Not paying attention to what the competitors are doing is a business mistake to avoid. In fact, 19% of small businesses fail because their competition outperforms them.
Companies that regularly complete competition research can adapt and improve their overall business to push ahead.
Competitive market analysis involves market research and other steps to give a business a better chance of succeeding. Keep reading to learn what a competitive market analysis is and how to conduct one.
What Is a Competitive Market Analysis?
Competitive market analysis is a strategy that involves researching business competitors to gain valuable information. Through a competitor analysis, you’ll learn about marketing tactics, products, and sales.
The greatest advantage of a competitive market analysis is that your business can identify potential opportunities to outshine the competitors. Staying on top of industry trends is another advantage.
Before your company can reap the benefits of competitive market analysis, you’ll need to complete competitive market research.
Competitive Market Research
Market research focuses on finding and comparing metrics to identify differences between your products/services and the competitors. More comprehensive research equates to an established sales and marketing strategy.
Competitor analysis through research leads to knowledge of the following:
- Gaps in the market
- Development of new services and products
- Market trends
- More efficient sales and marketing
Learning these simple four components can lead a brand down the right path. First, understand how to conduct a comprehensive competitive analysis.
How to Conduct a Competitive Analysis
Complete and effective competitive analyses are ideal for business. To make that happen, follow these steps:
Determine Your Competitors
Who are you competing with? This is the most important question to ask in order to compare your data and competitor data accurately.
Divide the competitors into two categories; direct and indirect. Direct competitors are those that offer products or services similar to yours within the same geographic area.
In contrast, an indirect competitor provides products and services that aren’t the same but solve the same problem.
During the comparisons, focus on direct competitors rather than indirect ones. Nonetheless, keep indirect competitors on your radar.
Once competitors are separated, analyze your competitor’s product line to determine the quality of products or services. Take note of pricing and any discounts they might offer customers.
From here, run a sales analysis.
Research Sales Tactics and Results
Completing a sales analysis of the competition is not simple. Figure out the answers to the following questions regarding your competitors:
- What does their sales process look like?
- What channels are they using to sell?
- Do they have multiple locations? If so, does this give them an advantage?
- Are they expanding or scaling down?
- What is the reason their customers stop buying their products?
- Do they offer regular discounts?
Pieces of information from answering the above questions can give an idea of how competitive the sales process is. Those on your sales team will benefit from the information you find through a sales analysis.
Talk to your marketing and sales team about implementing a system where prospects are questioned about competitor companies they are considering. Asking open-ended questions provides the most honest information.
Part of learning the sales tactics of the competitors includes comparing your pricing to theirs which brings us to the next step.
Compare Competitor Pricing to Yours
Every industry has its own competitive market that indicates product pricing. Correctly pricing products to customers means adhering to industry standards.
However, if there is a gap in the market for affordable products, aim to charge less than the competitors.
Stay on top of industry pricing to ensure your cost is reasonable to prospects. Take a look at any perks or discounts that competitors offer to gain more customers.
In addition to product pricing, compare shipping costs to those of the competitors. Nowadays, free shipping is attractive enough to make customers choose one brand over another. Meet or exceed competitor shipping prices.
Analyze Competitor Marketing
Visiting the competitor’s website is the quickest way to learn about their marketing efforts. Items to should look for when scoping out a competitor website include:
- Whitepapers or ebooks
- Videos or webinars
- FAQ section
- Buying guides
Although digital marketing is essential to seek out, take note of any offline advertising campaigns they create and how they might tie into their digital marketing strategy.
Most businesses create a blog on their website to introduce content to prospective buyers and current customers. Evaluate their content to see if they publish regularly and learn about the topics they discuss.
Having a solid understanding of their content strategy is only half of the battle. From there, figure out if their content works for them.
Consider the Level of Content Engagement
Does the competitor’s target audience respond to the content they post? Check the average number of likes, comments, and shares to gauge this.
Note if certain topics resonate more than others by analyzing positive and negative comments.
Moving on straight from engagement to content promotion strategies allows observation of how a competitor promotes content. Pay attention to the following things during this step:
Perform a SWOT Analysis
Performing a simple SWOT analysis involves learning the strengths, weaknesses, opportunities, and threats of the competitors. Perform the SWOT analysis at the same time as the competitive market analysis.
With this outline, compare any weaknesses a competitor has to your strengths. Doing so will put the business in a better position to uncover areas of improvement.
Does Your Business Outshine the Competitors?
Completing a competitive market analysis can uncover just as much about your business as it can about your competitors. Without valuable data and insight into the industry, your company won’t stack up against the competition.
With accurate information about the competitors, you can create a better strategy for content, sales, and overall marketing.
We have the tools necessary to help outshine your competition. Build something with us by contacting us now.