According to Forbes, three-quarters of enterprises say their main competitors are already using data analytics to differentiate their propositions and promote their strengths to clients, the media, and investors. Organisations across different industries and territories are increasingly concerned about competitors becoming better informed and making smarter strategic decisions to steal customers and market share.
It’s not enough to know your own proposition’s strengths and weaknesses. You need to know which competitors are strong and weak in which areas and draw conclusions that help you protect and improve your position in the marketplace. That’s where competitor analysis comes in. In this article, we look at what competitor analysis is, the key insights you can give, the 6 important steps to conduct it successfully, and what you can do with the insights it provides.
What is competitive analysis?
Competitive analysis is the process of gathering, studying and drawing conclusions from data gathered about your competitors with the goal of understanding their strengths and weaknesses, and identifying the potential threats and opportunities posed by them.
It’s a process typically managed by the marketing and insights teams that use what they learn to inform their strategies. Next, this intelligence will be distributed to relevant teams and individuals within their organisation so that they can also devise, analyse and evaluate their internal strategies.
How can competitive analysis help your business?
The less you know about your competitors, the greater the risk they pose to your revenue and market share. Whether it’s a new feature that elevates their products or a change in pricing strategy that opens them up to new audiences, your position in the market is at threat.
Competitive analysis helps you to understand those threats and adapt and respond in a way that makes your organisation not only more robust but better positioned for future success. It can provide insights that your competitors don’t have, giving you an advantage in a competitive market. As the UK heads towards further economic turmoil, the need to get or stay ahead of the competition has never been more prominent.
Key insights you can gather from competitor analysis
Competitor analysis can cover almost any facet of business you can think of. But ultimately, it’s about understanding who’s leading in what aspects of competition, who’s closing the gap, who’s falling behind, who’s planning something that could pose a threat, where do you fit into the market and how are those positions changing.
Competitor analysis builds the picture and makes it clearer. Once analysed, which we’ll come to shortly, it gives you the insight to make better decisions in every part of your business, from the strategic to the tactical to the day-to-day.
Key insights you can gather through competitor analysis include:
- Price – What are their prices and strategies?
- Message – How are they communicating their proposition?
- Promotions – How are they attracting customers?
- Campaigns – What tactics are being used?
- Content – What are they saying to engage customers?
- Partners – Who are they aligned to and being supported by?
- Clients – Who gives them credibility?
- Engagement – How well are they performing on social?
- Reviews – What do customers think and feel?
That’s by no means an exhaustive list but it should give you a sense of what you track and learn about through competitor analysis. Next, we’ll break down the key steps in setting up and running a successful competitor analysis programme.
6 steps to conducting competitor analysis
a) Clarifying why you’re undertaking competitor analysis.
By now, you should have a better understanding of what competitor analysis can achieve. But now it’s about applying that to what you want and need as an organisation. Maybe you’re about to launch a new product and want to get things like your positioning, pricing and content right. Or perhaps you want to understand how you compare in the affections of consumers.
Being clear on the reason you’re dedicating time and resources to competitor analysis and defining measurable results you need to achieve from it will inform your approach.
b) Identifying your competitors
Once you know what you’re trying to achieve, you can identify your competitors. This could include direct competitors that offer similar products or services in the same market. Or indirect competitors such as those that have different products but compete for the same revenue. Or have similar but operate in different territories.
Use your goals to dictate which organisations to include and review the list regularly to make sure it’s right.
c) Defining what to track and analyse
We’ve already covered some of the key insights you can capture through competitor analysis. Use your goals and in-house resources to determine where best to focus your attention.
If you are launching a new product, like the example used above, tracking pricing, product changes, marketing campaigns, promotions and customer sentiment can all help you make your strategy more successful.
d) Finding the right tool(s)
The days of manually tracking the market are coming to an end thanks to a number of automated competitive and market intelligence tools that accelerate and optimise the process. A lot will depend on your budgets and team resources but it should also come down to what you like the look of.
Most intelligence tools provide demos to give you a better understanding of how they work, how they’re set up, what other software they can integrate with and the way your competitive analysis will be presented. Take your time, ask questions and go with the one that will fulfil your goals.
5. Analysing the data
Let’s say you’ve deployed your competitive intelligence software to start conducting competitor analysis. It’s gathering data about your competitors and the people in your organisation are keen to use it to inform their strategies and decision-making. How do you make sure you’re analysing and drawing the right conclusions from the data?
It may depend on the areas of expertise and experience you have within your team and organisation but it’s worth noting that some competitive intelligence tools provide market analysts who help to set up your competitive analysis dashboard, surface the most relevant insights and draw conclusions for your reports and presentations.
6. Sharing the analysis
To get the most value from competitor analysis your organisation needs to be mobilised to use it. By that, we mean sharing the insights you capture in the most effective and efficient way possible and having clear lines of protocol for how it should be used.
A lot of competitive intelligence tools give you the ability to integrate with your existing communication and data visualisation tools, making the transition seamless and buy-in more likely.