Competitive analysis is the ability to track, understand and take into account the strengths and weaknesses of competitors. Competitive analysis helps you detect gaps in your work and determine the actions of competitors. As a result, you gain:
- Understanding of how to improve your business strategy.
- Knowledge of strategies to beat the competition.
- Find out which traffic channels the competitor is working with.
- What marketing activities are your competition using.
- What competitors’ customers like and what they don’t.
The competitive analysis provides an opportunity to learn from your own mistakes and others’ mistakes. This is a huge advantage, which is a shame not to take advantage of. To keep up with your competitors, conduct competitive analysis regularly.
What is Competitive Analysis?
Competitive analysis is based on collecting and analyzing information – this is necessary to understand your position relative to competitors. The nature of competitive analysis can be defensive or offensive. In this process, you identify possible threats and weaknesses of competitors – based on this data. You can then create and act upon more effective marketing strategies.
It is worth noting that there is no place for intuition and assumptions in competitive analysis – it is completely based on specific data and facts. Furthermore, competitive analysis implies an in-depth study of all marketing strategies of rival companies and specialty areas. For example, in one of our blog articles, we talked about competitor SEO analysis.
Competitor analysis includes the following areas:
- Features and quality of the website. Displaying images, download speed, search tools and more.
- UX. Ease of customers’ interaction with the site – navigation, ordering, technical support, mobile device support.
- Content strategy. How is the call to action carried out? What are the descriptions of goods/services, blog posts?
- Social networks. Engagement rate, chosen platforms (Facebook, Twitter, YouTube, Linkedin, Pinterest, TikTok, and others) and posting frequency to these platforms.
- Marketing tactics. How often do competitors hold promotions, discounts, etc.?
- Email marketing. Newsletter emails, their types and offerings, data on abandoned carts.
- Reviews. Positive and negative responses and their essence through the analysis of Yelp, G2, Capterra, Clutch and others.
- SEO. What content generates more organic traffic, and how is it getting backlinked? For this analysis, you can use Ahrefs or Semrush.
- Traffic. Identifying channels that bring more traffic. Similarweb can be used to analyze data.
- Onboarding. A video or a demo presentation of the product is offered to instruct how to handle potential clients. Of course, specifics depends on the type of business – B2B or B2C.
- PR. In which media are they published most often, or where a brand or a competitor’s website is mentioned.
- Google Ads. Which search advertising campaigns have been launched and which are currently active. Analysis of requests and ads. Use Ahrefs or Semrush for analysis.
- The number of orders and competitor turnover. You can purchase something from a competing online store to get this data and remember your order number. The same action should be repeated a month later, so you can calculate the number of completed orders for this period. Then, the number can be multiplied by the average order value. As a result, you will get the approximate turnover of the competitor.
- Brand popularity. Using Google Trends or Google Ads Keywords Tool, you can check the number of searches for a competitor’s brand query and which countries performed the most searches.
Whatever analysis you choose to employ must be done at all stages of doing business. It is advisable to build your marketing strategies for market promotion with a competitive analysis.
Why is Competitor Analysis Important?
By researching your competitors’ website-product mix, marketing strategies, and SEO, you receive invaluable insights into your target audience’s preferences and the tricks of rival companies.
Why is it important to regularly conduct this analysis to improve its position in its niche? New competitors appear, market trends change, and Internet marketing and the e-commerce niche develop. Accordingly, it is crucial to track and consider all of these changes for a successful online business.
Benefits of a Competitor Analysis
Taking a closer look at the value of a high-quality and comprehensive study of the work of rivals reveals three main advantages of competitive analysis:
- You will see how heavily the product is in demand. Not all products will be in demand, and not all will compete. To not move at random, “ask” your competitors about it. With the help of research, you will learn about trends and new products and understand what to consider when developing a new product or introducing it into everyday life.
- Evaluate and improve the effectiveness of your marketing campaign. How successful your strategy is can only be understood by comparing yourself to your competitors. If your marketers are at the stage of developing strategies, then competitors can “tell” you what to implement.
- Identify potential customers that your competitors have missed. There is always a portion of consumers who have received less attention or been neglected altogether. By using customer journey maps, you will identify these gaps. As a result, your spheres of influence will expand and reach a different audience.
As you can see, competitive analysis is something worth investing your efforts, money, and time in.
Competitor Analysis Framework
The key to conducting a good competitive analysis is five components.
SWOT analysis is based on four pillars: Strengths, Weaknesses, Opportunities, Threats. What do you learn from this data? The four main indicators include two internal and two external factors:
- Strengths. The answer to the question: What are the advantages of your competitors? For example, brand reputation, resources, culture, etc.
- Weaknesses. What is bad or lacking for a competitor?
- Opportunities. You will find out where the paths for growth are open – both new developments and improvements to existing ones.
- Threats. What circumstances can jeopardize the success of the product? For example, price increases, the appearance of competitors unknown to you, or a changing political or social occurrence.
The SWOT method is used to identify potential strategic opportunities. Marketing agencies use it for Competitive Environment Analysis (CLA).
Porter’s Five Forces
The following method analyzes competition across five segments:
- Buyers. The number and their degree of influence on the price and solvency.
- Suppliers. The market of suppliers and their uniqueness, quantity, and influence on the cost of the product.
- Replacement. How many companies can replace you in the market and what alternative products do they provide.
- Rivals. The number of your rivals and the comparison of your products.
- New members. How easy is it to get into your niche and what the chances are of success for companies that start in this. area.
At the end of your research, you will draw up a strategy based on real market performance. For example, if you realize that the industry is saturated with the same products, you can focus your energies on making the product more unique.
Strategic Group Analysis
The method helps to analyze competitors in clusters based on the similarity of strategies. As a result, you will gain insight into the impact of different strategies and identify your closest competitors. Depending on your needs, you can classify competitors by type of product/service, market share, and other characteristics. Research is especially relevant if your goal is to assess the position of other companies.
This allows you to analyze the market and give you the answer to the question, “Is it worth investing in a particular product?” The Growth Matrix ranks products based on their market share, showing the most successful solutions. In the same way, you can analyze the development of a competing company to see what is attractive to consumers.
Position mapping is a visual demonstration of customer perception of a product versus your direct or alternative opponents. You can see the maps of the consumer’s actions on the way to the product – movements, points of contact, and interaction.
5 Competitor Analysis Examples
How does competitive analysis work? Let’s take a quick look at a few examples.
An example of a Geographic Market Analysis
An Airbnb-like website that provides rental services is an example of this. First, you need to analyze your competitors and divide them into groups. We studied competitors in the following categories:
- Business and company indicators
- Clients and awareness
To expand your understanding, all you need to do is change the date ranges – pay attention to the countries and languages that have changed recently. The changes will indicate a new market segment; this is what competitors are interested in. This means that it can be a potentially profitable area for your company. So why not take an interest in this area yourself?
Basic Analysis of Competitors and Their Products
The Shopify blog provides a competitive analysis template. The components of the list and the number of competitors are at your discretion. In this example, you can see an analysis of a makeup brush seller.
Determining your Position in the Market Relative to Competitors
An example taken from the Asana review demonstrates how to position yourself in the market. To do this, we created a graph with the X and Y axes – they represent the most important levers of influence on competitiveness. Customer satisfaction and market presence were among these.
Competitor SEO Analysis
- A list of contenders was compiled using a Google search
- Marketing strategies (on service offerings using tools like Ahrefs for SEO analysis of competitors’ websites) were examined
- SWOT analysis was carried out
- A graph was created with existing competitors, showing hat two companies outperform the client in terms of market presence and positive responses.
The results are transferred to a table. Thanks to this, you can see the solution for creating an effective strategy.
Determining market share
An example posted on the Buffer blog shows how to determine a company’s market share. The example in the article used fast-food restaurants were used. Using the Brandwatch tool, the following results were obtained:
The vote share graphically displays the number of mentions on social networks, search engines, and websites.
If your goal is to reach the top level in your niche, competitive analysis should be a mandatory part of strategic planning.