Nowadays, in every market you step in, you will notice saturation, and there will always be some dominating players in your market. As an early-aged business, it is difficult to enter the market and get your share. And to do this, you need to understand your competition. That is why competitive analysis is becoming as crucial as ever before for new business that aims to thrive in today’s highly dynamic and ever-evolving market. And to prove this point, statistics show that 70 percent of businesses regret that they should have spent on competitive intelligence as it could increase the effectiveness of their previous business campaigns.
For simple understanding, competitive analysis is examining your competition, gaining insights into their strengths and weaknesses, and channeling that information into refining your business strategy. This includes studying their marketing tactics, product offerings, pricing, and customer engagement strategies; all this is done to identify opportunities and improve your approach. By conducting competitive analysis, you can stay ahead of your rivals, capitalize on gaps in the market, and refine your value proposition, which ultimately helps you build a successful and sustainable business in the long run.
As we have discussed why a competitive analysis is crucial now, we will dig into how you should conduct one for your business.
In order to get started with your competitor analysis, your first step is to want to know how your direct and indirect competitors are. Most of the time, focus only on the direct ones, but it is crucial to make a count of the indirect ones as well. And once you have figured out your competitors, the next step is to discover their strengths and weaknesses. You can look out for
business strategies, product offerings, pricing tactics, etc. And find out where they stand out of the crowd and where a gap exists.
Knowing your top competitors’ strengths and weaknesses allows you to be in a position where you can accurately understand where you stand in the market and how you can differentiate yourself from the competition. It is essential to remember that not all competitors are created equal, and some may pose a more significant challenge than others. Therefore, businesses must conduct thorough research and gather all relevant information about their top competitors to gain a competitive advantage.
In competitor analysis, you must also analyze the market trends within your industry. By doing so, you can deeply understand what your consumers are looking for in a product or service. Market trends can reveal consumer needs, preferences, and behavior patterns, helping you stay ahead of the competition. And as you have figured out the strengths and weaknesses of your competitors, you can easily find out whether they are aligned in their approach to the market trends. This will help you find the market gap, and then you can utilize this information and make the best possible use of this.
Failing to stay up-to-date with the latest trends may result in a loss of market share, so it’s essential to regularly analyze and adapt to consumer demands. You can also perform trend analysis and get some idea about future trends. With this knowledge, you can tweak your marketing strategies, improve your product offering, and ultimately gain a competitive advantage in your industry.
Research competitor pricing strategies to determine what competitive advantages you can offer customers
For thorough competitor analysis, one must research competitors’ pricing strategies. When you understand what advantages customers are getting from your competitors in pricing, you can better look at what you should offer to the market. For instance, if your competitors are charging high prices for their products or services, you can try a lower price tag than your competitor, also called (loss ledger pricing) but in the long term, it would not be possible for you to play in the price tag game as it can damage your profitability.
Therefore by looking at competitors’ prices, you can get an idea about your cost of production and to what extent you want to decrease it. On the other hand, if your competitors use discounts and promotions to drive sales, you could leverage your strengths, such as higher quality or better customer service, to set yourself apart.
Conducting customer surveys can provide valuable feedback on products and services. Understanding what customers are looking for and what they believe works well can help businesses stay competitive and improve their offerings. By gathering customer feedback, companies can gain insight into their competitors’ strengths and weaknesses while also identifying areas where they can improve their products and services.
Moreover, customer surveys allow businesses to listen and respond to customer concerns, ensuring they meet their needs and expectations. And listening to your customers, they get a sense of importance that they have their say in the company, so it builds brand loyalty in the long term.
As social media has been incorporated into our lives, it is all over the business world. Therefore, to do a competitive analysis, observing your competitors’ online presence is crucial. It can give you valuable information about their marketing tactics, audience engagement, and overall brand strategy. Social media provides a window into how your competitors communicate with their customers and the types of content they prioritize.
Regularly monitoring their profiles can help you stay updated on their latest offerings and marketing campaigns – allowing you to adjust your strategies accordingly. Ultimately, analyzing your competition’s social media activity can give you a decisive advantage in the marketplace by highlighting areas where you can outperform them.
For competitor analysis, it is of paramount importance to look at the long term and assess future threats and opportunities. If a big player in your market is trying to shift into some other market, then it is a future opportunity for you, so you must plan how you can grab it, and the same goes for any threat in the future.