define Your Market
Defining your market is an important first step. It allows you to understand who your potential clients are.
2. Research Your Competitors
Researching your competitors is essential because it gives you insight into their businesses. This information can help you see how they operate and what they offer.
3. Develop a Product Line
After you know who your target audience is, you can begin developing a product line. To do this, you must identify your strengths and weaknesses.
4. Create Pricing Structure
Pricing structure refers to how much you charge for your products. You can either charge a fixed price or a variable price based on demand.
5. Promote Your Business
Promoting your business involves telling people about your company and its products. You can advertise through print media (newspapers, magazines), radio, television, direct mailings, and word-of-mouth.
6. Plan Your Marketing Budget
Marketing budgets are often limited resources. Therefore, you should carefully consider where you spend your money.
7. Build Relationships with Clients
Building relationships with clients is critical because it makes them feel valued. In addition, you should try to establish a relationship with every customer.
8. Conduct Customer Surveys
Customer surveys allow you to learn more about your customers� needs and wants. You can also find out if your services meet these needs.
9. Analyze Data Collected
Analyzing data collected during customer surveys helps you improve your service. You can use this information to create new products or services that better suit your customers� needs.
10. Set Goals
Setting goals is an ongoing process. As you achieve certain milestones, you can set new ones.
Short Term Strategies
Short term strategies are used when time is of the essence. These strategies are designed to give you immediate results.
To implement a short term strategy, follow these steps:
1. Identify Problems
Identifying problems is the first step in solving them. By identifying problems, you can figure out what needs to change.
2. Decide What Action to Take
Once you have identified a problem, you can decide what action to take. The best way to solve a problem is to determine whether you want to fix it now or later.
3. Implement Solution
After you have decided what action to take, you can implement the solution. For example, if you want to increase sales, you can hire additional staff.
4. Evaluate Results
Monitoring results lets you measure your progress toward meeting your goals.
Competitive Analysis
A competitive analysis is a tool that helps you evaluate your competition. It provides you with detailed information about your competitors so you can make informed decisions.
There are two types of competitive analyses:
1. Strategic
Strategic competitive analysis identifies your strengths and weaknesses. It helps you define your niche and develop a unique value proposition.
2. Tactical
Tactical competitive analysis focuses on your current situation. It helps you analyze your current position and plan your next moves.
Competitive Analysis Templates
The following templates provide examples of strategic and tactical competitive analysis questions.
Strategic Competitive Analysis Template
Question 1: Describe your organization’s primary market.
Question 2: Define your target markets.
Question 3: List your major competitors.
Question 4: Explain why your product/service is different from those offered by your competitors.
Question 5: Describe your product/service.
Question 6: Why do you believe your product/service will be successful?
Question 7: Explain why your product is superior to those offered by your competitors (if applicable).
Question 8: Which of your competitors has the most potential for growth?
Question 9: Which of your competitors could pose the greatest threat to your business?
Question 10: What are some ways you intend to differentiate yourself from your competitors?
Question 11: What are some ways your company can grow?
Question 12: What are some ways to expand into new markets?
Tactical Competitor Analysis Template
Question 13: Who is your main competitor?
Question 14: What does he/she offer that you don’t?
Question 15: What would happen if this competitor was not around?
Question 16: What are their weaknesses?
Question 17: What are yours?
Question 18: What are your strengths?
Question 19: What are theirs?
Question 20: What are the advantages and disadvantages of being a direct competitor versus being a partner?
Question 21: What are the pros and cons of entering a specific industry?
Question 22: What are the pros of staying in your present industry?
Question 23: What are the pros/cons of expanding into other industries?
Question 24: What are the pros / cons of going public?
Question 25: What are the pros, cons, and risks of mergers and acquisitions?
Conclusion
You now know how to conduct a competitive analysis. You should use it as part of your planning process. The more information you gather, the better prepared you’ll be when making important decisions.
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