Introduction

Anyone who has ever set foot in the world of entrepreneurship knows that there is a real battle going on in the market. It’s as if you entered the arena, and on the opposite side there are other fighters – your competition. In order to successfully deal with them and fight for your place under the sun, you need to know your opponents well and understand their tactics. One of the most important steps in conquering the market is COMPETITOR ANALYSIS.

I know, it might sound complicated, but don’t worry! In this blog I will share with you how competitive analysis can be simple, interesting and useful for your business.

Let’s get started.

What is Competitor Analysis?

Before we get into the different methods of competitor analysis, it’s important to understand what exactly it means.

Competitor Analysis is the process of researching and gathering information about your competitors to better understand their strategies, strengths, weaknesses, products and services. This allows you to recognize and take advantage of the OPPORTUNITIES presented to you in the market, but at the same time it helps you to discover potential THREATS that represent a risk to your business.

Basically, competitive analysis helps you identify COMPETITIVE ADVANTAGES – what makes your business unique and valuable in the eyes of your customers. Also, it allows you to recognize and understand the obstacles that your competition puts on your way to success.

Remember, the goal of competitive analysis is not to copy or imitate your competitors. On the contrary, it is an opportunity to learn from them, find inspiration and discover ways to improve your business. All of this will help you STAND OUT on the market and achieve the success you deserve.

Now that we know what a competitive analysis is, it’s time to get into the concrete steps to conduct it. First, we’ll find out who your competitors are, and then we’ll explore their products, services, and key success factors.

Identification of competition

To analyze your competitors, you must first identify them. Sometimes it’s easy, because competitors are already familiar, but you’ll often have to put in the effort to find out who all the players in the market are. Here are a few steps you can take to find competition in your industry:

  1. Internet search: Use Google or other search engines to find companies that offer similar products or services to you. Search for keywords that are relevant to your industry and study the results.
  2. Social networks: Study the profiles and activities of competitors on social networks, such as Facebook, Instagram, Twitter and LinkedIn. Pay attention to their supporters, posts and interaction with users.
  3. Visit trade shows: If your industry involves selling products in physical stores, be sure to visit them and explore competitors who offer similar products. Also, participate in trade shows and conferences in your industry to get acquainted with the competition.
  4. Ask your customers: Your customers can be a source of valuable information about the competition. Ask them which other companies take into account when looking for products or services similar to yours.
  5. Analyze online reviews: Review reviews from competitors on platforms like Google My Business, Yelp, Trustpilot , or Amazon. This will help you better understand their reputation and user experiences.

The product can have hundreds of thousands of reviews, and by reviewing just a few of them you can get invaluable insights into the needs of consumers:

Figure 1: User review

Once you’ve identified competitors, make a list of those you’ll focus on during the analysis. This list will serve as a starting point for further research.

Types of Competition

Competition can be divided into several categories:

  1. Direct competition: These are companies that offer products or services very similar to yours and target the same target group. Direct competition often has similar marketing, sales, and business strategies to your company.
  2. Indirect competition: Indirect competitors offer products or services that can meet the same or similar needs of your customers, but are not identical to your offer. For example, if you sell bicycles, indirect competitors could be sellers of scooters or electric scooters.
  3. Potential competition: These are companies that are not currently direct competitors to your company, but have the potential to become one in the future. This may include new companies entering the market or existing companies expanding their product or service offerings.

What does your competition offer?

Once you find out who your competition is and HOW they’re competing with you, the next step is to find out WHAT they offer. Understanding the products or services your competitors offer allows you to compare your offer with theirs and identify possible strengths or weaknesses. Here are some steps to discover what products or services your competitors offer:

  1. Study their websites: Most companies have detailed information about their products and services on their websites. Study their product or service pages, read descriptions and characteristic reviews to gain a better insight into their offerings.
  2. Visit their STORES or LOCATIONS: If your competition has physical stores or business premises, visit them to see firsthand what they offer. Pay attention to the appearance of the store, the assortment of products, prices and how customers are treated.
  3. Follow their SOCIAL MEDIA: Social media is a great way to keep up with your competitors and learn more about their products or services. Track their posts, promotions and customer interactions to better understand their offer and how they behave in the market.
  4. Collect CUSTOMER OPINIONS: Read the reviews and comments customers leave about competing products or services. This will help you understand what characteristics customers appreciate, as well as the potential problems they face.

By using tools like Similar Web, you can get insights into customer demographics for a given competitor company or information about their distribution channels:


Use this information to create a profile for each competitor, including details of their products or services, prices, differences in offer from your company, and any opportunities to improve your offer.

Analyzing key factors

Once you’ve identified your competitors and their products or services, the next step is to analyze the key factors that affect your market positioning. When analyzing, focus on the following factors:

  1. Characteristic Matrix: Create a CHARACTERISTIC MATRIX that displays key attributes of your company and competitors. This can include product quality, pricing strategy, distribution, customer care, and innovation. This is how you compare your strengths and weaknesses to your competitors.
  2. Market Share: Consider each competitor’s market share to understand how much market space they occupy compared to your company. A larger market share may indicate better positioning and greater market impact.
  3. Price: Learn how competitors charge for their products or services. Compare their prices with yours to determine if you are competitive or can improve your pricing strategy.

    More information about pricing strategies can be found on the blog “How to determine the price of your Product?”.
  4. Advertising: Analyze HOW COMPETITION ADVERTISES and which marketing channels it uses. Consider whether you can improve your advertising strategy or leverage new channels to increase your visibility in the market.

    More information about advertising can be found on the blog “What is Advertising?“.
  5. Differentiators: Identify DIFFERENTIATORS that make your company unique to the competition. This can be something your company does better than others or a special value that you provide to customers.
  6. The forces of competition: Study the STRENGTHS of your competition and consider how you can learn from them or adapt to improve your business.
  7. Weaknesses of competition: Identify YOUR competition weaknesses and opportunities to exploit those weaknesses and gain competitive advantages.
  8. Regions your competition serves: Consider the REGIONS your competition serves and whether there are markets where you can expand your presence.

Each of these components plays a key role in creating a comprehensive competition analysis, which allows you to better understand your competitors and find ways to stand out in the market.

Differentiators

Differentiators are the unique characteristics, advantages, or aspects of your product or service that set it apart from the competition. These factors allow your company to stand out in the market and attract the target audience. Identifying differentiators can help you better understand their market position and how your company can compete.

Differentiators can be categorized in several areas:

  1. QUALITY of products and services: Companies may differ based on the quality of their products or services, providing high-quality products that meet or exceed customer expectations.
  2. INNOVATION: Innovative products, technologies or business models can create unique value for customers and set a company apart from the competition.
  3. BRAND: A strong and recognizable brand can be a key differentiator, creating an emotional bond with consumers and encouraging loyalty.
  4. PRICE: Companies can be distinguished by offering competitive pricing or unique price models that attract different segments of customers.
  5. CUSTOMER SUPPORT: Providing outstanding customer support can create loyal customers and help the company stand out.
  6. SOCIAL RESPONSIBILITY: Companies that focus on sustainability, environmental responsibility and social responsibility can attract customers who value these values.

By analyzing competition differentiators, you can better understand their strengths and weaknesses and adjust your strategy to excel in the market.

Methods of market analysis

Once you’ve identified your competitors, analyzed their key factors, and found out what yours and their differentiators are, it’s time to focus on MARKET ANALYSIS METHODS that will help you better understand your market position and growth opportunities. In the following sections, we will consider in detail the SWOT analysis and the Perceptual Mapping method. However, in addition to these methods, there are other popular methods of competitor analysis, including Pastel Analysis, Porter’s 5 Force Analysis, Competitive Position Analysis, Benchmarking , etc.

In the following sections, we will explore swot analysis and perceptual mapping method in more detail, so that you can better understand their application in competition analysis.

SWOT Analysis

SWOT ANALYSIS is a popular method used to assess four key aspects of a business: Strengths , Weaknesses , Opportunities and Threats . This method can be used both to analyze your business and to analyze competition.

When analyzing, we use differentiators that we previously discovered. Here’s how this method works:

  1. Strengths : In this section, you identify what the competition is doing well and where they have an advantage over others in the industry. This can include things such as a strong brand, a wide range of products or services, customer loyalty, high product quality, production efficiency or a strong distribution network.
  2. Weaknesses : Weaknesses are aspects of a competitive business that are not well developed or where there are deficiencies. This may include things like low profitability, a weaker brand, a limited range of products or services, poor product quality, production inefficiency, or a weak distribution network.
  3. Opportunities : Here you identify external factors that can provide competition with opportunities to grow and improve. Opportunities can include things like market trends, technological developments, changes in consumer preferences, changes in legislation, or global changes.
  4. Threats : Threats are external factors that can adversely affect the business of competition. This may include things such as changes in market conditions, growing competitive pressure, changes in demand, new regulations or economic changes.

Each key competitor should be analyzed based on these factors, but the same factors should also be applied to your company in order to obtain an objective picture and an accurate assessment of the advantages and disadvantages.

Figure 2: SWOT Matrix

SWOT analysis is useful because it helps you understand the key characteristics of competition, which can be useful when planning your own strategies. Through this analysis, you can better identify the competitive weaknesses you can exploit, as well as the strengths that need to be developed to stay competitive.

When using SWOT analysis for competition analysis, it is important to keep in mind that your observations and assessments are subjective, and that circumstances can change rapidly. To get a more objective picture of your competition, consider using multiple sources of information and talking to industry people to get different perspectives.

In addition to SWOT analysis, there is another method that can be useful in the process of competition analysis – Perceptual Mapping.

Perceptual Mapping

PERCEPTUAL MAPPING is a visual representation of how consumers perceive different brands, products or services in the marketplace. This method enables businesses to better understand their competitors, as well as to discover what consumers really value about a product or service. (More information on how people value things can be found on the blog “What is Value?“.)

Perceptual Mapping is commonly used to display data using two dimensions, where each brand or product is represented by a dot on a diagram. The axes on the diagram can represent different characteristics of a product, such as price and quality, or perhaps emotional factors, such as luxury and practicality.

Imagine, for example, that you are analyzing the smartphone market. You would create a Perceptual Map with PRICE on one axis and QUALITY on the other. The diagram could then show brands such as Apple, Samsung, Huawei and others, with their positions based on these criteria. This would help you identify competitors who are similar to your brand, as well as those who differ in characteristics that are important to consumers:

Figure 3: Perceptual Mapping – Example

It is important to note that Perceptual Mapping does not give absolute values or rankings of brands, but only shows relative positions in relation to other brands. Also, there is always the possibility that consumers have different perceptions about the same products, so it is important to use multiple sources of information in order to get the most accurate picture possible.

Perceptual Mapping, together with SWOT analysis, is a useful tool for competitive analysis. Through these methods, you can better understand your competitors, which will allow you to improve your business and achieve success in the market.

The benefits of competition analysis

One of the biggest benefits of competitive analysis is that you can see how you can improve your products or services to become more competitive in the market. In this way, you can position yourself as a leader in your niche and attract new customers, while at the same time retaining existing ones.

Another benefit of competitive analysis is that it allows you to identify untapped opportunities in the market. These can be opportunities for new products or services, new areas where you can expand your business.

When you know more about your competition, you can better understand how they attract customers and how you can improve your marketing strategy to be more competitive. Also, competitive analysis can help you better understand the needs and wants of your customers, which allows you to adapt your products or services to be more attractive to customers.

Conclusion

I hope this article provided you with useful information about competition analysis. As we have seen, competition analysis is an important tool that can help you better understand your market, your competition and develop a more successful business strategy. Identifying key factors, such as characteristic matrix, market share, price strategy and differentiators, allows you to better understand your competition and develop a strategy that will distinguish you from them.

SWOT analysis and Perceptual Mapping are two powerful methods that can help you understand your strengths and weaknesses against your competitors, as well as identify opportunities for growth in the market.

It is important to regularly perform competition analysis to stay up to date with market changes and to provide your customers with the best possible service.

Although Competitor Analysis can be a complex topic, and SWOT analysis can capture a large amount of information and take up hundreds of pages, I hope that with this article I have helped you understand and apply competition analysis to improve your business.

Resources: https://businessmodelanalyst.com/downloads/competitive-analysis-strategies/