"Whether it's Google or Apple or free software, we've got some fantastic competitors and it keeps us on our toes." - Bill Gates
Competition is inevitable in business. Successful companies will always know who their competitors are and what their strengths and weaknesses are. It is important to have this information because it allows you to know how you compare to other companies that are trying to capture the same market share.
By conducting a competitive analysis periodically, you will gain a better understanding of your competitors and maintain a competitive edge.
What is a Competitive Analysis
A competitive analysis is a review of competitors' tactics used to determine the strengths and weaknesses of their product, pricing, sales, and marketing. It is essential for identifying how your competitors are executing their tactics and to see if they are a threat or not.
A competitive analysis can:
- Inspire you to innovate.
- Determine who your competition is.
- Help you know your competitors strengths and weaknesses.
- Influence you to create better content.
You can create a competitive analysis at a very high level or Scorpion can help you further analyze your competition's data to improve your own business strategy or growth.
Why create a competitive analysis
The business world doesn't care what product you have, who funded you, or how seasoned your company is, without knowing the competition you may be left behind, for example:
BlackBerry peaked in 2013 with 85 million subscribers and was considered one of the most prominent smartphone brands in the world. But because of its lack of consumer focus and innovation, Blackberry lost its dominant position in the market.
Blackberry completely ignored its competition and eventually lost all of its customers to touch screen phones from Samsung or Apple: "BlackBerry’s desire to cater to people in business was pretty evident in the design of its devices. While you could respond to emails, send instant messages, answer calls, and browse the web, you couldn’t do anywhere near as much as even the early iPhones made possible."
A little competition never hurt anyone. Keep your competitive analysis close to you so you can make informed decisions that involve customer satisfaction or innovation. However busy your schedule may be, take the time to do a little research.
Competitive analysis can help you:
- Gain a better understanding of your market and what's trending.
- Recognize market gaps and opportunities for growth.
- Avoid past marketing strategies that have failed for others.
- Improve your understanding of your unique value proposition.
How to create a competitive analysis
1. Determine Your Competitors
There are three main types of competitors: direct, indirect, and replacement competitors.
- Direct competition involves competing in the same market and offering the same products or services. (ex: Burger King & McDonald's)
- The indirect competition offers something different that may act as a substitute. (ex: Subway & Pizza Hut)
- Replacement competitors include companies that sell different products or services then you but still fulfill the needs of the customer. (Eating at a restaurant or buying groceries)
Identifying your competitors is something you acquire with time and it can change. Your direct competitors are easy to spot but try following other different companies that have the same company size or customer groups to gather more insight for your competitor analysis.
In your search for competitors, you may find more than you expected, but don't get discouraged or overwhelmed. Some competitors pose less of a threat than others. You will need to determine what your own business's threats are.
2. Perform a SWOT analysis
A SWOT analysis is an acronym for strengths, weaknesses, opportunities, and threats and provides a quick overview of your competitors. In the beginning, SWOT analyses were used by businesses. However, they are becoming more common among different types of organizations, such as government and nonprofits.
- What resources do they have access to that you don't?
- What advantages do they have over you?
- How are they perceived by their customers?
- What do they need to improve on?
- What's their employee turnover rate?
- How does their reputation influence their brand?
- What gaps are they leaving in the market?
- Are there trends they are not picking up on?
- What weaknesses are your strengths?
- Are they leading innovation within your industry?
- How successful are their marketing campaigns?
- Are you losing customers to them and why?
The best way to approach your SWOT analysis is to approach it the same way your buyer personas might and research their reviews, website, or blogs. A lot can be researched at your desk as if you were an actual potential customer.
3. Analyze Your Strengths and Weaknesses
Your competitors may also be researching their competitors, which may include you. Look inward and give yourself an honest assessment and you may find internal gaps that need to be filled before it's too late. For Blackberry it was innovation, but what does your business specifically need to do better at?
Ask yourself the following questions:
- Why would consumers choose you over others?
- What is your company’s value proposition?
- What pain points are you still not addressing?
4. Review Your Competitors' Content
You can know a lot about your competitors by reviewing their own content. This includes their social media, website, past ad campaigns, etc. By comparing it against your own you can determine whether or not you need some help with branding, digital marketing, SEO, or design.
- How often do they post new content?
- What is their tone and voice?
- Do they post white papers?
- Where have seen their traditional and digital advertising campaigns?
- What social media channels do they occupy?
- Is there content shareable?
- Have they gone viral and what was it for?
Knowing what kind of content your competitors are producing can help you know what's trending. The topics your competitors are talking about the most aren't on purpose, so read their blogs and sign up for their newsletters.
5. Map out their journey
It can be helpful to map out their journey with the research that you do. You can ask the following questions to create a timeline.
- When did they get started?
- Who are the key owners?
- When did they add each service to the business?
- When did they expand locations
You can put together a timeline of events and make best guesses on what their next move might be. It can be helpful to anticipate what they might do next and adapt your plans to that.
Setting you up for success
Any strategic planning should include your competitive analysis. Refer to it often and update it as you go. This is an ongoing process and as markets and technology change, you can stay ahead of the game with your competitor analysis.