Learn How To Crush Your Competition With Competitive Analysis
September 21, 20229 minute read
- Digital Marketing
Do you know why professional boxers watch hours and hours of their next opponent’s footage? It’s to learn how the opponents work. Understanding their strengths helps them know how to best work against them while also studying how to take advantage of their weaknesses. It’s the same in business! The business world is cutthroat; depending on what and where you provide, you can have upwards of millions of competitors. This competition makes it necessary to conduct a competitive analysis.
In this blog, we’ll break down what competitive analysis is, how it helps your marketing strategy, and a 5-step process for conducting your own competitive analysis.
So, what is competitive analysis? Competitive analysis is a business strategy that involves analyzing your competitors’ strengths and weaknesses. You must dive deep into their products, sales, pricing, and marketing strategies to combat their strengths and leverage their weaknesses.
While it’s not quite James Bond’s level of espionage, you need to gain enough information to help you gain insights into the industry you’re in and, more importantly, your customers. If you are selling similar products, chances are you also have the same target audience. Digging into different aspects of their company (ad copy, pricing, ad spend, etc) will help you learn more about:
If you’re trying to sell a product, you must show that your product can solve a specific problem. Analyzing competition can help you identify alternative solutions that other companies are offering. You can then probe deeper by identifying which specific solutions are most favorable to your audience and which are not as popular. You can even develop a new solution or service based on an analysis of your competitors’ solutions.
As mentioned, companies with similar offerings will likely target the same demographic. However, you can also learn what specific subset of your target audience gravitates towards. You can then see how they’re targeting that specific subset and come up with possible reasons that the audience prefers them.
Observing the competition will also teach you more marketing tactics. If a specific tactic works for them, you can take some of that and give it your own flavor. You can study their ad copy, how they’re targeting audiences based on different levels of awareness, and how they’re finding new leads. You can also learn what value they lead with and what benefits or features they convey to their audience. Analyzing the marketing tactics of many companies, including yours, can also help you learn about marketing trends to develop a plan to market and sell more effectively.
One major benefit of conducting a competitor analysis is learning how your customers respond to certain tactics and strategies. Remember, their current customers can be your potential customers. After all, you are offering a similar product or service. Try to find opportunities to leverage your competitors’ shortcomings based on their customers’ responses. Knowing the POV of your target audience might even help you identify gaps in the market and fill them.
We’ve established the importance and key benefits of conducting competitive analysis. Now I know it may seem intimidating, but laying out a clear plan of action is a must. That’s why we’ve taken it upon ourselves to give you an easy 4-step process on competitive analysis.
Here’s how it goes:
Step 1. Identify your competitors
To study your competition, you need first to identify who exactly your competition is. There are different types of competitors, and you might want to pick at least one for each type, but preferably at least 10 companies in total. Try not to rush this process. Sit down and take your time. It might even take you more than one sitting! Truly focusing and being wise about who you choose is extremely important. It can make or break your analysis. Choosing the right competitors will give you valuable information, while choosing the wrong ones will only invalidate your hard work.
Here are the three types of competition:
These businesses offer a solution for the same problem that you do and target the same audience.
Example: Although it’s only a segment of what both companies offer, Apple and Samsung are direct competitors in the smartphone industry.
Offers a similar solution to yours but not the exact same product. They also target the same audience.
Example: H&M and Lululemon are both clothing companies that offer to provide stylish clothes for their customers. However, Lululemon mainly sells athletic clothes, while H&M offers more variety.
They provide a different solution for the same problem or satisfy the same need.
Example: Uber and Lyft are direct competitors offering private rides. However, they’re also competing with the subway or even cycling! Replacement competition can be hard to identify, but they can be sneaky, so watch out!
Now that you’ve identified the different types, how do you find the competition? As mentioned, there are so many businesses out there. The first, most accessible way of finding competition is a quick google search. Search certain keywords that are also similar to yours. For example, if you’re selling a meal subscription service, you can simply type “meal subscriptions.” The results will likely show you who your biggest competitors are.
Another way is through customer surveys. While customer surveys are mostly for internal data, you can sneak in some questions that would give you an inkling of what other brands your customers have already tried or would like to try. You can ask customers to answer a survey that might include one or all of the following questions:
- What products are they currently using? From which company? Why that company?
- How do they use these products?
- Why are they buying from a specific company instead of another?
- Have they ever tried or considered switching to another brand? Why or why not?
The first two questions are mainly to get feedback on your own product or service, but the last two may be useful in knowing what other brands your customers might be considering. These companies will also be great additions to your list of competitors. The questions may vary depending on what you’re selling. Don’t forget to incentivize people who answer your survey! Maybe a discount code? Maybe they can even try some of your newer products. This strategy can also double as a lead-generating strategy by including contact information from the people who answered the survey.
Step 2. Evaluate the competition’s strategies.
After you’ve compiled a list of companies, you can begin evaluating them and their specific products.
Start with general data. You can look up their annual reports if they’re a big, public company. It’s a good place to start because it gives you general information about the company and the highlights of its financial and operating processes. You can also check their market share and see how you compare.
Evaluate similar products and compare them with yours to see the similarities and differences. What does their product offer that you don’t? Or, the opposite, what do you offer that they don’t? Asking these questions can help you see what you’re currently lacking and what features you have (that they don’t) that you can leverage and emphasize. You can also check out their distribution methods. Do they only sell online? Do they have physical stores? Do they have in-store product placements, and if so, which stores?
While you may not find answers to all of these general questions immediately, these are a great starting point for the type of research and analysis you need to conduct. Knowing this can only give you an advantage.
Now, into the marketing strategy. Marketing strategies, as you may know, can be quite broad. However, we are going to narrow it down to three major components. Their social media presence, website and SEO performance, and press coverage. These 4 will let you know how they’re reaching their target audience at different levels, how they generate new leads, and how they want to present themselves.
The influence of social media is undeniable. Most, if not all, brands have some level of social media presence. After all, it’s a very easy and accessible way to directly communicate with their target audience and increase brand awareness. Social media marketing is a blog post all on its own, but here are two things you need to focus on: how often they post and their reliance on user-generated content (UGC). How often they post shows you how often they try to communicate with their audience and how that’s performing based on the engagement they get. You can also see what types of posts get the most engagement. The next one is their reliance (or non-reliance) on UGC. As suggested by the name, UGC is content that your users make. It can be paid, e.g., influencers recommending your product, or non-paid, like people posting your products because they like them. Forms of UGC are very strong marketing tools because they come off as very authentic.
Another very easy way to see how your competitors advertise online is using the Facebook Ads Library. The library allows for transparency in advertising and shows all running ads from all companies across all Meta engines. It also conveniently allows you to search by location and ad category. If you search for a specific company, results will show all of their ads, making it easier to analyze their social media strategy.
Website and SEO Performance
One of the easiest forms of analysis you can do is look up their website and see how it looks and what the flow is. Pick their aesthetics apart and see how their visuals can come across to the audience. Are their websites catering to a specific audience? (e.g., a trendy, hip vibe for a younger demographic?). You can also try to go to any social media platform and try to look for their ads. You can click on these ads to see their landing pages. Evaluate that as well. Are their ads, websites, ad copy, etc., coherent?
Now, you need to dive deeper. How are they trying to keep their audience engaged? Any fun visuals or prompts? Do they use exit pop-ups? Do they have intuitive navigation? How is the overall user experience? Maybe they have systems in place that can also be used in yours. You can also check out what benefits and features they’re trying to emphasize on their website.
Knowing the SEO performance of these companies is also very important. A good SEO performance means the company is visible online, which further translates to more website traffic and a bigger chance of converting visitors. Try to search a related keyword on any search engine, preferably Google, and see if the company is on the first page. Do they rank high? Or low? How high are they compared to you? Organic and unpaid results like these drive a lot of e-commerce sales. When evaluating their SEO performance, you can ask some of the following questions:
- What keywords are they using?
- And similar to social media, what kind of content do they post on their website?
- Do they do any backlink building?
- Do they do search engine marketing?
While it may seem old-fashioned, media coverage is still a great tool for marketing. When hearing media or press coverage, we often only think of TV, print, or radio. However, let’s not forget that most of these have also started to post content online, thus increasing reach. Any brand highlighted by any of these publications will surely boost its performance. Check out how they’re taking advantage of the media and how the attention benefitted their company.
Step 3. Study their pricing strategy
There’s no question about the importance of pricing in the business. After all, it’s a fine line between pricing too low for very little profit or pricing too high and turning away customers. Knowing the price of the same product from other companies can help you toe that line. Of course, depending on your product, additional benefits others don’t offer, or other factors, you can always justify a higher price. It all depends on how you frame your pricing. You must also analyze how their pricing fits their branding and target audience. Does their pricing make sense?
Aside from the straightforward price of each product, you can also analyze other aspects connected to price in this step. For example, you can delve into their shipping costs. Do they shoulder shipping, or is it on the customers? Do they have free shipping promos for a certain amount of orders? How about loyalty programs? How does it compare to your own loyalty program? Based on this information, is there anything you can change about your pricing or discount strategies?
Step 4. Explore customer responses
Last but not least, you need to check how their marketing efforts resonate with their customers. By looking at the opinions of their customers, you can see what the strengths of their products are and what they find lacking. We’ve mentioned social proof in one of our previous blogs. One type of social proof is testimonials, often found on websites. In the same way that you choose the testimonials you feature on your website, your competitors must have also rigorously chosen which testimonials to include on their website. Try to find out the factors they base their choices on and see what they’re trying to highlight. Since you and some potential customers might think testimonials are biased, it would also be wise to look up reviews from third-party websites. To make it easier to analyze, you can categorize the reviews and analyze each. An example of categories you can use are:
- Favorite features
- What’s lacking/common complaints
- Customer Service
Since the customers are the ones who have first-hand knowledge of just how well a product or service works, it’s vital to see things from their perspective. You can see what gaps you can fill, and what improvements your products or services need.
All the data you have gathered from the steps above are very useful in determining the market trends in your specific industry and would also help you develop further improvements in your own marketing strategy. Now, you’re not gathering data for the sake of gathering data. Make this data work for you! You need to compare and contrast how each company performs based on the criterion above to help you make informed decisions. When answering the questions above, you can optimize this information by using them for your SWOT analysis. SWOT stands for strengths, weaknesses, opportunities, and threats. Knowing how the competition works would help you better identify your strengths and opportunities and leverage them. You can also find ways to eliminate or minimize weaknesses or preemptively address certain threats.
Knowing which information is relevant and how to gather them is extremely important. However, it’s invariably more important to know how to use this information to formulate strategies for the success of your business. Remembering that you’re doing this to see what works and what areas need improvement. We’re not saying to copy what works from other companies; you can definitely do better than that! You can simply take their successes as inspiration and notice patterns you can apply to your business.
Are you ready to take on the competition? We can help you with that! Visit our website for a free strategy session. While you’re there, check out our blog for more information on cutting-edge digital marketing tactics and strategies to scale your business online!
Tip: Use a spreadsheet or a table to get a better bird’s eye view of all the information from many companies at once. Include yours for better comparison. Be objective! Hubspot has a few competitive analysis templates you can use.