Let’s find out how to perform a competitive analysis – and how you can use that information to your advantage.
Why do you need a competitive analysis? Building a successful marketing plan requires knowing your customers and their pain points intimately. That is step one. And step two is knowing how your competitors are addressing their needs (if they are) and where opportunities may exist for your company.
Marketing ethics 101: Don’t be shady!
Before I go any further, I want to state something up front. This post is meant to teach you how and why to do a competitive analysis. It’s not meant to encourage or even hint at something more malicious. Stealing – whether from your competitors or your neighbors – is never cool. Please don’t do it!
What is a competitive analysis?
Now that we have that out of the way, let’s get into the topic at hand: competitive analysis. What is a competitive analysis?
A competitive analysis is a formal process of evaluating what your competitors are up to. And in this case, we’re talking about a qualitative analysis, not a quantitative or cost analysis. You’d look at things like their product, their marketing approach, their customers, their strengths and weaknesses – and how those may become threats. This may sound similar to a SWOT exercise – and that is for a reason. SWOT (which stands for Strengths, Weaknesses, Opportunities, and Threats) and Competitive Analyses are related concepts. They’re marketing cousins, so to speak.
Why: the benefits of doing a competitive analysis
With a successful competitive analysis, you look at what the other guys are doing, and, more importantly, what you can do in response. A competitive analysis pulls you out of your myopic bubble to find what else is going on in the world … to take a step back and then analyze your findings.
Here are some other benefits of doing a competitive analysis:
- Get a view of the market landscape. See what else is out there – and where customers may go if they don’t choose you. You or your predecessor probably did this when your company or product was initially concepted. This isn’t a one-and-done exercise, though. You need to constantly keep an eye on the competitive landscape.
- Meet a need. Ultimately your goal as a marketer (or R&D team member) is to find a niche (or chasm) to fill a need that isn’t already being met. To create a product or service that customers want or need – and expertly sell it in a way that garners the most traffic. Essentials of Marketing, a textbook on all things marketing that sits on my bookshelf, words it this way: “The search for a breakthrough opportunity – or some sort of competitive advantage – requires an understanding not only of customers but also of competitors.”
- Find ways to get new customers – or hang on to the ones you have. During a competitive analysis, you get time to think about acquisition and retention. For example, how are you competitors winning new customers or retaining them? Look at their loyalty programs and win-back strategies. Also consider what you could do to win customers from your competitors and take over more market share.
When to perform a competitive analysis
There are a variety of times to perform a competitive analysis. Maybe you’re launching a new product and need to know how to approach it. Maybe your brand is feeling stale and you need ideas. Or, maybe it’s simply a downtime in your marketing schedule and you want to do extra credit work. Whatever the case, I encourage you to perform competitive analyses at least once or twice per year.
How to perform a competitive analysis
Now let’s get into the how-tos.
- First, scope out the competition and name them. In order to perform a competitive analysis, you have to know who your competitors are. If you have a list, great. Go grab it. If not – or if you’re launching something new and don’t yet have your competitors ID’d – let’s walk through a few questions to help identify them:Who else is doing what you’re doing, or striving to do? Who is the closest competitor? Also consider less obvious competitors, such as brands or products that may not replicate your product, but may feel similar in tone. And also think about those whose work is similar enough – or those who have a similar ethos. Consider that they could pose a future threat if they develop something new.
- Next, ID their strengths and weaknesses. This is where SWOT comes in. Literally write down each competitor’s name and product, and then run a mini SWOT on them.
- Pay attention to the details. What kind of marketing campaigns are your competitors running – and in what channels? What keywords are they using? What obvious keywords are they avoiding? Take note of your observations. You may make some very interesting discoveries here, so take detailed notes.
- Get a little help from your friends – and the Internet. You don’t have to do all of this research on your own. Turn to your colleagues, for example, the folks on your R&D team who came up with the product you’re in charge of marketing. It’s possible that they’ve done similar competitive research while concepting and creating the product. Get your hands on that material.Also, if you’re willing to put in the work, you can access a wealth of consumer-authored and brand-authored information online. As we know by now, today’s consumers do a ton of pre-work before they make a decision. In fact, I just did this exact thing: I’m in the market for a new blender and spent a good chunk of time doing research online before making my decision. I read the product descriptions, reviews, and user comments. I paid attention to all the details – the good, the bad, and the ugly.
As a marketer, you can use that same data and strategy to gain understanding of what customers want and how your competitors are responding. For example, scour competitors’ product reviews and their social media feeds. Pay attention both to what consumers are saying and how brands respond. These primary sources may be time-consuming to shuffle through, but yield invaluable results.
- Turn your research inward and make recommendations. The ultimate goal of a competitive analysis is to better position your own product against the competitors. Once you’ve found your competitors and what they’re doing, turn your focus to your own brand or product. How do you – or could you – do things differently? What are your strengths above theirs – and/or differentiators? For ideas, turn back to your SWOT here and look at your “S” and “O” categories specifically. What have you learned, and what could you try?Remember to use your knowledge for good. It’s worth repeating: Once you’ve done your work, you will likely have a great playbook of what the competition does and how they do it. Now’s the time to put your white hat back on and remind yourself and your colleagues of good business practices. Ideate ‒ don’t imitate.
- Formalize your findings. Take copious notes, and pull them into a format that you and your colleagues can use. It might look like this:
- Devote one page (or slide) per competitor/product.
- On each page note the competitor’s name and the specific product name. Include a quick SWOT grid. Note three top-level findings.
- In your conclusion, summarize your findings and recommendations.
Don’t forget to add the date of your research; a lot can change in a few months, so it’s helpful to notate when research was performed.
Practice makes perfect
The first time you perform a competitive analysis can be shaky. Personally, I ended up with a laundry list of brands, products, and notes. Once I went through the exercise a few more times, I got more of a rhythm with what I was trying to do – and what kind of information I was looking for. As with anything, practice makes perfect (or at least makes you more comfortable).
For bonus points, look outside your own rabbit hole. Try performing a competitive analysis for a totally unrelated company or industry. For example, if you’re a marketer for software, pretend instead that you’re marketing a specialty clothing line. Or do a competitive analysis for a retail coffee chain, or an e-learning platform, or … the possibilities are endless. I recommend doing these exercises to get practice with the craft of competitive analysis, but also to gain perspective and inspiration. You may even want to do a competitive analysis of an industry or company that you really want to work in. This way you have it in your back pocket when you secure an interview!