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Your Guide to What is Competitor Analysis and Why It Matters
Using Competitor Analysis Tools to Stay One Step Ahead
Russell Cargill
May 19th, 2024
When I first started my own business, I didn't pay much attention to what my competitors were doing.
Big mistake.
After launching a product that flopped, I realized I could have avoided that failure if I had just paid more attention to the market.
I learned the hard way that if I had first studied what worked and what didn't for others, I could have had a winning product.
As Sun Tzu says in The Art of War, "Knowing your enemy enables you to take the offensive, knowing yourself enables you to stand on the defensive."
Let's dive in to see how conducting effective competitor analysis in marketing can improve your business.
Table of Contents
The Role of Competitor Analysis in Market Positioning
Competitor analysis serves as a key driver for defining your company's market position by thoroughly assessing businesses in your industry.
By identifying your rivals and evaluating their strategies, strengths, and weaknesses, you increase your odds of carving out a unique, effective spot in the market.
Market positioning is a complex blend of various factors, and competitor analysis narrows down the necessary information on competitors' positioning, brand perception, team structures, and alliances.
Ask yourself questions like, what's your competition's status? How does the target market perceive them? What core elements shape their business, and who are their industry partners?
Get this right, and you’ll be well on your way to setting your brand apart from the competition.
Why Competitor Analysis Is Essential for Success
A detailed competitor analysis clearly highlights the strengths and weaknesses of your industry counterparts, both established and emerging.
Competitor analysis can help uncover the following:
Gaps in the market
Unattended customer needs
An unoffered service
An underutilized marketing channel
Identifying Your Real Competitors
Your rivals aren't always businesses offering similar products or services. Sometimes, they're entities with a similar value proposition, competing for the same market share.
Direct competitors offer products or services that are directly comparable to yours. Indirect competitors may cater to the same target market but offer different products or services.
Here’s a couple of examples for you:
Direct Competitors Example: Samsung and Apple both offer high-end smartphones targeting tech-savvy consumers.
Indirect Competitors Example: A bicycle shop selling high-performance road bikes and a local gym offering cycling classes. Both target health-conscious individuals looking for fitness solutions, yet they provide different products and services.
Understanding this distinction is crucial for devising effective strategies to deal with each type.
So, how can you identify your genuine competitors?
Starting with basic keyword research is often an effective strategy, especially for small businesses. By investigating the organic search results using your primary business keywords, you can identify who is consistently appearing in the rankings.
However, high ranking in organic searches doesn't necessarily equate to being your competitor.
So, apart from organic search, you can also use paid search to identify key competitors. With this approach, you can see which businesses are investing in ads for your target keywords, giving you an indication of who with these keywords as significant to their business.
Your community is also an untapped goldmine for identifying competitors. Connect with your customers, partners, or even vendors to learn about other figures in the industry.
While gathering information, take a deeper dive into each likely competitor’s unique strengths that are challenging to replicate. These might include superior technology, specialized staff, exclusive contracts, or even a stellar reputation.
Identifying Market Influencers
Market influencers have become big players in shaping consumer behavior and decision-making. Identifying these individuals can give you a strategic edge while performing a thorough competitor analysis.
Here's a step-by-step guide on how to do that effectively.
First, and likely the most obvious is to look into your competitor's social media platforms. This involves carrying out an exploratory sweep of their Instagram, Facebook, Twitter, YouTube, TikTok, and LinkedIn accounts.
Pay attention to individuals who appear frequently in their posts, especially those who consistently get reactions among followers. These are likely to be influencers partnering with your competitors to generate authority and authentic content.
Secondly, don’t overlook the influence of CEOs and team members. In the current era where consumers crave transparency and authenticity, the personal brand of leaders who project a strong vision can greatly influence their company’s positioning and trust factor.
Therefore, take a closer look at whether your competitors' CEOs or team members are renowned industry influencers.
Study their affiliate marketing or brand ambassador programs. These initiatives whereby brands partner with influencers or happy customers to promote their products can be strong indicators of their influencer network.
Their mission statement, About Us page or website, voice and tone, and social media engagement can provide helpful insights here.
To streamline this identification process, various tools like Market Explorer and Traffic Analytics can help you analyze audience demographics and compare them with your competitors.
Strategy for Direct Competitors
To stand out in the competitive market, you must differentiate yourself by focusing on your unique selling points. This includes offering a superior-quality product and providing exceptional service that exceeds customer expectations.
Additionally, offering innovative solutions that address specific needs or challenges can set your brand apart, making it a preferred choice among consumers.
Strategy for Indirect Competitors
Indirect competitors require a different approach. Rather than focusing all efforts on outdoing these businesses, aim to identify untapped customer needs or carve out a market niche where your product can thrive.
In this case, the goal is less about direct competition and more about creating complementary or supplementary offerings that expand the customer's options.
This might involve:
Developing new features
Exploring new marketing channels
Partnering with businesses for mutual benefit
Gathering Data for Competitor Analysis
During the process of competitor analysis, you'll need to gather comprehensive data to understand your competitors.
There are several ways to obtain this information, including public sources, using data collection tools. A tech company may go as far as developing its own proprietary techniques for analysis.
Let's take a closer look below.
Public Sources for Data Collection
Public sources for data collection are readily accessible and often provide a wealth of information. Sources such as company websites, social media platforms, trade publications, and government databases can offer insights into the operations, strategies, and performances of your competitors.
Company annual reports and press releases are also valuable resources, shedding light on official announcements and financial performance.
These traditional sources, though useful, are time-consuming. I'd suggest considering a process that uses specialized tools for effective data collection.
Tools for Effective Data Collection
SEO and social media monitoring tools like Semrush, Ahrefs, or BuzzSumo offer insights into your competitor's online presence, keyword strategy, and social engagement.
Review platforms like Yelp and Google Reviews can give you an idea of a competitor's service quality and customer satisfaction. Job search sites like Glassdoor and Indeed can be unexpectedly helpful as well, offering insights into a company's work culture, employee satisfaction, and even technology stacks.
For a broader view of your competitor's market presence, tools like SimilarWeb allow you to analyze their overall web performance, including the source of traffic, time spent on their site, and even their advertising strategy.
Use tools like Hootsuite or Sproutsocial for robust social listening – measure Share of Voice, understand the sentiment behind mentions, and identify key topics your customers are voicing about competitors. This can help you tune your strategy and respond effectively.
Proprietary Techniques in Data Analysis
Data Mining: This involves using advanced algorithms to go deeper than just collecting data. The algorithms are tailored to find hidden patterns, links, and trends specific to your industry and how competitive it is. This method provides not only reactive predictions but also proactive ones, assisting in future planning.
Web Scraping: These are special tools that extract vast amounts of data from competitors’ websites and track any changes that occur over time. You can do a lot with these, like monitor pricing, new product launches, and marketing tactics in real-time.
Text Analytics: This involves natural language processing (NLP) to understand sentiment, thematic trends, and the nuances of competitor messaging and customer feedback, revealing not-so-obvious strengths and weaknesses in competitors’ strategies and how customers perceive them.
Machine Learning Algorithms: Machine learning models are custom-designed to learn from your market data, improving their performance over time. They can predict future trends, anticipate what your competitors might do next, and suggest strategic responses with an unmatched level of accuracy and specificity compared to standard solutions.
Analyzing Competitor's Marketing Strategies
Begin by pinpointing their promotional channels and analyzing their communication of value proposition. Look at their website, email campaigns, and public relations efforts to understand their positioning and messaging directly.
Here's a closer look below.
Your competitors' social media engagement can give you insights on what to post and how to communicate with your audience.
Look for key details like their number of likes, shares, comments, and overall engagement rate. See what kind of content gets the most reactions. Is it educational, promotional posts, or content from users known as UGC?
You can use tools to compare their social media stats, such as how fast they're gaining followers, how far their posts are reaching, and how engagement trends are changing over time on different platforms.
This will help you understand what their followers are interested in and how well they're using social media to connect.
Content Strategy Breakdown
After getting a clear picture of your competitor's social media engagement, it’s time to put their content strategy under the microscope.
Focus on key metrics such as content format (videos, blogs, infographics), frequency of posts, and engagement levels per content type (likes, shares, comments, and views).
Here's how you can analyze and organize this data for actionable insights:
Content Format: Do they lean more towards visual content like videos, infographics, and graphical representations, or are their marketing attempts centered around plentiful text-based content, such as detailed blog posts, insightful articles, and comprehensive guides?
Posting Frequency: Do they follow a specific pattern? Is there a correlation between when they post and increased engagement rates? This could give you an indication of when audiences are most receptive and active, thereby fine-tuning your audience engagement strategy.
Identify Patterns: High levels of audience interaction (likes, comments, shares) with your competitor's content often signal that similar content could potentially resonate with your own audience.
Organizing the Data
Begin by organizing the data you've gathered into a table or spreadsheet. This should include content types, posting frequency, and your competitors' average engagement metrics.
Next, calculate the average engagement rate for each type of content your competitors are using.
Do not skip this step, as it helps you understand what type of content prompts the most audience interaction.
Here's an example.
Let's say Competitor A posts videos on Mondays and Thursdays and blogs on Tuesdays. Videos receive an average of 500 likes and 50 comments each, while blogs get around 300 likes and 20 comments. This suggests their audience prefers video content.
However, when they post videos more than twice a week, engagement per video drops, indicating that audience engagement might be optimized with a balanced and consistent posting schedule rather than overwhelming frequency.
What this could mean then is:
There's a strong preference for video content
The audience responds best to a moderate frequency of video content
So, here's what I would do.
I'd fully embrace video content, making sure that it is high-quality and aligned with my brand's unique value proposition.
Quality over quantity, always.
Understanding Marketing Channels
A successful competitor analysis does not end with content strategy. You should also develop a deep understanding of the various marketing channels your competitors utilize. Whether they invest heavily in SEO, social media, emails, advertising, or PR can indicate where they derive the most value.
Each channel appeals to a different segment of its audience and caters to different marketing goals.
Comparative Advertising Analysis
Finally, conduct a comparative advertising analysis by examining how they are positioning their products or services against yours or other competitors.
Once you have a good understanding of your competitor's services, you can look at creating a comparison landing page.
These are a straightforward way to highlight the value you bring to your customers over your competitors.
However, the emphasis should be on drawing attention to your own strengths, not competitors' weaknesses.
A successful comparison landing page should include the following:
Clear branding
Your USP
A fair, balanced comparison chat or table
Customer testimonials
Assessing Competitor's Product and Service Offerings
An in-depth analysis of your competitor's products and services is an important aspect of competitor analysis. Here's a guide that breaks down this procedure systematically.
Service Quality Assessment
Understanding the quality of service your competitor provides is a key factor in distinguishing why a customer might choose them over you.
A good way to do this is to submit inquiries across their support channels (email, live chat, phone) and note the time it takes to receive an initial reply and resolution.
Reddit is a great way to gather information and gauge the sentiment of your competitors' communities toward their brands.
Faster resolution escalates customer satisfaction. Also, check if they provide personal account management. This is a valuable service feature that can significantly influence customer loyalty and retention.
A great way to assess their customer service quality is by actively listening to their customers. Read reviews and social media posts, and observe chat rooms or community posts. Complaints, praises, or general feedback will offer you invaluable insights in this context.
Feature Set Comparison
Going beyond their customer service, you need to dive into their product or service's core value proposition. What are the product features they’re highlighting? Do they have any unique advantages?
Make sure to not stop at just feature listing. Analyze the value each feature brings to the customer. Consider factors like usability, innovation, and how well the feature solves a customer’s pain point.
Identifying Unique Selling Propositions
To identify your competitors' USP, review their site copy, blogs, and stories to understand the problems their products solve, the desires they fulfill, and the benefits they deliver.
You will learn what language and narrative they use to engage their customers, revealing what they view as their unique selling proposition. Usual USPs could be their pricing structure, technology used, freemium versions, or additional perks like complementary tools.
However, the goal here is not to replicate their USPs but to understand them so you can create yours.
Knowing your competitor’s USPs helps you discover the gaps that you can leverage.
I'd also encourage you to experiment with ChatGPT for this. For example, you can use a prompt like "Tell me the USP for X company."
Here's an example:
Prompt: “Tell me the USP for McDonalds. Keep it short and sweet.”
Answer: "McDonald's Unique Selling Proposition (USP) centers on its consistent delivery of fast, convenient, and affordable meals across the globe. Known for its iconic burgers and fries, McDonald's prides itself on offering a uniform quality and taste at every location, coupled with quick service and a family-friendly environment. This combination of speed, convenience, consistency, and value for money has made McDonald's a go-to choice for millions of customers worldwide."
Not bad, right?
Conducting a SWOT Analysis
Conducting a SWOT analysis allows you to examine external factors, such as industry trends and regulatory pressures, informing you of potential opportunities.
It's is a four-step process that starts by identifying all of the strengths within your own organization. This could be something as straightforward as a strong brand, unique products, or loyal customer base.
The next step involves pinpointing the weaknesses within your business. These might be things I've previously mentioned like gaps in your product range, outdated technology, or poor customer service.
Next, outline opportunities that your company could potentially exploit, based on the market trends and industry at large. These could include potential collaborations, market diversification, or targeting a new demographic.
Lastly, and perhaps the most critical step, involves identifying threats. In this regard, consider economic, political, or technological shifts that pose potential challenges for your business. It could also involve potential competitor strategies, aggressive pricing, or a shrinking customer base.
Once you've systematically categorized these factors, you can develop a targeted and effective marketing strategy that leverages your strengths, improves weaknesses, capitalizes on opportunities, and mitigates threats.
Why Trust Me? Russell started his journey as a content writer, writing hundreds of articles for niche websites. He then turned to copywriting, writing for big brands. He is now the founder of InboxConnect marketing agency, has over five years of expertise in email marketing, and has run notable campaigns for leading brands such as Payoneer.
Leveraging Competitor Analysis for Strategic Planning
The next step is to leverage your competitor analysis for strategic planning. This is where you switch from the observational to the application mode.
During this stage, it's key to remain flexible and use the insights gained to synergize with your broader business goals.
You'll be required to constantly refine and improve along the way, revisiting your approach based on your own outcomes and fluctuating market factors.
Monitoring Competitors and Industry Trends
Start with building competitor profiles. Benchmark critical details such as market share, audience demographics, and evolving offerings.
Keep an eye on your competitors for new product launches, marketing tactics, shifts in strategy, and changes in leadership or partnerships. A good way to do this is to sign up for their email newsletters if they have one.
Take it a notch up by actively tracking industry news, professional forums, podcasts, and webinars—anywhere relevant industry news is available.
One way to do this is to use Google Alerts. To use Google Alerts for competitor analysis, follow these steps:
Head over to the Google Alerts website
Enter the name of the competitor, related keywords, products, or industry terms.
Set up the frequency of the alerts based on your requirements. You may want to receive them as they happen, at most once a day or at most once a week.
Choose your preferred sources, region, and language. If unsure, you can leave these to include all automatically.
Select 'Only the best results' or 'All results' according to your need.
Finally, set up the email address where you want to receive these alerts.
Another way to do this is to use OpenAI's GPT, which can provide in-depth insights into market trends and competitor activities by analyzing large scales of data. You can leverage this AI technology to:
Analyze customer reviews and ratings to understand the strengths and weaknesses of competitors.
Maintain sentiment analysis over time to track changes in customer perception about your competitors.
Conduct thematic analysis to extract information about the trending topics and concerns in your industry
Implementing Findings into Your Marketing Strategy
Now that you have all of your data, it's time to implement your findings into your marketing strategy.
Optimizing Marketing Mix Based on Analysis
Your marketing mix—the blend of product, price, place, and promotion known as the 'four Ps', can now be optimized based on the insights gathered from your competitor analysis.
When considering changes, directly align your alterations with the strengths and weaknesses highlighted through your analysis.
For example, the beehiiv community asked for ways to tag subscribers, and beehiiv responded accordingly, along with a bunch of other updates, including enhancements to the editor and new automation for segments.
Read more about the updates here.
Measuring the Impact of Your Strategy
Below is a hypothetical scenario of how businesses would measure the impact of their strategy.
Geekout Tech has identified that their number one competitor, All About Gadgets, offers similar products but at slightly lower prices.
To stay competitive, Geekout Tech decides to adjust its pricing strategy by reducing prices on key items to match or slightly undercut All About Gadgets pricing.
Here are the steps to measure the impact that had on their business.
Pre-Adjustment Data Collection: Before implementing the new pricing strategy, Geekout Teach collects data on sales volume, revenue, profit margins, and customer acquisition costs for the specific items that will be subject to price adjustments.
Implementation: Geekout Teach rolls out the new pricing and promotes the price reduction through email marketing, social media, and on their website to alert current and potential customers.
Post-Adjustment Data Collection: Over the next three months, Geekout Teach closely monitors the same metrics as collected pre-adjustment: sales volume, revenue, profit margins, and customer acquisition costs.
Key Metrics to Monitor
Sales Volume: An increase in sales volume of the adjusted items could indicate that the new pricing strategy is attracting more customers.
Revenue: While a reduction in price might lower per-item profit, overall revenue could increase if the sales volume increase compensates for the lower price point.
Profit Margins: Analyze whether the increased sales volume offsets the reduction in profit margins per item.
Customer Acquisition Costs (CAC): If the pricing adjustment strategy is effective, the CAC should decrease as more customers are attracted to the lower prices without a proportional increase in marketing spend.
Analyzing the Data
After three months, Geekout Tech has achieved a 25% increase in sales volume for the items that had their prices adjusted, with overall revenue for these items increasing by 15%.
However, profit margins on these items have decreased by 5%.
The data reveals that the CAC has decreased by 10%, indicating that the new pricing strategy attracted more customers at a lower cost.
So, what does all this mean, and did it work?
With the data collected, Geekout Tech determined that the pricing adjustment was successful in increasing sales volume and overall revenue despite the slight decrease in profit margins. The reduction in CAC also suggests that the strategy efficiently attracted more customers.
Moving forward, Geekout Tech decides to continue monitoring these metrics and consider similar adjustments for other product lines, aiming to optimize the balance between competitive pricing, sales volume, and profitability.
Maximizing the Potential of Actionable Insights from Competitor Analysis
Reflecting on Sun Tzu's wisdom from the start, he emphasizes the importance of knowing both the enemy and ourselves to strategically navigate attacks and defenses.
This principle proves invaluable as we apply insights from competitive analysis to forge deeper connections with our audience.
Why does this matter? It's simple: having a thorough grasp of both the competitive landscape and your own business sharpens every interaction you have with your customers.
And when it comes to engaging directly with your audience, nothing beats the power of email newsletters.
They're the perfect medium for sharing updates, insights, and special offers in a way that's uniquely yours.
Signing up for beehiiv is your first step towards leveling up your marketing strategy, outshining your competitors, and creating a success story that's all your own.
With beehiiv, you can channel the valuable lessons from your competitor analysis into compelling email newsletters that resonate with your audience.
Happy mailing!
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