A competitive analysis is the process of categorizing and evaluating your competitors to understand their strengths and weaknesses in comparison to your own.
In other words, it’s not a complicated idea. It’s common knowledge that the better you understand your competitors, the better chance you have of beating them.
The concept might be simple, but the process is more complicated. A competitive analysis can cover a whole range of areas, metrics, and disciplines. Some of these will be more important dependent on who you are, but the more exhaustive you are the more effective your competitive analysis will be.
Although performing a competitive analysis isn’t rocket science, it does go beyond the few simple Google searches needed to identify your competitors. Here are the crucial steps of that process.
Identify your competitors.
Whether you want to admit it or not, your competitors are out there and they’re likely just as hungry as you are.
Capitalize on their weaknesses and strengths to help start your business, have a better understanding of the landscape and learn how to best position your business for success, plus Identify, understand and keep tabs on your competition so you never have to worry about them sneaking up behind you.
This process is known as competitive intelligence gathering.
Find Your Competitors
There are many ways to identify key competitors in your industry, but Google and Amazon will likely be where you begin your research. Start with a simple search for your business name, product ideas and overarching business idea.
From there, explore your competitor’s digital footprint by looking into: Content and social media, News mentions, Support threads and reviews, and Niche organizations and online communities. Your ultimate goal at this stage should be to cast a wide net and get a comprehensive view of the competitive landscape.
Categorize Your Competitors
As you find competitors, you’ll want to categorize them into various levels, from primary competitors to those you still need to keep on your radar — like secondary and tertiary competitors.
Here is an easy way to categorize sellers in your industry:
Primary Competition: These are your direct competitors, which means they’re either targeting the same audience or have a similar product — or both.
Secondary Competition: These competitors may offer a high- or low-end version of your product, or sell something similar to a completely different audience. If you’re selling Timex watches, a secondary competitor might be a Rolex retailer.
Tertiary Competition: This category includes businesses that are tangentially related to yours, and really comes in handy when you’re looking to expand your product catalog. These could be related products and services that are trending, as well as businesses that may be beneficial to partner with further down the line. For instance, if you sell jewelry, a tertiary competitor may sell gems and stones.
As you conduct your research, be sure to keep things organized in an easily accessible spreadsheet or database.
Examine your competitor’s website & customer experience.
Once you’ve identified your competitors, you’ll want to analyze their websites.
Identify your competitor’s market positioning.
By identifying your competitor’s positioning strategy, you’ll start to get a feel for your market’s demands and expectations.
Take a look at their website and marketing messaging and ask the following:
What are customers really buying from them? Are they going for price? Experience?
How are they differentiating their product from their competition? What features and benefits do they highlight the most in their marketing copy?
In their opinion, what makes their product or service unique?
Take a peek at pricing.
Your pricing strategy is going to be one of the most important aspects of your online business — and potentially a competitive advantage.
There are several factors to consider when setting prices for your products. The best place to start is to look at how your competitors have priced their products. You’ll learn what your target market is willing to pay and get an understanding of what prices might work well for your business.
Remember, regularly performing a competitive analysis doesn’t mean you need to watch your competitors like a hawk or let them keep you up at night, but you should keep tabs on how their businesses are changing and watch for new challengers in your space.
The goal for your business should be to always be one step ahead. These competitive analyses will serve as a key factor when you’re creating strategies to dominate the market.