Achieving business success is no child’s play, especially when sharing the same target audience and playing field with another business. Therefore, marketing acumen is no longer a skill gained through experience or a theoretical approach. Instead, it demands to be backed by relevant data filtered from an ocean of data analyzed constantly to stay on top of market shifts.
The good news is, with dedicated effort and digital marketing skills, companies can identify their competitors and determine the resources they can leverage to dominate the market.
That is precisely what this article will deal with. Let’s start by understanding what competitor research is before we move on to our start-to-finish guide on how to do competitor analysis.
What is Competitor Research?
Competitive research is an essential aspect of any business plan that involves identifying competitors and analyzing their business strategies. It also means evaluating the strengths and weaknesses of both your competitors and their products or services. This gives businesses a clear idea of where their products stand and what strategies they can adopt to gain a competitive advantage and eventually succeed.
One of the primary reasons a business fails can be ineffective or even a lack of competitive analysis.
It is a misconception that only leading brands are competitors for a new product. In reality, plenty of brands have lost to underdogs whose existence was not even known to them. This explains why competitor research is vital to a business’s success.
Understanding how your competitor works will help you figure out strategies for your product development and position yourself and your business effectively in the market.
Advantages of Performing Competitor Research
- Identify the market trends: Competitive research helps identify intricate market trends that are otherwise impossible to decipher. The power to identify, analyze and predict market trends is a huge boon for any business. This helps in a better value proposition which in turn gets the business closer to the customers.
- Devise effective marketing strategies: Marketing, as discussed earlier, is not just about highlighting your products. It is also about letting your customers know how your business can impact their lives in ways better than others. The strategy should be able to make customers position your product much higher than its competitors. To achieve this, you should know why the customers prefer your product over others or the other way around. This can be achieved by competitor research.
- Explore market gaps: Competitive analysis helps get data of competitors’ strengths, weaknesses, and target crowd. The data also shows the segment of consumers that have been left uncatered. Designing and creating strategies to cater to this segment shall provide winning leverage to your business. This also helps your product secure a unique position in the market.
- Plan the future course of action: Competitor research provides the much-needed advantage of developing a strategic plan for the business. This also helps you know the area that needs improvement, improve the product or service, and decide the pricing strategy that will hold good for the future. This also gives an idea of how to highlight your product to stand apart from the crowd effectively.
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Step by Step Guide on How to do Competitive Research
Step 1: Identifying potential competitors
This is the initial step in performing competitive research. Unfortunately, it is impossible to analyze all the competitors as it is time-consuming and tedious. To make the process simple and more effective, only the top competitors are identified and analyzed. These competitors fall under two categories: direct and indirect.
- Direct competitors: Competitors with products or services similar to yours and having the same customer base as yours come under direct competitors.
- Indirect competitors: They have similar products or services as yours but target a different group or target your customer group and have a different product or service.
Identifying and analyzing both types of competitors is essential for the following reasons:
- It helps you explore different growth opportunities for your business.
- It helps in diversifying your business.
Step 2: Analyzing the market position of Competitors
Understanding how competitors offer their service to their customers is the next important step. This can be done in the following ways:
- Value vs. Value providers: Value refers to the gains wanted by the customers, while value providers are how those gains can be given to the customers by your product or service. Analyzing this can help you determine how your competitors offer additional value propositions, thereby gaining leverage in the market.
- Problems and their alleviators: Problems stand for any pain, discomfort, or negativity faced by the consumers in reaching an objective. Alleviators are how your product can address the problems and create a solution.
Analyzing these factors will help you understand how your product is performing against the competitors and will also help you offer a better value proposition to further the business’s success. Winning over competitors in delivering value is the key to any business’s success.
Step 3: Analyzing competitors’ business strategy through their content
In today’s world, content is everything. So, scrutinizing the type of content published by competitors will give a clear idea of their business strategy. Getting access to their content through their websites and blogs is an easy process. This step is key to your content marketing success.
Here are some of the important things to keep in mind while analyzing your competitors’ content:
- The type of content that your competitors are engaging (whether it is on YouTube, Instagram. blogs, vlogs, etc.).
- Whether the type of content is private, premium, or detailed like case studies, etc.
- Comparing the competitors’ content quality with yours.
- The frequency of publishing their new content and updating existing ones.
- It is also vital to look for content gaps (whether competitors focus on the content you have not touched).
Step 4: Studying the pricing strategy of competitors
This is a simple but essential step. It is important to compare the prices of your competitors’ service and product costs with yours. This will help you determine whether to cut down or increase the price of your product to obtain a competitive upper hand. This should be done after proper deliberation to make sure your profits are not affected too much by cutting down the prices.
Step 5: Make a list of competitors strength.
Based on the data obtained from the above steps, a list of strengths and advantages that the competitors have in the market can be made. It is crucial to remain neutral without getting too defensive or complacent about your competitors’ strengths. While listing, consider the following aspects of your business:
- Size and location of the company
- Value proposition
- Pricing technique
- Quality of their product
- Quality of their service
- Their target consumers
- The extent to which their website has reached the audience
- Their position in the social media
Step 6: Make a list of their weakness
Make a list of your competitors’ weaknesses. This should be relative to your market objectives like:
- High COGS ( Cost of Goods Sold)
- Ineffective sales crew
- Poor cash flows
- Greater employee turnover
- High employee attrition rate
- Weak social media engagement
Step 7: Look out for opportunities
This step is essential to explore opportunities and seize them before it is late. While the opportunities can be plenty, seizing them requires a lot of calculation and strategies. Also, prioritizing will help grab crucial opportunities.
Step 8: Identifying threats and risks
This step is important to devise a future course of action for your business. It is essential to have response strategies in position for all existing and forecasted threats.
Step 9: Create an effective strategy
Converting the obtained information into actions and strategies is the most important of all. Generate a detailed list of competitor research data and use it to make changes, develop, and diversify your business. Recognizing your competitors’ strengths is as important as competing. When facing an invincible competitor, it is wise to move to a different product or target customers, thereby preventing your business from tough competition. Keep in mind that you are also on the list of someone’s competitor analysis.
Well-performed competitor research will provide you with valuable insights, which, when converted into action, will improve the overall performance of your business.
So, that’s basically what competitor analysis is all about. If you’d like to learn about more such interesting digital marketing concepts, upGrad’s Advanced Certificate in Digital Marketing and Communication can help you achieve your goals. The program is offered in collaboration with MICA University and spans 32 – 50 weeks, depending on the learner’s pace. It comprises four specialization tracks – Branding and Communication, Social Media and Content Marketing, Marketing Analytics, and Marketing Communications – PR.
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What is the primary objective of competitor research?
Competitor research is carried out to evaluate existing and potential competitors' business and market strategies. The research offers both competitive and defensive strategies to identify and respond to opportunities and risks
Mention the key components involved in competitor analysis.
There are four main components in the competitor analysis framework. They are:
1. Porter's Five Forces
2. SWOT analysis
3. Business models
4. Mapping of the customer journey.
What are the factors on which competitor analysis is based?
The framework of competitor research is based on three main aspects. They are:
1. Objectives of the competitors
2. Assumptions of the competitors
3. Strategies of the competitors