Taking the time to do a competitor analysis will help you grow your business and stay on top of market trends. It’s an important part of any business strategy, whether you’re just starting out or are an established brand looking to understand a new competitor.
Learn how to do a competitor analysis and how it can help your small business identify opportunities, develop your products and services, and stay ahead of the competition.
Competitive analysis, or competitor analysis, is when you take a strategic view of your competitors to understand their products, services, and their marketing and pricing strategies.
Ultimately this is how businesses of any size can try to gain a competitive advantage and continue to attract customers. For example, it can help you answer questions like:
A competitor analysis is a useful way to help you:
You probably have a good idea who your competitors are, but do you know what sets them apart? If you only take the occasional look at their social media channels without digging deeper into their overall strategy, you could be missing out on big opportunities.
The key here is to look at direct competitors that match your business in terms of the products or services they offer, their geographic location, and size. Choose three or four key competitors and give a short overview as part of your analysis, including:
This is where you should list the features and benefits of your products or services, and compare them in detail with each of your competitors. A good way to do this is to create a simple table that breaks everything down by price, quality, and key features.
This section is where you can look at how your competitors are promoting their business to customers. You’ll include things like:
Read our guide to marketing your small business for tips on improving your own marketing strategy.
It’s important to regularly analyse your pricing strategy against your competitors so you don’t miss potential threats to your business. A similar business might drop their prices for example, so you need to make sure you’re staying on top of changes in demand and seasonal sales.
It’s not all about price though. Consider how price reflects quality, as well as any shipping and return costs.
Trawling through review sites might seem like a chore, but it can be a fantastic indicator of what your competitors are doing well – and what they aren’t so good at.
Whether it’s reviews on Facebook, Google, Trustpilot, Tripadvisor, or one of the many other sites available, there are plenty of ways to see what customers think of you and your competitors. This can help you understand if there’s an opportunity to improve your service or develop something new that better answers customer needs.
SWOT stands for strengths, weaknesses, opportunities, and threats. Usually you’ll use a grid layout with space to write notes for each section. It’s an important part of writing a business plan, but a SWOT analysis can also be used to see how your competitors are performing based on your perceptions and market research.
Read more about how to do a SWOT analysis.
A competitor analysis framework is a form of analytical modeling that guides how you’ll structure your competitor research.
We’ve already mentioned SWOT analysis, which is one example of a framework that can help you gain a competitive advantage.
Another example is position mapping. For this model, you’d use a simple chart to plot your perception of your competitors’ products in terms of quality versus price, and how you think your products compare. This can help you understand whether you’re able to demand a higher price if you’re offering a premium product.
There are so many competitor analysis tools out there it can be overwhelming, particularly if you’re a small business without big budgets and a digital marketing agency at your disposal.
That said, you might like to explore how some of the tools below can help you as you grow. But keep in mind, they’re subscription platforms so you’ll need to decide if the monthly cost is worth it.
This is just an overview of some of the ways you can approach a competitor analysis and is by no means exhaustive. The main thing is to keep it simple and focus on market research to start with, but continue revisiting your analysis and building on it as your business grows.
Have you done a competitor analysis for your business? Let us know how you get on in the comments below.
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