Competitor Analysis: Tracking The Capability of Competitors In Marketing

What is Competitor Analysis?

A competitor analysis, also referred to as a competitive analysis, is the process of identifying competitors in your industry and researching their different marketing strategies. You can use this information as a point of comparison to identify your company’s strengths and weaknesses relative to each competitor.

How To do competitor analysis?

Figuring out what to focus on when conducting a competitive analysis can be tricky. Below are 6 steps to help you get started. Before you begin your competitor analysis, consider what you want to get out of it. Add any other areas of research that align with these goals.

1. Identify your competitors

To create a list of potential competitors, consider where your customers would turn if they didn’t buy from your company. An easy way to start is to search your product name or category on Google or another search engine and explore the results. You can also survey or interview existing customers to ask them what alternatives they considered before deciding on your product or service. Keep your list to 10 or fewer competitors so that you can devote enough time and attention to researching each of them. When you finalize your list, aim to include a diverse set of companies to get an accurate assessment of what the market is like. You should consider businesses that fall into each of the 3 categories of competitors.

Direct competitors

Direct competitors sell a similar product or service to a similar target audience. These are likely the companies that first come to mind when you think of your competition. For example, McDonald’s likely considers other fast food burger chains like Wendy’s and Burger King to be its direct competitors.

Indirect competitors

Indirect competitors sell a different product or service in the same category but target an audience similar to yours. For example, takeout pizza restaurants like Domino’s and Papa John’s are indirect competitors of McDonald’s.

Replacement competitors

Replacement competitors exist outside your product category, but they satisfy a similar customer need. For McDonald’s, replacement competitors could be any solution that consumers turn to when they are hungry, including products such as frozen meals. Of the 3 types of competitors, replacement competitors are the hardest to identify. When conducting a competitor analysis, you should focus most of your attention on direct and indirect competitors. Still, it is worth briefly taking stock of potential replacement competitors that could threaten your business prospects.

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2. Create a competitor matrix

Before you dive into your competitor analysis, take a moment to get organized. A competitor matrix, also known as a competitor grid, is a table or spreadsheet you can use to compile your research. This will make it easier to compare your findings across competitors and spot larger trends.

Start by devoting one row or column to each competitor that you’ve identified. On the other axis, list data points or categories of information you’d like to find out about each competitor. Don’t worry if you’re not sure what you should be looking for at this point. You can also always add more categories as you progress through your research.

3. Gather background information

Once you have a list of competitors to research, start learning about their businesses. Look for the most basic information first, and then build your way up from there. Start by looking at company websites, social media pages, and any news articles that have been published about them. Basic information like: Company history, Location and Company size must be enquired into.

4. Profile your competition’s target customers

A company is nothing without its customers. Getting an idea of who your competitors sell to will tell you a lot about their businesses. To pinpoint the target customer for any business:

Read their mission statement.
Look at what kind of messaging they use.
Track who they interact with on social media.
See if they feature any existing customers in their content.

Use this information to construct a profile of who your competitors are trying to reach with their products or services. These customer profiles will probably resemble your own target customers—these are your competitors, after all—so make note of even small differences.

5. Focus on the 4 P’s

Now that you’ve identified the target customer for each competitor, it is time to look into how they go about reaching that segment of the market. This will require a deep dive into their marketing strategies. The marketing mix, also known as the 4 P’s—product, price, promotion, and place—covers the must-have elements when bringing a product to market.

What is the purpose of competitor analysis?

More often than not, small business owners find themselves juggling many tasks at once. Even amid a busy schedule, though, it is worth taking the time to do a competitor analysis. It can benefit your business by helping you:

Identify your business’s strengths and weaknesses.
Understand your market.
Spot industry trends.
Set benchmarks for future growth.

Conducting a thorough competitive analysis is always a good idea when starting a new business. However, a competitor analysis is not just for start-ups. It is a tool that can—and should—be used at every stage of the business life cycle. Periodically revisiting and updating your competitor analysis, or conducting one from scratch, will help you identify new trends in the market and maintain a competitive advantage over other companies in your industry.

Type of competitor analysis

SWOT analysis.
Strategic group analysis. A strategic group analysis shows the competitors in a map, graph or chart.
Growth share matrix.
Porter's five forces.
Perceptual mapping.

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Example of competitor analysis

Brand Awareness. The percentage of your target market that are familiar with the competitor's brand.
Customer Experience.
Organizational Culture.
Intellectual Property.

Here is a step-by-step process for writing a competitor analysis report: