Hands up if you’ve told someone you’re not interested in what a rival is up to when deep down inside you're scrutinizing their every move?
Don’t worry, we’re not here to judge - heck, we’re always snooping at ways our competitors are managing to fill their time.
Or to put it in a more sophisticated way, we’re conducting competitor analysis.
If you’re not one to be nosy, ignore what your mother told you and put your manners to one side, because sometimes, rudeness yields results.
What is competitor analysis?
We’re not proud to say it, but we all took a peek at our classmates' test paper in school, right?
Well, competitor analysis is similar, with your rival playing the role of your classmate, while you take a peek at their products, sales, and marketing strategies.
Product marketers using competitor analysis gain access to a wealth of invaluable information, using their findings to spot what’s worked well, and which launches have been met with a lukewarm response. This juicy info can ensure you don’t make the same mistake and is essential in introducing strategic approaches to leave your rivals in the shade.
A crafty tactic in the eyes of some, but hey, if you don’t act first, they will, so get your skates on and lap up the many benefits snooping on your competitors can bring.
The benefits of competitor analysis
There’s nothing worse than failing to learn from other people’s mistakes, and as we mentioned before, thorough competitor analysis will show you exactly what your competitors have done wrong, paving the way for you to benefit from their shortcomings.
While benefits of competitor analysis will vary from brand to brand, here are some of the core reasons to embrace the process and delve into the activities of your competition.
Spotting gaps in the market
There’s no doubting consumers will always be attracted to something new, and isn’t available in other areas of the market - it’s part of consumerism, and this will never change.
Making an existing product and pitting your wits against another company, and fighting for customers’ attention is extremely difficult. However, conducting competitor analysis not only reveals what’s already available but also how you can fill a gap in the market with a brand-new product nobody else is offering.
Sportswear manufacturers Admiral executed this to perfection in the 1970s. Following the success of the England soccer team at the 1966 World Cup, owner Bert Patrick scoured the market and identified a gap in the market for replica team shirts. The company would go on to produce shirts for the likes of Manchester United, Arsenal, Tottenham Hotspur, and the England national team, with the likes of Adidas and Umbro, soon jumping on the bandwagon.
In using competitive analysis, Admiral spawned an industry worth billions to the sports industry, annually; the perfect testament to the benefits of keeping an eye on the ball.
No pun intended, honest.
Improve products and services
A pessimistic may say, ‘there’s no such thing as perfection’, but product marketers adopting a more optimistic stance would argue competitor analysis can serve as the ideal way to aspire to achieve more or less the same thing.
Although mistakes are somewhat inevitable when making a product, or putting a new service together, (let’s face facts, we are human, after all), the shortcomings of other companies can’t be acted upon if you don’t know about it, which is all the more reason to scope out your competition, spot their flaws, and pounce the minute you get the chance.
Meeting demand and pricing accordingly
Competitive analysis also allows you to use the services being provided by your competitors as an indication of how market trends are emerging.
For example, research into product sales can provide an insight into what customers in the field want, and don’t want, at any given time. This can be used during your product development phase to ensure you’re not promoting products unlikely to prick the interest of your target market.
Similarly, price is always a key driver behind whether a prospect converts into a customer, or whether they decide against making a purchase. Researching market trends will give a clear indication of how much money someone is willing to spend on a product; introduce a price that’s too low, and not only could you lose out financially, but you could also risk devaluing your product. Similarly, if you price too high, this can drive away customers, and thrust them into the grateful arms of other companies.
Use your competitors as a guinea pig, and analyze their strategy to inform your decisions, never make an impulsive decision.
Ultimately, there’s no doubt competitor analysis can benefit your company. We'd go as far as saying it’d be pretty ignorant to think no lessons can be learned from those you’re competing with.
But before you can reap the benefits, you need to consolidate your understanding of exactly who your competitors are.
How to identify your competitors
It goes without saying unless you know who your competitors are, you can’t get the insights you need to provide the best service possible.
Firstly, you must split your competitors into two groups: direct and indirect.
Direct and indirect competitors
If a business is a direct competitor, then their product or service could be considered to be similar to your own, and operate in the same geographic location.
On the other hand, indirect competitors don’t necessarily provide the same services as your own company, but could still fulfill the needs of the customer and offer a solution to their requirements.
Brands often succumb to a common error when comparing their brand, as they focus their attention on their indirect competitors. However, if you’re comparing your brand, it’s important to focus mainly on your direct competitors.
Note the term mainly - just because they’re an indirect competitor today, they could quite easily become a direct competitor tomorrow. Drop your guard, and they’ll seize their opportunity in the blink of an eye, potentially having huge ramifications for your product.
So, don’t be sloppy, keep your eyes peeled, and stay on your toes.
Once you’ve identified your competitors, dig deeper into your analysis, familiarizing yourself with their products, and marketing methods being used.
Familiarizing yourself with competitors’ products
Whether it’s McDonald’s’ trademark hamburgers or Apple’s Macbook computers, every business provides a product or service synonymous with its brand.
Analyzing the products your competitors are pushing out to the masses, as well as establishing their pricing, is essential in the competitor analysis process. Ask yourself a range of questions, like:
- How are the products distributed?
- Which methods are used to differentiate products from competitors?
- Does the company offer a budget or costly product?
- What’s their market share?
- What are the main needs and characteristics of their customers?
- Does their online pricing differ from their pricing in-store?
Which marketing methods do they use?
The implementation of effective marketing strategies is fundamental in not only putting a product in the eyes of the target market but also making sure it’s impossible to ignore.
When you’re researching competitor marketing, consider whether the following avenues are being used:
- Do they publish regular blog content?
- Do they favor graphics, such as infographics, to communicate with their audience?
- What advertising campaigns are being used?
- Is there an FAQ section for customers?
- Do they have videos, webinars, and articles?
In addition to products and marketing, it’s also essential to do your homework on other areas, including:
- Sales tactics
- Content strategy
- Methods used when marketing content
- Social media presence, as well as their preferred platform.
How often should competitor analysis be conducted?
So, now you know what competitor analysis is, and how to conduct the research, you may be wondering when you should be completing the exercise.
Competitor analysis is a continual job, and honestly, there’s no definitive answer to how often it should be carried out; the frequency will vary depending on how many company’s you’re scouting.
Competitor research may be conducted weekly, bi-weekly, or monthly, depending on individual circumstances. However, what we can say is leaving it longer than once a month isn’t advisable. After all, the market and the behaviors of your competitors are always changing, and you could well be left behind.
It’s also important to note your stage in the cycle should also influence when you conduct your research into the competition. For instance, if you’re launching a new product, or making improvements to an existing service, you need to make sure you’re completing competitor analysis.