Competitive market analysis is like having a compass in a dense forest – it helps you navigate through a complex business landscape. Just like how Netflix’s competitive market analysis proved invaluable, understanding your competitors is crucial for your business’s survival and growth. In this guide, we will take you through the step-by-step process of conducting a competitive market analysis, helping you stay ahead in a rapidly evolving business world.
Table of Contents:
What is Competitive Analysis?
Why Competitive Analysis Matters in Marketing
How to Conduct Competitive Market Analysis in 6 Steps
Real-Life Competitive Analysis Example
Leveraging Your Internal Operations as a Competitive Advantage
What is Competitive Analysis?
Competitive market analysis is the systematic process of identifying your competitors, analysing their strategies, and dissecting their strengths and weaknesses. This knowledge helps you understand your own business better and enables you to position yourself more effectively in the market.
Why Competitive Analysis Matters in Marketing
Competitive analysis goes beyond keeping an eye on your rivals; it’s about staying relevant
and innovative in a fast-paced business world. Here’s why competitive analysis is vital:
Learn from the Greats: Your competitors can teach you valuable lessons. Studying what works for them can point out gaps in your strategies and inspire you to fill those gaps.
Spot Trends and Stay Ahead: Competitive analysis is not just about rivals; it’s about industry trends. Failure to adapt, like Blockbuster, can lead to obsolescence.
Identify Pain Points and Solutions: Analysing competitors can help you find customer pain points that they might have missed. You can then address these needs more effectively.
Set Growth Objectives: By examining market leaders, you can define ambitious growth goals and emulate their tactics. AI-driven tools can predict market trends and help you set precise KPIs, ensuring data-driven success.
How to Conduct Competitive Market Analysis in 6 Steps
Competitive analysis involves in-depth research and thorough observation. Here are the steps to conduct it effectively:
1. List Your Competitors
Start by creating a comprehensive list of all the players in your industry. Don’t exclude anyone at this stage; later, you can narrow it down to the most relevant competitors. Perform keyword research to find out who your online competitors are. This is particularly important for businesses operating in the digital sphere.
Categorise your competitors into “direct” and “indirect” competitors. Direct competitors offer similar products or services to a similar target market, while indirect competitors offer different but related products or services to the same target market. Understanding both is crucial.
2. Identify Their Target Markets
Understanding your competitors’ target markets is crucial. To determine this, study their mission statements, analyse their communication style and tone, and observe their social media engagement. The influencers they collaborate with can also give insights into their audience.
3. Analyse the Four P’s
Product: Experience your competitors’ products or services to understand what’s working and where there’s room for improvement. When you use their products, you gain invaluable insights.
Price: Analyse your competitors’ pricing strategies and models. Consider factors such as subscription-style pricing or one-time purchases and how their pricing compares with industry standards.
Place: Explore where your competitors sell their products, whether it’s online, in physical stores, or a combination of both.
Promotion: Investigate how your competitors promote their products, particularly in digital marketing. Pay attention to their advertising strategies, focusing on cost per click (CPC) and keywords. Watch for long-running ads as well.
4. Understand Their SEO Strategy
Use a keyword research tool to discover the topics your competitors are ranking for. This will reveal which keywords are driving traffic to their websites. Understanding their backlink profile is also important.
5. Analyse Their Most Popular Content
Determine which types of content are most popular with your competitors’ audiences. You can use marketing analytics tools to find out what content drives the most traffic and engagement.
6. Conduct a SWOT Analysis
A SWOT analysis allows you to assess your internal strengths and weaknesses while recognizing external opportunities and threats. Factors such as market share percentage, competitive features, company culture, customer reviews, and geographic influence should be considered.
Real-Life Competitive Analysis Example
Imagine you’re the CEO of an automotive company. Your competitive analysis reveals that a close rival is heavily investing in electric vehicles (EVs) and allocating over 50% of their advertising budget to promote them. In contrast, you only have one EV option and allocate just 15% of your budget to it. This sends a clear signal: you need to pivot and invest more in EV research, production, and promotion.
Five years later, you’re ahead of the curve and thriving, while competitors who ignored the shift to EVs struggle to catch up. Competitive analysis helps you anticipate changes in the market and act decisively.
Leveraging Your Internal Operations as a Competitive Advantage
Ultimately, competitive market analysis is about maintaining your competitive edge in a constantly changing landscape. It’s a compass guiding you through the complexities of your industry. By understanding your competitors, you can better understand yourself and chart a course towards success. Follow these steps and make competitive analysis a cornerstone of your strategic planning.
In a world where innovation and adaptation are keys to survival, competitive analysis is the compass that points you in the right direction.