Whether it’s a rivalry between football teams or pesky neighbors competing for the greenest lawn, we’re constantly surrounded by competition—especially when it comes to business. While many assume that without the competition their business would be thriving, this isn’t always the case. In fact, competition is healthy and can be a leading motivator.
But what it really boils down to is knowing your competition. Being able to identify who you’re up against will help you market your products and services in a way that sets you apart from the crowd.
What is a competitive analysis?
A competitive analysis is a critical part of any marketing plan. Its purpose is to determine the strengths and weaknesses of the competitors within your market, which in turn can help you strategize your marketing efforts to effectively reach your intended clientele or prospects.
Why is it important?
If you’re out and about for lunch and are in need of something quick and easy, you resort to fast food (no judgement, I promise). But, before you pull up to any drive-thru window, you make a conscious choice of where you’re headed. And not just because it’s two minutes up the road, but because we all have brand preferences. So, how does McDonald’s know what Chick-fil-A has on them, and vice versa? A competitive analysis.
As mentioned above, a competitive analysis is used to determine the strengths and weaknesses of the competitors in your market. In addition, this helps you to understand how your customers and potential customers use and rate the competition. But ultimately, the data and research that is gathered during an analysis will provide you with a starting point for developing the type of marketing strategy that will help you reach clients and prospects, and potentially sway them toward either team McDonald’s or team Chick-fil-A.
How do I conduct one?
While conducting a competitive analysis takes an immense amount of time and effort, the end results are more than worth it. To begin, you’ll want to break your competitors into three separate groups—current, potential, and secondary. Starting with your current competitors, you’ll want to answer a few basic questions.
- What are their strengths and weaknesses?
- What are their basic objectives?
- What marketing strategies do they currently utilize?
- What products or services do they sell?
- What potential threats do your competitors pose?
- What potential opportunities do they make available for you?
When it comes to gathering this information, it’s simpler than one would assume. Either visiting their website or their brick and mortar location provide the necessary insight.
The next step requires answering questions that are more detailed. These specific questions will help you gain a bigger picture of what your competitors are doing from an online standpoint.
- How is their web content?
- How is their SEO structure?
- Do they utilize social media?
- Do they utilize email marketing?
After you’re done analyzing your current competitors, you can move on to your customers, and then secondary customers. Keep in mind that as you work your way down the list, some of the information may be more challenging to locate.
At the end of the day, performing a competitive analysis is necessary for any business. Understanding your competitors can not only light a fire underneath you as a motivator but also help you tailor your marketing efforts to stand out from the crowd and capture more business.