Competition! It’s everywhere in the market. The competition is tough because so many substitutes are there. In order to be in the market, it’s important for businesses to keep an eye on competitors and businesses can do it by doing competitive analysis.
Competitive analysis is a must when building your marketing strategies. It helps you know when and how to compete with your competitor.
So Let’s start with the basic understanding of competitive Analysis.
What is Competitive Analysis?
Competitive analysis is a process of identifying your competitor’s products, strategies, and course of action.
It helps you analyze the strength and weaknesses of your competitor so that you can accordingly work on building your competitive edge.
Competitive analysis in marketing is an important part of your business strategies. It helps businesses to formulate policies to build a unique product or service to gain a competitive edge over competitors.
Why Competitive Analysis is Important?
It helps you formulate better business strategies than your competitors.
Tells you about the customer’s reviews of your competitors and helps you understand what additional feature you can add to your product.
Gives you benchmark to measure your product’s quality, performance etc.
You will find out your competitive edges.
It helps you identify what position your competitors hold in the market.
It gives you an estimate about what could be your competitors next step.
Competitive Analysis – The Process
Before starting competitive analysis write down the below questions and try answering them. These questions will help you understand what you know and what you need to find out about your competitors.
Who are your competitors?
Identify who are your competitors? You can do a search on the internet, in business magazines, etc. Make a list of all the competitors. Now find out who is stronger than you in the market. Add them to the top competitor’s list.
Do you know about your close competitor’s strengths and weaknesses?
After making a list of top competitors, try to find out if you know about their strengths and weakness or not. If not then it is suggested to do a SWOT (Strength, Weakness, Opportunity, and Threat) Analysis.
How detail should we analyze the competition?
The more detailed analysis the more information you will get so it is good to do detailed analysis at various levels. You should use a systematic approach to do analysis.
Now let’s understand the competitive analysis framework.
1. Gather Primary and Secondary data
The first step is to collect data from primary and secondary sources such as products they have, who are the managers, pricing, profit earned, product to be launched, salespeople, etc. It is difficult to get data from primary sources but some data can be collected. You can enquire about your competitor’s product by acting as a potential customer. In this way, you will get some data.
2. Answer key questions
The second step is to answer key questions about computers product/services, strategies objectives.
- What are their product/service features?
Firstly collect information about products and services of all the key competitors and put all the information in the tabular form given below. After putting all the information in the table try identifying where you are lacking behind your competitors and where you are ahead of your competitors.
- What are their objectives/strategy?
The aim of analyzing objectives and strategies is to identify where they are planning to reach in the future. Through this analysis, you will get to know if they are correctly applying their strategies to fulfill the objectives or not. If not then how it can benefit you. It will also help you to understand competitor’s short term loss bearing capacity.
3. Determine who has competitive edge
- The marketing Mix
The Marketing mix helps you to identify the competitive edge. The competitive edge will help you give cut through the competition to your competitors.
- The BCG Matrix :
BCG matrix is a framework created by Boston Consulting Group to evaluate the strategic position of the business brand portfolio and its potential. The BCG matrix helps you identify the market share and growth of the competitors. It helps you understand who are the cash cows, who are the star performers, who are the dogs, and who are the question marks? You will also get to know where your company stands in the market compared to your competitors.
You need to identify how potential your competitors are. You can do it by answering the following questions.
- How crucial is this product to the firm? – It will help understand the reaction of your competitors.
- How visible is the commitment to the market? – It will help you whether your competitors are delivering the promise or not.
- How aggressive are the managers? – You will get to know how their management is.
4. Figure what they are going to do
The last step is to figure out what will be your competitor’s strategies? Are they going to continue with the old plans or they are going to make changes? If they are going to change what could be the reason such as Changes in the marketplace, Changes in management, Changes in financial goals, etc.
Make notes of information which think play crucial role in building strategies.
Now you can look into your plans and strategies and can make necessary changes if required.
Competitive analysis plays a crucial role in business strategies. It helps businesses understand in and out of competitor’s strategies, plans, and actions. It’s not just a one-time process, it’s a continuous process. The business has to do a competitive analysis to keep an eye on their competitor.