Without a good competitive analysis, you cannot expect your digital marketing efforts to put you several steps ahead of the competition. Unless you know your major competitors’ resources, capabilities, and marketing activities, you cannot effectively compete in the market.
What is competitive analysis?
Identifying your competitors and evaluating their strategies, activities, resources, and capabilities through research with the end in view of determining their strengths and weaknesses in relation to your own business and product/service.
A comprehensive competitive analysis can give you a macro view of the market landscape that you must deal with accordingly to come out ahead and successful.
Competitive analysis, which is also part of strategic planning, is the foundation of formulating your own strategy to identify and take advantage of opportunities as well as to discover threats and mitigate its effects on your business.
By knowing your competition well and continuously updating your knowledge about them, you will have a pretty good idea what probable decisions and actions they will take. This puts you steps ahead of them.
Your competitors’ corporate strengths and weaknesses
Here are some key areas of strengths and weaknesses:
- Product/Service – features, advantages, and benefits
Take note of the benefits that your competitors highlight in their marketing communication. Do the actual features support the benefits they claim?
- Corporate culture – values upheld, management and leadership styles
What values do they believe in and upheld – integrity, leadership, innovation or change? Do they practice professional business management?
- Strategy – short-term and medium-term corporate strategies and goals
Do they have a well-crafted strategic plan? Check where they want to be 1, 3, or 5 years down the road.
- Finance – capitalization, funding availability
Are they adequately capitalized? Take note of how they finance their day-to-day operations. How do they secure additional funding if necessary?
- Human resources – selection, hiring, and training programs
In selecting and hiring personnel, especially marketing and sales staff, do they give due consideration to character or skills? Investigate what kind of skills they put a premium on – technical or soft skills? Do they conduct continuing training for their personnel particularly their marketing and sales teams?
Your competitors’ marketing assets and techniques
Some marketing assets and techniques you may look at:
- Product/Service innovation and development – new product/service development program, research and development capabilities, product lifecycle management
Do they have a program in place that includes research and development of new products/services? What do they focus on and do to find/develop new products/services? Determine the lifecycle stages of their current products and what they do, if any, to extend it.
- Pricing – pricing policies
How do they normally price their products – skimming or penetration pricing?
- Distribution – methods and channels
Do they distribute directly to the target market or do they use distribution channels? Check what consists their channel of distribution.
- Promotion – offline and online promotion
Check their advertising and promotion campaigns. Do they focus more online or offline? What media do they use? Try to determine how much budget they allocate for advertising and promotion.
- Customer value – value offering, customer experience
How do they deliver customer value? Do they prioritize quality, price, or customer service? Check how customers perceive and experience their product/service at various touch points.
- Digital channels and techniques
Check the kind and quality of content they are publishing on their website, blog, newsletter, social media posts, videos and other visual content, and online ads.
Any gap, weakness, or failure in their content will be a good opportunity for you to capitalize on. On the other hand, you can improve on what you find as good content published by your competitors.
Do their content attract, engage, and drive customers to positive actions on their brand?
Find out how they distribute their content. What social media platforms are they using? Take note of customers engagement. How do customers react to their content?
It is also important to know what keywords your competitors are ranking for and what SEO techniques they are using.
Check also available online reviews about your competitors.
How do you go about competitor research?
You can obtain information about your competitors using either online or offline sources.
- Search engine
- Competitor websites, blog, case studies
- Social media posts
- Online ads
- Press releases
- Government agency filings
- Industry data
- Distribution intermediaries
- Other competitors
Why is competitive analysis critical to beating the competition?
Without competitor research and competitive analysis, you may have a lack of factual understanding that is crucial to creating an effective and sustainable competitive advantage.
Many businesses rely on random and raw bits of information in assessing their competitors which normally lead to wrong assumptions and decisions.
How do you conduct a competitive analysis?
A competitive analysis starts with a well-structured competitor research and the end product is an evaluation of the overall relative strength of competition.
Below is a process you can follow:
- Identify your major competitors (at least seven direct competitors).
- Classify your competitors. You may categorize them as direct and indirect competitors. Direct competitors are those that sell the same product/service as yours to the same market. Indirect ones are those that offer substitute or alternate products/services to the same market.
- List down their corporate information such as head office and branch location, principal owners/stockholders, executive officers, capitalization, number of employees, and other businesses.
- Determine their distinct strengths and weaknesses. These are relative to your business, i.e. how these directly affect your market performance.
Their strengths are what will negatively impact your business. These may be a strong financial asset or a solid strategic plan for the next five years.
Their weaknesses are areas where you believe you have a clear and current advantage over them. These may include an inexperienced management or sales team.
- Enumerate their marketing assets and techniques. Identify which ones will directly affect your market performance. These may include a progressive R & D program that can churn out new products/services within a short time frame. It can also be a dynamic pricing strategy. An aggressive offline advertising campaign that stretches for the whole year. A comprehensive and well-financed digital marketing campaign.
- Evaluate and rank their over-all strength. Again, this is dependent on your perception as to how each factor above affects your business. You may use a scale, say from 1 to 10, to grade each factor. This is an attempt to put a numerical value on each factor. The total number you reach for each competitor will serve as their competitive ranking relative to your business.
One good way of presenting the competitive analysis is to use a matrix. On the left column you can list and group all the factors cited above and on the succeeding columns, you can show your various competitors. In each cell, you can indicate the grade you give for each factor per competitor. The last cells below can show your competitors’ respective total grades.
Review and assess periodically depending on the diversity and intensity of competition. You can update your competitive analysis at least every six months to take into consideration new factors that come into play. A new strong market entrant, expansion program of an existing competitor, new product/service launches, aggressive promotion, introduction of new product, service, or marketing technologies – all these will continuously change your competitive analysis.
Competitive analysis gives you a sustainable competitive advantage. You cannot get ahead of your competitors without it.
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