In this article:
- What is Competitor Analysis?
- Why is it important?
- Factors to Consider in Competitor Analysis
- How to Do Competitor Analysis in 9 Steps
- What is a Competitor Analysis Tool?
- Competitor Analysis FAQs
Understanding your market is a critical, whether you're starting a new business or planning to grow an existing one. A good place to start is by doing a competitor analysis or studying your competition and identifying what makes them successful. You'll have to ask questions like: "Who are my competitors' traffic?" What are they doing that I'm not? What can I learn from them? How can I improve upon their strategies?
By answering these questions, you can better understand your market and what it takes to be successful. Then you can develop strategies to improve your position and make better decisions about where to allocate your resources. This guide explains everything you need to know about how to do competitor analysis. You'll also discover an incredible tool to help you perform competitor analysis in minutes.
What is Competitor Analysis?
Competitor analysis is the process of studying your competitors and their businesses so you can learn from them and improve your own business. It's all about understanding your competition's strengths and weaknesses and figuring out how to capitalize on that information.
For example, if your competitors are doing a great job of marketing their products, you can try to improve your marketing strategy. Or, if you notice that their customer service is lacking, you can ensure exceptional customer service in your own business.
The goal competitor analysis is to get a clear picture of your competitors, what they're doing, and how you can beat them.
Why is Competitor Analysis Important?
1. Crystalize Your Market Positioning in Terms of Value Proposition and Differentiators
There are a lot of moving parts when it comes to running a business. And as your business grows, it becomes increasingly important to take a step back and analyze how you stack up against the competition. Identifying your value proposition and differentiators through competitive analysis allows you to more effectively market your business and make strategic decisions about where to allocate your resources.
You can learn a lot from your competitors. In fact, any successful business will study and monitor all competitors in their market, from established brands to new potential rivals.
2. Estimate the Entry Barrier into the Target Market/Niche
Competitor analysis helps you to estimate the entry barrier into your target market. In other words, it enables you to understand how difficult it is for a new player to enter the market and compete with established brands. This is something you can figure out by looking at how entrenched your competitors are, how much money they're spending on marketing, and what kind of barriers they've put up to keep new players out. If the entry barrier is high, you'll want to consider it when planning your marketing strategy.
3. Identify Baseline Consumer Expectations, Set by Others
Competitor analysis helps you identify baseline consumer expectations. It provides answers to questions like: What are people used to? What do they expect from a product or service in your industry? Knowing the answers to these questions is essential as they will help you determine what you're up against.
Competitor analysis is also vital for setting prices. You could charge too much or too little if you don't know what your competitors are charging. Charging too much could make you uncompetitive and charging too little could mean you're not making enough profit.
4. Find Market Gaps and Opportunities for Improvement
Market gaps are opportunities you can exploit to gain a competitive advantage in your industry. You need to understand your competitor's strengths and weaknesses to find them. And competitor analysis is the best way to gather this information. It also helps you understand market trends to find areas to innovate. Once you've identified market gaps, you can start formulating a plan to improve your business. This may involve improving your products, services, marketing, or pricing.
5. Uncover Potential Risks and Weaknesses in Your Marketing Plans
Competitor analysis can help you uncover potential risks in your marketing plans so you can make the necessary adjustments. Potential risks in your marketing plan can come in many different forms. Maybe a competitor is targeting the same audience as you and has a lower price point. Or maybe they have a better product. Whatever the case, it's essential to know what your competition is up to. By understanding your competitor's strengths and weaknesses, you can find areas where you can capitalize. If you see that your competitors are not taking advantage of a particular marketing channel, you may be able to use that to your advantage.
6. Provides You with a Benchmark Against Which You Can Measure Your Growth
Competitor analysis provides a benchmark against which you can measure your growth. When you can see what your competitors are doing, it gives you an idea of where you are and what you need to do to reach or surpass them. For example, if you observe that your competitors offer better customer service, you'll be able to rate your customer service using your competitors as a point of reference. And you'll be able to tell when you have improved on this aspect of your company by comparing it with your competitors.
7. Plan Future Growth
When performing a competitor analysis, you're looking at all the different ways your competition is succeeding and trying to figure out how you can replicate that success. But you're also looking at their weaknesses and trying to figure out how you can capitalize on those. Competitor analysis is an essential part of any business plan. By understanding your competition, you can map your path to growth and ensure you're always one step ahead.
Factors to Consider in Competitor Analysis
1. Market Share Percentage
How big is your competitor’s share of the pie? Assessing their market share percentage will give you an idea of whether your competitors are growing or shrinking. And the information can help you determine your market position and set strategic priorities.
2. Feature Matrix
Consider all facets of your competitors’ business by creating a feature matrix. A feature matrix is a table that lists your competitors' features and then scores them on a scale of importance. This will help you see which features are most important to your target market and which ones your competitors excel in. This tool can help you prioritize your product development efforts, and it can also help you develop a strategy for differentiating your product or service.
Price is a big factor when analyzing competitors. After all, if they're undercutting you, they could be stealing your customers. Analyzing pricing will also let you identify opportunities or gaps in the market. (Read more about killer pricing strategy here).
A few things to keep in mind when analyzing your competitor's pricing:
● What is their product offering?
● What is the quality of their product?
● How does their pricing compare to yours?
● Are they offering any discounts or promotions?
● How often do they change their prices?
Answering these questions will give you a good idea of how to price your own products and stay competitive.
Marketing is what shapes customer perceptions of your product and your competitor's products. Learning how to analyze the content of your competitors' marketing materials will help you understand what benefits they're touting and how they're positioning their products. It would help if you also tracked their advertising campaigns to see what ads they're running and how much money they're spending on marketing. Finally, you need to be aware of what PR stunts your competitors are pulling, so you can be prepared for any backlash that may occur.
During a competitive analysis, you need to consider what makes you different from other similar businesses. What do they do that you don't? What can they offer that you can't? These are called differentiators, and they're what set businesses apart from one another. They can be anything from a unique product or service to a lower price point or better customer service. Identifying your differentiators helps you stand out from the competition and win more business since you have more clarity about your ideal customer.
6. Strengths and Weaknesses
If you know what your competition is good at, you can focus on areas where you have an advantage. On the other hand, if you know their weaknesses, you can exploit them and gain an edge over the competition. Overall, learning about your competitor's strengths and weaknesses will help you improve your business operations and stay ahead of the competition.
7. Location and Culture
You need to consider location during a competitive analysis. For example, if your competitors are situated in a rural area, their prices will be different than if they're located in a city. But it's not just about geography. You also need to think about the culture of the area where the company is located. For example, a company based in a conservative state will have a different marketing strategy than one based in a more liberal state. Culture can also give companies a competitive advantage.
How to Do Competitor Analysis in 9 Steps
1. Identify Your Competitors
The first step in the competitive analysis is to know who your company is competing against. But how do you identify your competitors? It's simple. You can use social media analytics software like Mandala AI. to discover similar businesses, or you can do a Google search for your product or service and see what comes up. You can also visit online directories and look at the companies closest to you in terms of business models. But the most important thing is being aware of your competitors.
2. Identify the Products They Offer
The next thing to do is to identify the products your competitors offer. This step gives you a sense of their product range and what they're good at. It also helps you understand what products they might use to target your market. It's easier to find ideas for improving your product once you understand the features and benefits of your competitors' products. When looking at your competitors' products, take note of the product's name, the categories it belongs to, and the product's price point.
3. Study Your Competitors’ Pricing and Current Offers
During competitive analysis, you want to consider what your competitors charge for their products and services. Are they overcharging or undercharging? Are they using a premium pricing strategy or a discount pricing strategy? How can you compete? These are a few questions to ask regarding pricing. You also have to look at your competitors' current offers. Which product or service are they offering that you're not? What can you learn from them? And how can you improve upon their offers?
4. Research Your Competitors’ Sales Tactics and Results
When doing a competitor analysis, it's important to research your competitors' sales tactics and results. Sales tactics can be a valuable indicator of how a company is performing. And analyzing your competitors' sales tactics can help you discover what tactics drive their sales results and adopt similar strategies. Are they using aggressive tactics? Or are they offering discounts? You can borrow their ideas when you learn what's working for them.
5. Ensure You’re Meeting Competitive Shipping Costs
You have to be competitive with shipping costs to keep your customers and stay ahead of the competition. One way to do this is to partner with a fulfilment center with low shipping costs. You might be able to find a cheaper shipping option or offer free shipping on orders over a certain amount. Whatever you do, ensure you're constantly evaluating your shipping costs and looking for ways to improve them.
6. Find Out How Your Competitors Market Their Products
It's important to find out how your competitors market their products, as it can give you valuable insights into their business. When you see your competitors' methods and their success with these methods, you also get ideas for marketing your products. Also, it enables you to find out what weaknesses your competitors have that you can exploit.
7. Learn About the Technology Your Competitors Use
It's important to learn about the technology your competitors use. If they're using advanced technology, there's a good chance you should be using it too. Technology has grown exponentially because of the competitive advantage it gives businesses. With the right technology stack, you'll be able to do things your competitors can't, giving you an edge in the market. But how do you know which technology is right for your business? That's where things can get tricky. Finding the right technology for your company takes a bit of trial and error. But once you do, you'll be well on your way to success.
8. Review Social Media Feedback and Performance
You need to review your competitors' social media feedback and performance to understand what's working for them and what isn't. This information can give you a competitive advantage because you'll be able to see what's resonating with their audience and adapt your own social media strategy accordingly. To review social media feedback, start by looking at how many followers each of your competitors have on different platforms. Then, analyze the type of content they're sharing and how it's resonating with their audience. Finally, look at the engagement rates they're getting.
9. Use a Good Competitor Analysis Tool
Competitor analysis tools give you a competitive edge. When you have data on your competitors, it's easier to decide what to do next. Competitor analysis tools also give you insights into your customers' mindsets. When you know what your customers think, giving them what they want is easier. The business world is always changing, and if you're not constantly evolving, you'll quickly fall behind. A good competitor analysis tool will help you stay ahead of the curve and keep your business on top.
What Is a Competitor Analysis Tool?
A competitor analysis tool helps businesses understand the competitive landscape in their industry. Business managers can use this information to create strategies to gain market share and improve business performance. This tool collects data on the competition and analyzes it to identify trends and opportunities. This data can be collected through various means, such as market research, financial analysis, and customer surveys. Once the data is collected, it is analyzed to identify areas where the business can improve its performance.
Several competitor analysis tools are available, each with its advantages and disadvantages. The most important factor in choosing a competitor analysis tool is selecting one that will fit the business's specific needs.
How to Use Mandala AI. Competitive Analysis Tool to Spy on Your Competition
Mandala AI. is a market research tool that can provide you with accurate and reliable insights from across the web, including social media platforms. So whether you're thinking of how to analyze your competitor's YouTube channel or how to analyze your competitors on Facebook, this tool has got you covered. Let's see how you can use this tool to perform competitor analysis. We'll use fried chicken as an illustration.
Step 1: Log in to your Mandala AI. account and select the social analytics tool. After typing your keyword, go to the feature Data Aspect.
Step 2: Select Engagement Video Views.
Step 3: After processing, look at another feature called Top Channels. This feature puts together all the popular pages with high engagement related to your chosen keywords (your product, competitors, industry). The pages are ranked from one to ten.
Step 4: To study further, click on the eye icon to see the actual post.
Step 5: You can see the results of all four platforms: Facebook, Twitter, Instagram, and YouTube.
Once you have a deep understanding of your competitors, you can go ahead and implement these steps to see improvements in your business. You can have a go at Mandala AI. free for seven days trial or register for personal use at mandalasystem.com. Besides competitive analysis, Mandala AI. enables you to monitor your customers' activities on social media and other valuable insights across the web. If you have any questions about this tool, feel free to contact our sales team at [email protected]
Competitor Analysis FAQs
How often should you perform a competitive analysis?
You should perform a competitive analysis regularly, preferably every quarter. This schedule will give you a good sense of how you're stacking up against the competition and what you need to do to stay ahead.
How long does it take to perform a Competitor Analysis?
You can probably do a basic competitor analysis in about an hour. But if you want to do it more thoroughly and dig deep into your competitors' strategies, it will take a little bit longer.
What happens if I don’t do a competitor analysis?
If you don't do a competitor analysis, you'll be playing catch-up the whole time. You need to know what your competitors are doing so you can adjust your marketing and sales strategies accordingly.
How many competitors should you keep track of?
You should keep track of as many of your competitors as you can. The more data you have, the better prepared you'll be to stay ahead of the curve.
What is a competitor analysis framework?
Essentially, it's a system you can use to evaluate your competition systematically. One popular framework is the SWOT analysis, which involves looking at your competitors' Strengths, Weaknesses, Opportunities, and Threats.
Another common approach is known as PESTEL analysis. This involves taking into account Political, Economic, Social, Technological, Environmental, and Legal factors that could impact your competitors (and your business).