What Is a Competition Analysis and How It Benefits Small Businesses

No matter if you want to sell your own product or service or just have a blog, it is always good to know what your competition is doing to improve your marketing efforts. You can do this with a competition analysis by gathering info about your business rivals.

But what is a competition analysis, and how to do one?

What is a Competition Analysis?

With competitive analysis, you can identify competitors and research their products, sales, and marketing strategies. It helps you improve your business strategies against your competitors.

You also can stay on top of industry trends and ensure your products consistently meet and exceed industry and market standards.

There are many benefits when you do competitive analyses:

Identify your products/services’ unique value proposition that makes your product different from your competition. It helps you with your future marketing effort to better understand customer behaviors and enhance their experience.

Find out what your competition is doing right. It is critical information to stay relevant and ensure your products and marketing campaigns outperform industry standards.

Discover where your competitors lack so you can identify areas of opportunities in the marketplace and test new unexplored marketing strategies they haven’t used. Maybe you can find potential places and fill these gaps to explore new market opportunities for your brand.

Learn with customer reviews what the competitor’s product is missing and how you might integrate features into your own product to meet those needs. It helps you stay updated with market trends and improve your product offerings.

Use a routine analysis for benchmarks to measure your own future growth, reveal new market trends, and keep track of new players to be aware of.

How to do a Competitive Analysis

To run an effective competitor analysis, you need to follow some steps and collect as much accurate and honest information as possible. You need the info about potential competitors’ features, pricing, service quality, strength, and weaknesses.

Document your research in written analysis and include comparison charts, graphs, grades, and text. Also, add the sources you find the specific information for later research.

While your online business might not directly sell a product or service, you can still do a competitive analysis by starting with step 6 for your competition’s marketing and content strategies.

If you have the budget, you can hire a consultant that gathers information and has the tools and technologies, and expertise needed. But a downside is there can be some compliance and differences between the approach of your in-house experts and a professional researcher.

You most likely understand your business better, and you know the competitive factors that require close tracking. It will also be easier to make suggestions and recommendations.

However, you can also take the middle approach by hiring a consultant who initiates the project and updates quarterly while the in-house team handles daily tracking.

Whatever you choose, it is still a good idea to look into the competitive analysis steps to know how the process works.

1. Determine your competitors

First, you need to figure out who you are really competing with to compare the data accurately. Not everything that works for similar businesses works for your brand. You can find a lot about competition and marketplace leaders online. But can also research in person if possible and acceptable.

Divide your competitors into two categories:

  • Direct competitors are businesses that offer a product/service in a similar niche and operate in the same country or location, depending on where your customers are.
  • Indirect competitors provide products that are not the same but could serve the same type of customer need or solve the same problem.

When you compare your brand, the focus is on your direct competitors.

For example, there are two shops both sell designer clothes for women and serve a similar target audience. But when you look deeper, you can see the product (the clothes) aren’t the same; while one brand focuses and everyday outfits, the other offers workouts and sports clothes.

Both brands satisfy the same need for women by offering trendy clothes delivered to the doorstep. They are still different types of clothing which make them indirect competitors. So it doesn’t make sense to study their competition close since their audiences vary a bit.

It doesn’t mean you should completely ignore your indirect competitor. Rather, you keep these brands in mind as they could shift their positions at any time and cross over into the direct competitor zone.

Categorize your competition and focus mainly on the direct competition with the same product/services and a similar target audience. Don’t exclude large competitors; they teach you how to succeed rather, practice the 80/20 rule of 80 percent direct competitors and 20% top competitors.

You should routinely do a competitor analysis. Because the market can change at any time, and if you don’t constantly research, you won’t be aware of shifts until it is too late.

2. Research the products your competitor offers

The heart of most businesses is its product or services, so it is a good place to start. You want to analyze the complete product line and the quality of their offers. Also, take note of any pricing and discounts they are offering.

Questions to consider include:

  • What is their pricing strategy, low cost or high cost? Are the prices different online than in a store?
  • Do they offer mainly volume sales or one-time purchases?
  • What’s their market share and position?
  • What do their ideal customers look like? What are their needs and characteristics?
  • What differentiates the company from its competition?
  • How do they distribute their product or services?
  • How do they showcase and describe their offers?

3. Explore your competitor’s sales tactics and results

A sales analysis can be a tricky thing to do because you need to answer questions like:

  • What does their sales process look like?
  • What sales channel do they use?
  • Do they operate in multiple locations and get them an advantage?
  • What do their company culture and objectives look like?
  • Do they expand or scale down?
  • Are they using partner reselling programs?
  • Why do customers not buy from them?
  • What are their revenues each year, and what is their total sales volume?
  • Do they offer regular discounts for their product or services?

The information will give you an idea of how competitive the sales process is and what your team needs to know during the final buy stage.

Publicity-held companies have their annual reports online, but to find info on privately owned businesses, you need to look deeper.

You should also compare it to your own product and services. Ask customers some questions, like why they choose your brand over others. Or if you lost to a competitor: What were the features that attracted the prospect? Was it the price? What was the prospect’s impression of your sales process?

By asking open-ended questions and doing surveys, you can get honest feedback if your customer finds your brand appealing. It also helps you by creating a buyer persona and discovering your targeted audience.

If you read reviews by customers for the product/services of your competitors, you can learn a lot about how their brand is doing. It is also an indicator of how superior the product is and if they have high brand awareness. Look at all places where customers could post reviews, such as social media channels, blog sites, online review platforms like Trustpilot, and others.

Based on your finding, you can see why customers might be unhappy with your competitor’s brand. This helps you to deliver a better buying experience and higher quality products.

4. Take a closer look at your competitor’s pricing and the features they offer

Pricing

You need to understand how much competitors are charging for a similar product/service. When you think you offer higher quality and better features than your competitors, you can make your offer more expensive than the industry standards. But you need to explain why your product is worth that additional cost.

Indifference you might feel like there is a gap in your industry for affordable products. In that case, you aim to charge less than the competition, so you appeal to prospects who won’t spend their money on an expensive product.

Of course, there are other factors in pricing a product correctly, but to stay on top of your industry, you need to price your product so it feels reasonable to potential customers.

Additionally, looks for any features and perks your competition offers and how you might match them to compete. For instance, the big referral discount, a one-month free trial version, or a long guarantee could be the reason why you are losing customers.

So you know where you can improve and also provide unique features that your competitors don’t have.

5. Meeting competitive shipping costs.

Expensive shipping is the number one reason why customers often don’t buy. It means free shipping is a major factor that can attract consumers to choose one brand over another. When you work in an industry where shipping is important, like e-commerce, you need to look at your competition’s shipping costs and ensure you are meeting or exceeding those prices.

So if most of your competition offers free shipping, you should do it if it is also an option for your company. When it is not possible, you can try to include other strategies like loyalty programs, holiday discounts, and giveaways.

6. Analyze the marketing strategy of your competition

You need to analyze your competitor’s website to see their market efforts. Write down the specific URLs and answer the following questions:

  • Do they post articles, videos, or webinars?
  • Do they use visual content like infographics and statistics?
  • Do they offer whitepapers, guides, datasheets, or ebooks to get email leads?
  • Are there featured articles and press releases?
  • Can you find any case studies?
  • Is there an FAQ section?
  • Do they have active customer support?
  • What online and offline advertising methods do they use?

7. Look at the content strategy of your competition

Find out how much and how frequently (daily, each week, monthly) they publish new content like blog posts, ebooks, and case studies.

Pay attention to the quality of their content and website; if it is lacking, their target audience won’t find much value there. Look at a handful of samples with a variety of topics.

When you read your competitor’s content, you need to consider: Whether it is accurate and in-depth without spelling or grammar errors. What tone do they use, and do they structure it correctly for readability with headers and bullet points? Can everybody access the content?

Also, find out who is writing the content. Is it an in-house team/person or an external writer? And explore the visuals they are using, like generic stock photos or self-made graphics and illustrations. Do they have a call to action that links to products or other content?

It gives you a solid understanding of your competitor’s content marketing strategy, and you can also see how you can improve your own content.

8. Find out the technology your competitors use

When you understand the type of technology competitors have integrated, it helps your own company to reduce irritations and increase momentum.

For example, if you see positive customer service reviews, you may find out that the competitor uses powerful customer service software like Live Chat. A tool that you haven’t been taking advantage of. But It gives you the opportunity to outperform your competitor’s process.

To figure out which software your competitors use, type the company URL into Wappalyzer. This effective tool unveils the technology your competitor’s site runs on, along with third-party plugins ranging CRMs to analysis systems.

Or use the free browser extension Whatruns to gain insight into the technology and tools that competitors have integrated.

Alternatively, you can also look for job listings of the competitors to see if the, e.g., web developer needs to be familiar with any specific tools.

9. Analyze the engagement on your competitor’s content

engagement

User engagement plays an important in online businesses. So it helps to see how the competitor targeted audience responds to what the brand is posting.

Check the average number of comments, likes, and shares your competitor’s content gets. You can also find out what topics do well and what do not and if the comments are negative, positive, or both.

Look if they have specific hashtags for their brand and if they have social media follow and share buttons integrated. Both will help with engagement activities.

What content is highly shared and linked? How does your content compare?

10. Research how they promote their content

A content promotion strategy is often done with organic search engine traffic. You need to find out if they use SEO and research keywords. Look for keyword density in the content if they use internal and external linking. And if other websites link to your competitor’s site.

Do keyword research by using a tool like Semrush to find out what keywords your competition focuses on. And if you can use similar keywords for your own marketing strategy

11. Consider the social media presence, strategies, and go-to platforms.social media presence

Evaluate your competitor’s social media presence and user engagement rates. What social media platform do they use, and are the profiles linked on their site?

If you find a social media platform you aren’t using, it can be a good idea to about such a platform. It can maybe help you reach a similar targeted audience. Determine if the social media platforms are worth your time by checking the competitor’s engagement rate.

Look for the number of followers and how consistent and frequent they post on each platform. And if users leave comments, share and like posts.

Also, find out where their focus is on. Do they want to drive people to landing pages to get leads? Or do your competitors post visual content to get engagement and brand awareness? Is it original content or from other sources? How and which tone do they use to interact with their followers? Is it a frequent interaction depending on the platform?

If you collect enough data, you can generate an overall grade for your competitor’s content quality. A grading scale makes it easier to compare it to the rest of your competition.

12. Perform a SWOT Analysis

You evaluate each competency of your competition analysis(business, sales, and marketing efforts). Take notes of your competitor’s strengths, weaknesses, opportunities, and threats. Every time you do such an analysis, you assess an overall grade. Here is a template for a SWOT Analysis.

Discover what your competitors are doing really well and what are their weakest key areas. This includes everything the product, marketing, social media presence content, etc.

Also, look where your competition has an advantage and disadvantage over your brand to see what you can improve. Consider the factors where your competition is a threat. And identify opportunities in the market your competition already knows about.

Then you can compare their weakness against your strength and vice versa. If you do this, you can better position your company and find out in which areas you can improve your brand.

Analyze your competition at various stages of your business to ensure you provide the best product or service at the right price for your customer. This is important because industries are constantly changing, and each new company that enters your market does a competitor analyst on you. So you need to continually evaluate your competitors

No matter how you do a competitor analysis, keep your notes organized and name them correctly. Also, link any sites and research material you find. This data and information can be analyzed by marketing experts or yourself to develop a powerful strategy to improve your marketing and business efforts.

If you make changes, measure them to see if your visits, sales, and profit have improved and whether they were successful.

With Semrush you get many amazing tools to do a competitor analysis. You can not only research keywords. You can also do market research to find the marketing strategy and tactics of your competitors. As well as improve and analyze content marketing, social media, and advertising strategies.

FAQ

What is a Competition Analysis and how to do it?

A Competition Analysis, also known as a competitive analysis or competitor analysis, is the process of evaluating and analyzing the strengths and weaknesses of your competitors in order to gain a competitive advantage. It involves researching and understanding the market landscape, identifying direct and indirect competitors, and assessing their marketing tactics, product or service offerings, and position in the market. To conduct a Competition Analysis, you can use various analysis tools, templates, and frameworks to gather information about your competitors and determine how you can differentiate yourself in the market.

How can a Competition Analysis help my small business?

A Competition Analysis can help your small business in several ways. Firstly, it can help you identify your direct and indirect competitors in your industry or market. This knowledge can enable you to understand the competitive landscape and position your business effectively. Secondly, it can help you analyze the marketing tactics, product or service offerings, and competitive edge of your competitors, allowing you to identify areas where you can improve and differentiate yourself. Lastly, a Competition Analysis can also help you develop a comprehensive marketing plan by understanding the market trends and consumer behavior.

What is the difference between a Competition Analysis and a SWOT Analysis?

While both a Competition Analysis and a SWOT (Strengths, Weaknesses, Opportunities, and Threats) Analysis are valuable tools for businesses, they focus on different aspects. A Competition Analysis primarily revolves around evaluating and analyzing your competitors, their strengths and weaknesses, and how they position themselves in the market. On the other hand, a SWOT Analysis focuses on assessing your own business by identifying its internal strengths and weaknesses, as well as the external opportunities and threats it may face. Both analyses are useful for strategic planning and decision-making.

How do I conduct a Competitive Analysis?

To conduct a Competitive Analysis, start by researching and identifying your direct and indirect competitors. Look for businesses that offer similar products or services and target the same or a similar market as yours. Analyze their marketing tactics, product or service offerings, pricing strategies, and customer reviews. You can use competitive analysis templates or frameworks to gather and organize this information systematically. Additionally, consider conducting a SWOT Analysis to evaluate your own business’s strengths, weaknesses, opportunities, and threats in comparison to your competitors. This will help you identify areas for improvement and develop strategies to gain a competitive advantage.

Are there any free Competitive Analysis tools available?

Yes, there are several free Competitive Analysis tools available online. These tools can help you gather data and information about your competitors, their online presence, social media activities, and website traffic. Some popular free Competitive Analysis tools include Google Trends, SEMrush, SimilarWeb, and Alexa. These tools can provide insights into your competitors’ strategies and help you make data-driven decisions for your own business.

What can a Competitive Analysis tell me about my competitors?

A Competitive Analysis can provide you with valuable information about your competitors, such as their marketing tactics, product or service offerings, pricing strategies, target market, customer reviews, and competitive edge. By analyzing this data, you can gain insights into what your competitors are doing well and identify areas where you can differentiate yourself and gain a competitive advantage. Additionally, a Competitive Analysis can also help you understand the market landscape, identify emerging trends, and spot potential opportunities or threats.

How often should I conduct a Competitive Analysis?

The frequency of conducting a Competitive Analysis depends on various factors, such as the nature of your industry, the level of competition, and the pace of market changes. However, it is generally recommended to conduct a Competitive Analysis at least once a year or whenever there are significant changes in your industry or market. This will ensure that you stay updated on the latest trends, competitor strategies, and consumer behavior, allowing you to adapt your own business strategies accordingly.

 

What are some examples of a Competitive Analysis?

Here is an example of what a Competitive Analysis might look like: Let’s say you own a small bakery and want to assess your competition. You would start by researching other bakeries in your area that offer similar products. You might analyze their pricing, quality of ingredients, variety of product offerings, customer reviews, and marketing tactics. This information can help you identify areas where you can improve your own bakery, such as offering unique flavors, expanding your product range, or adjusting your pricing strategy to be more competitive.

How can I use Competitive Analysis in my marketing efforts?

Competitive Analysis can be a powerful tool for your marketing efforts. By analyzing your competitors’ marketing tactics, target audience, messaging, and branding strategies, you can gain insights into what is working well in your industry. This information can help you refine your own marketing strategies, identify gaps in the market that you can capitalize on, and position your product or service effectively. By staying updated on your competitors’ activities, you can also stay one step ahead and ensure that your marketing efforts are relevant and competitive.

Patrick
Patrick
Wants to help others to find success in building an online business by writing articles with useful insights and knowledge.

Latest articles

Related articles

0 0 votes
Article Rating
Subscribe
Notify of
guest
0 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
0
Would love your thoughts, please comment.x
()
x