What is a competitor analysis?
A competitor analysis is the process of identifying major competitors, researching and evaluating their products, sales and marketing strategies and comparing them to your own.
However, the concept is more complex than just figuring out who your competitors are and what they’re doing. Importantly, you are taking information learned from your research to then make improvements to your own company.
A competitor analysis is one of the most effective ways for finding out your companies position in the marketplace.
Here is an overview of what a competitor analysis is, how to create one and why completing one will benefit and improve your company.
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Why do a competitor analysis?
A competitive analysis will help you:
- Identify who your main competitors are
- Know what platforms they’re on and how they’re using them
- Know how well their marketing strategy is working for them
- Help you identify their strengths and weaknesses
- Identify strengths and weaknesses in your own company
- Find ways to get new customers
- Identify opportunities in the market that are currently not being used
By investigating your competitors, you can gain a more thorough understanding of what is happening in your industry. Without knowing what your competitors are doing, you won’t be able to grow and succeed as a company.
For a competitor analysis to be truly successful, it must be done regularly. There is always something new happening and changing with the market and trends within your industry, so it’s important to stay up to date.
How to conduct a competitor analysis?
Step 1: Gather information on your main competitors
Start by listing 3-5 of your main competitors; they are the businesses or companies that provide a similar product or service to yours. You want a mix of competitors that:
- Sell a similar product or service to yours
- Have a similar business premise
- Market to your audience demographic or a slightly different one
- Have a similar marketing strategy
If you’re unsure who your main competitors are, start with an internet search. Search your business name or product and see who else comes up in the search. From there, you can look at social media, online groups or even articles online.
It’s best to use businesses that are a similar size to your own and are in a similar location to you. You don’t want to look at a store in another country because they might have a completely different target demographic and marketing strategy.
You can also directly ask your customers who else they considered shopping with or who they are already using. User feedback is gold when understanding your customer and also helps you to foster a closer relationship.
Your goal with this step is to get a good understanding of who your competitors are in your industry.
Step 2: Analyze competitors
Once you’ve identified your main competitors, find out everything there is to know about them.
Try to answer the following questions about your competitors:
What are their Products and Services?
You need to have a good idea of the products or services your competitors are offering. This can be a very general overview and understanding or it can be as detailed as you want.
Some questions to ask yourself include:
- How do they differ from your own?
- Are they launching new products or services?
- What are the customer reviews?
- What don’t customers like about the product or service?
- Does your product or service have this same product? How can you fix this?
- What is the description of their product or service? How does it differ from your companies?
- Who is their supplier?
- Is there something you can word differently to increase sales or engagement?
- How do they deliver?
- How do customers order?
How do they do their pricing?
Evaluate your competitors’ price of the product or service they are offering. Is it the same or similar to your own? Why could it be different?
Take into consideration whether they are an online or in-person store (or both). This might increase or decrease the price of their products or services compared to yours. Production and manufacturing costs also greatly impact pricing.
There are a few ways you can analyze the pricing:
- Are they a low-cost or high-cost provider?
- Check prices out online and in-store (if available) and compare them between all competitors
- Do their prices vary from online to in-store?
- Are there discounts offered regularly?
- Do they offer any discounts on shipping? What is their normal cost of shipping? How does yours compare?
- Do customers buy one or more products at a time? What items do they buy together? Is there a way you could offer a deal on those items?
- Use an online price tracking software, such as Prisync.
What are their Sales tactics?
Knowing and understanding your competitors’ sales strategies can help you to develop and improve your own. Questions you should be asking are:
- What are your competitors’ annual revenue and growth pattern?
- What online and offline channels are they selling their products or services through? Are there any that they are missing that you can start using?
- Are they online or in-store? Do they have multiple locations? Do they sell their product or services through multiple websites?
- What does the sales process look like? How does this differ from yours?
- Is there a pattern to their discounts? Do they get more sales during these times? Do they get more sales when they offer a particular discount?
- When do they lose customers during the sales process and why? Is this similar or different to your businesses?
In order to find out this information, you might need to use an online resource, or you can even purchase a product for yourself to see and experience what the sales process is like for the customer.
What Marketing channels do they use?
You’ll want to start analysing your main competitors marketing strategies. Start by looking at some of their channels below and asking yourself these questions.
|Website||What does their website look like?|
What pages do they have?
What information do they have on their website?
How many people visit their website?
|Social Media Accounts||How many followers do they have?|
Who do they follow?
How often do they post on these accounts?
What are they posting?
How do they engage with their customers?
|Blog||What are they writing about?|
How often are they posting?
What is their SEO structure?
How does is differ from yours?
Does their SEO bring customers to their blog?
|Email marketing||Do they have a company newsletter?|
How often are they sending emails?
Do they offer promo codes and discounts regularly?
|Online and offline ads||Do they promote their product or service online?|
Do they promote in person via billboards or in magazines?
|Videos and podcasts||Do they have videos or audio on their website, blog or social media?|
What are the types of videos they have?
Do customers respond or interact with the videos?
Do these posts have a lot of engagement?
|Customer resources||Do they promote their customer reviews and feedback?|
How do they do this?
Step 3: Compare and contrast competitors with your company
Now that you have collected all of the information about your competitors, you need to analyse and compare it to your company.
One of the ways to do this is a SWOT Analysis, where you can identify you and your competitors’ strengths, weaknesses, opportunities and threats.
Through SWOT Analysis, you will be able to determine where your company needs to improve and change, and how other companies’ strengths and opportunities can influence this.
It can also help you understand your industry, what’s happening or changing and how your competitors might be using this to their benefit. You will be able to use the analysis to predict changes in the market that your company can use to make sure you are successful.
After you’ve done the comparison, it’s time to make the necessary changes to your company. It’s important to monitor these new changes as you implement them to see if they are working or if you need to change them further.
Now that you have an overview of the competitive analysis process, here is a template to get you started.
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