No brand today exists in isolation. They have to compete against hundreds of companies selling similar products or services. In a world where consumers have an endless amount of choices, how will your brand stand atop all available alternatives? It has to be unique and different from what’s already available in the market. But how can anyone design a product or service so unique when they don’t know what others are doing? Which is why competitor analysis is one of the most important business exercises before starting a business or launching a product. In an immensely competitive market, such as FMCG, automobile, and consumer electronics, each brand introduces a new product to the market every now and then. Brands have to be on their toes to respond to such actions. So, for brands looking to gain an edge over the competition, how to do a competitive analysis?
5 Steps for Competitor Analysis
#1 – Define your market and customers
In order to develop a robust competitor analysis framework, it is essential to understand what market is the company serving. The question should not only answer markets in terms of geography, but include other factors such as the customer segment, the needs and wants the product is fulfilling, and price point. Numerous models are available to assess and define market and customers, but it should answer these fundamental questions:
- What needs or want is the product satisfying?
- Who will likely use the product?
- What does an average customer look like?
- How much will they spend on it?
- Which organizations are currently satisfying current needs and wants?
#2 – Identify current and future competitors
Based on the questions answered before, companies should compile a list of competitors who are competing on the same functional area. Additionally, it is also important to figure out who will be competing in the same area next year, or say five years down the line. For instance, if you are selling a deodorant, then you should list out all the players selling deodorants in the market, including branded and unbranded ones. It is equally important to list out indirect competitors as well, for instance, people who do not use deodorant may instead opt for perfumes, or even make do with fragrance soaps. Since using perfumes will eat up the market for deodorant, such factors should be considered when performing a competitor analysis.
#3 – Analyze competition and find out market share
Merely listing out competitors is not enough to conduct a thorough competitor analysis. One must understand what their competitors are doing and how big they are. A straightforward way to find out such information is to conduct market research. However, not all companies may have such vast resources, so instead, they can use available news articles, industry journals, company’s website, marketing collateral, analyst reports, and company reports. Additionally, looking at reviews on various rating site on the competitor can give a rough idea of how well the competitors are doing. It is also a must to find out their presence in local and regional markets. How big a pie of the market they hold and their share of wallet in each territory.
#4 – Perform SWOT analysis
Moving on to the next step, brands should pinpoint the strengths and weaknesses of the competitors. It gives them a fair idea of where they cannot compete, and what competitor weakness they can overcome to win market share. It is best to organize all information in a tabular form listing the following:
- Company name
- Product and price
- Target market
- Market share
- Sales volume
- Market strategy
#5 – Analyze data and plan strategies
Once you get your hands on all these data and information, it is essential to understand what story the data is telling. For instance, most competitors in the broadband market may have a similar weakness, that of installation fee. It is possible to ply on their shortcomings and plan strategies which gets rid of such installation fee and just imposes regular monthly payments. This way, the company can easily gain an edge over the competition and start acquiring new customers. Analyzing competitor data gives a fair idea of where your organization currently stands and on what grounds they can compete against new or established players.
For more information on how to do a competitive analysis, market intelligence, and competitive intelligence: