A competitive analysis is a common and useful assessment that is used by marketing and strategic management to gauge the weaknesses and strengths of potential competition and develop best practices.
This analysis often forms the basis of defining opportunities for both offensive and defensive tactics with the goal of solidifying your organization’s foothold in the marketplace.
Essentially, businesses have been using competitive analyses in order to gain leverage over their competitors through an understanding of varying business processes and differentiation. Today, we will be discussing how to complete a competitive analysis given the vast amount of technology we have available to us!
Foundation
The foundation for your competitive analysis needs to consist of a few things before you can take a more detailed approach.
– Industry
Consider the industry where you reside as an organization. Too many people begin their analysis based on irrelevant competitors who are not niched within the same area as they are.
This is just a waste of time and resources. Contemplating your industry beforehand will give you a much better idea as to your actual competitors and similar products/services.
You can often determine who the main competitors in your industry are by simply googling key words in your offering. That way, similar offerings will arise from companies that provide solutions to a similar problem. These people are part of your direct competitor base.
– Product
Next, consider the exact product you are offering. Are there similar products or complementary products within your market that can be leveraged or partnered with? How do these products deliver value?
Considering your product or offering will help you boil down your competition. After all, a competitor may be in the same industry but may not provide a product that delivers value to the same market as you do.
Therefore, after considering your industry you must determine if there are similar products targeted to a similar audience.
– Promotion
Once again, it is possible for a competitor to provide a similar product, but not promote it to the same niche. This is very important. Essentially, you must consider the market placement that your competitor uses, and how is this different from yours?
Are they providing value in a different way? Or are they simply targeting different people? Recognizing the differentiation in the “promotion” aspect leaves the door open for you to explore various other niches.
With these considerations underway, you can begin to form the foundation for who your true competitors actually are. It is useless and time-consuming to perform a competitive analysis of an organization that doesn’t actually influence the marketplace that contains your niche.
Sorting Competitors
Once you have identified who the relevant competition is, you have to sort that competition to determine where the threats and opportunities are. Sorting competition into 3 main categories is beneficial, as it is simple to do, easy to understand, and creates a clear separation of the varying threat levels these varying businesses provide.
Let’s discuss the 3 main categories within which to sort your competition.
Category 1: Primary Competition
The primary competition is characterized by the organizations that directly target the niche that your organization targets. These people have the same proverbial “avatar” surrounding their ideal consumer.
These organizations are categorized as primary competition because they pose the most threat to you. Generally speaking, if a consumer had a single issue to fix by using your product or service, they could also use the direct competitor’s product or service for the same issue.
Primary competition is based on two key factors:
1. They offer a similar or the same product/service.
2. They target the same niche.
Primary competition can have just one, or both, of these factors. It is important to realize that, although they may not have a similar product, if they solve the same problems as your product does, they are competition.
Category 2: Secondary Competition
Secondary competition are those businesses or organizations that may offer solutions to an entirely different niche with a similar product or provide a similar service that quells the needs of your target market.
These competitors are generally less threatening to you, but they are still players in the marketplace that solve your market’s “pain point”
For example, Kohl’s clothing stores provide clothing at reasonable prices, but Versace, Gucci, or any other high-end luxury clothing retailer also provides the answer to this problem, however, they don’t target the same market.
These stores would be considered secondary competition. They offer different products or services to a different market, but the fundamental needs of the market are being met (they both provide clothing).
Category 3: indirect/ complementary Competition
Also called “tertiary competition” (Tertiary is a word that, quite literally, means “3rd level”). However, in this case, indirect/complementary competition are those competitors that you can directly leverage or benefit from in some way.
These competitors are organizations that may provide related or complementary products to yours, and in so doing, create the potential for partnership and product/service arrangements for you and your organization.
Consider the peanut butter and jelly sandwich. Peanut butter doesn’t solve the same need as jelly does, and if they were marketed alone, they would probably reach a very different audience. However, they are complementary products that are often bought together by consumers.
Tracking the Basics
After discovering and categorizing the various levels of competitions there is, next, we need to analyze the basics of your competition.
The basics of the competition include things like…
– Company Name
– Location
– Offerings
– SWOT analysis
– Mission Statement
– Values
– etc.
These “basic” categories are surface-level and provide at least some insight into the nature of the competitor’s positioning in the marketplace.
The benefit of discovering these basic categories is that they provide a general overview of the organization itself, and therefore, can further solidify the organization’s positioning in one of the three categories of competition.
Experience the Competition
One of the most useful things you can do as a business owner is actually experiencing the competitor’s product or service and how they deliver it.
Remember, one of the fundamental rules about marketing is that your product is irrelevant, it’s the experience of the consumer that counts. And although I know many business owners would immediately renounce supporting the competition in any way, it can actually help give you the insight that makes the competitor competitive in the first place.
Knowing your enemy is important after all, and discovering first-hand what makes them attractive to consumers can help you adopt best practices as well!
When/ if you decide to experience the competitor’s product or service for yourself, keep these main considerations in mind:
1. What about them is different than your product or service?
2. What are their apparent weaknesses?
3. How do they attract consumers?
4. How was the value delivered?
5. If you had to complain about the product or service, what would it be?
6. Did they have any “calls to action” that you can utilize in your own marketing plans?
7. How did they interact with you? Their consumer?
The Positioning of the Competition
By examining the positioning of your competition, you can adopt trends or relationships that you see relevant towards market demands and the needs/wants of your niche.
Consider how this competitor markets themselves. How do they make their offerings apparent to the consumer base? What exactly is the market purchasing from them? That will give you a good indication of their underlying strength.
Do they differentiate based on price? value? What would they say makes their product unique?
Discovering how the competition markets themselves is a great way to determine the relationship between consumer wants and the value they provide. Consider the 4 P method to keep this marketing analysis simple and direct.
The 4P method is simple, but it works wonders in it’s simplicity:
Product: what are they selling? How does it provide value?
Price: Is it competitive? Will it provide the value enough to justify the price point?
Place: How do they distribute their product/service? How do they channel attention from the market?
Promotion: How do they plan on advertising to the niche? How do they develop publicity?
A great and simple way to do this is to subscribe to their blog or follow their newsletter. This way, you may not actually be supporting them, but you will keep a bird’s eye view of how they position their products and offerings.
Conclusion
Ultimately, I will summarize the key points from the article into a handy little checklist for you!
Foundation:
– Industry: What is your industry? Who are also directly involved in this industry?
– Product: What purpose does your organization serve? How do you satisfy your market’s “pain points?”
– Promotion: Who target’s the same niche as your organization does?
Sorting Competitors:
– Primary Competition: Same/similar products, same/similar niche market. (i.e. Target and Walmart)
– Secondary Competition: Same fundamentals, different market/products. (i.e. Kohls and Gucci)
– Indirect/Complementary Competition: Complementary products. (i.e. PB and J)
Tracking the Basics:
– Company Name
– Location
– Offerings
– SWOT analysis
– Mission Statement
– Values
– etc.
Experience the Competition:
1. What about them is different than your product or service?
2. What are their apparent weaknesses?
3. How do they attract consumers?
4. How was the value delivered?
5. If you had to complain about the product or service, what would it be?
6. Did they have any “calls to action” that you can utilize in your own marketing plans?
7. How did they interact with you? Their consumer?
Competitive Positioning:
Product: what are they selling? How does it provide value?
Price: Is it competitive? Will it provide the value enough to justify the price point?
Place: How do they distribute their product/service? How do they channel attention from the market?
Promotion: How do they plan on advertising to the niche? How do they develop publicity?
Hopefully, these tips help you track the competition and become more competitive yourself!
Thanks for reading!
Work With Austin
-Austin Denison is a change management consultant from Southern California and founder/CEO of Denison Success Systems LLC. He is the author of The Essential Change Management Guidebook: Master The Art of Organizational Change as well as The Potential Dichotomy: The Philosophy of a Fulfilling Life.
.
Comments are closed