A couple of decades ago, businesses could just come out with a unique product and be assured it will be clocking in revenue because they were the only ones offering it. However, changing market dynamics have made businesses think twice before they make any move. Just one wrong decision and your customers already have their bags packed to switch to a competitor.
While the advent of high-speed internet and personal computing has opened avenues for businesses to connect with their existing and prospective clients, it has also empowered customers with a higher degree of freedom while making a buying decision.
How does a business owner stay ahead in the ever-evolving dynamics of the market forces and customer needs?
This is where an effective competitor analysis can make all the difference between winning and keeping or losing a business opportunity!
What Is Competitive Analysis & Why Your Business Needs It?
Competitor analysis means knowing your competition, however, simply scrolling through their website or social media posts would not suffice.
In today’s business world, keeping a tab on offerings as well as strengths and weaknesses of one’s competition can give a growing business all the competitive edge they may need to stay in the game.
Why your growing business needs competitor analysis
Hillel Fuld, a renowned tech marketer, and start-up adviser, believes that 9 out of 10 times entrepreneurs do not have any idea about their competition!
This evident lack of knowledge about your competitors’ strengths and weaknesses can cost your business in the long run. Let’s shift our focus to the solutions.
Steps Involved in the Competitive Analysis Process:
While competitive analysis is not as complicated as it may seem, it isn’t as simple as a few keyword searches on Google too. Competitor analysis framework can be undertaken in 3 very simple steps:
Step 1: Identify Your Competition
This is critical and often misinterpreted. While a quick Google search can give you a fair idea about who offers services similar to you, it is important to understand that some of these may not be actual competition.
When done right, this can save time and effort for the rest of the competitive analysis process and help you have a clear picture of what to watch out for in the domain your business operates and formulate an effective competitive analysis template.
Bonus Tip: You can share a customer feedback survey asking your customers about the brands they engage with for similar products/services.
Step 2: Research Your Competition
This is the most important step in the competitive analysis process and involves knowing absolutely everything about your competitors including; but not limited to its market positioning, brand awareness, website ranking, website speed, marketing strategy evaluation, sales format, online presence (blogs, social media posts, newsletters, customer reviews), funding, and future products.
Your business might be receiving product queries from potential customers over email. You can leverage help desk software to understand better why they might be interested in switching from other competitors to your business.
Step 3: Comparative Analysis of Your Business
Once you have all the knowledge from this, you need to do a SWOT analysis for your competition and yourself. This will help you ascertain what you need to stop doing, continue doing, and start doing to win.
It is important to understand that while competitive analysis helps to get an edge, in the beginning, constant monitoring of the competitor analysis framework is a must.
Competitive Analysis Example: Zappos
Now that you have the working knowledge of competitor research let’s put it to good use and simulate a competitive analysis for Zappos – an online shoe and clothing retailer.
Step 1: Identify the competition for Zappos
Let’s determine what Google shows upon entering keywords “shoes”
Here’s what we get as a result of this query:
So, it would appear in this instance that Zappos has shoes.com, dsw.com, and famousfootwear.com as leading competition.
Step 2: Research the competition for Zappos
Since this is an example, we shall consider only one of the competitors here – Shoes.com. We will research its market positioning, brand awareness, marketing strategy, sales format, pricing, and online presence through blogs, social media posts, newsletters, and customer reviews.
Once we have all the required information, we will move to the next step.
Step 3: Comparative analysis of Zappos
The last step here will be for Zappos to do a SWOT analysis, which will present a comparative evaluation.
Strong Brand Image
Strong online presence
Variety of products on offer
Customer perception after the merger with Amazon
Limited profit margin
Data privacy concerns
Exploring overseas markets
Introduce new product lines as about 80% of sales are from shoes
Introducing stronger data security systems
Disparity in pay
Competitor analysis is a sure-shot way to rule existing markets and enter new markets brimming with confidence. While it is great to devote adequate time to understand your competition, overspending your time focusing on your rivals can lead to ‘analysis paralysis’. Know what makes your business unique to stand out from the crowd and implement a strategy accordingly.
Dwayne Charrington is a technical writer currently associated with ProProfs Help Desk. He possesses hands-on experience in writing for the customer service industry. Dwayne is insightful when it comes to industrial challenges, emerging customer service trends, and how businesses overcome related challenges. Dwayne likes drawing connections between different industries and entities while designing his blogs.