Competitor analysis is the process of gathering and analyzing information about competitors in a market in order to understand their strengths, weaknesses, and strategies. This information can be used to inform business decisions and develop competitive strategies.
To conduct a competitor analysis, businesses typically gather information about their competitors through a variety of sources, including websites, social media, trade publications, and industry reports. This information is then analyzed to identify key trends and insights about the competitors, such as their product offerings, pricing strategies, target markets, and marketing efforts.
One key aspect of competitor analysis is identifying the strengths and weaknesses of each competitor. For example, a competitor may have a strong presence in a particular market or offer high-quality products, but have a weak online presence or lack a clear differentiation from other competitors. By understanding these strengths and weaknesses, businesses can develop strategies to capitalize on opportunities and mitigate potential threats.
Another important aspect of competitor analysis is understanding the strategies and tactics of each competitor. This includes analyzing the marketing messages and tactics used by competitors, as well as their overall business model and approach to the market. By understanding how competitors are positioning themselves and targeting customers, businesses can develop strategies to differentiate themselves and compete more effectively.
Overall, competitor analysis is a crucial part of the strategic planning process for businesses. By gathering and analyzing information about competitors, businesses can gain valuable insights that can help inform their decision-making and develop effective competitive strategies. The following are included in a competitor analysis.
The percentage of your target market that are familiar with the competitor’s brand. Customers tend to buy what they recognize and it can be difficult to challenge a brand that is well known.
Estimating the costs of a competitor’s products from financial statements. In many industries, cost is a key factor and challenging a competitor that has efficiently scaled is difficult.
Identifying the strengths and weakness of the competitor’s products from sources such as product reviews.
Evaluations of the competitor’s customer experience such as customer service.
Evaluating business capabilities that are relevant to your industry.
The financial resources of the competitor.
Is the competitor lean and innovative or burdened by excessive office politics and unimaginative leadership?
Legal barriers to competition such as patents, copyrights, trademarks and licenses.
Knowledge resources of the competition.
Considering the relationships of the competitor with regulators, partners, customers and communities.
Looking at the competitor’s distribution strategy. For example, a competitor that doesn’t compete in a particular region.
Considering the competitor’s marketing strategies such as promotional activities and pricing.
A summary of competitive strengths that are difficult to challenge.
Opportunities such as dissatisfied customers, competitive disadvantages or niches that aren’t served by competitors.