Nothing in business is more irritating than appearing to be doing everything correctly as your rivals keep expanding and your company stagnates. Fortunately, conducting a competitive analysis may be quite beneficial for figuring out your advantages and flaws.
Whether you’re a successful shop owner who is reassessing your view of the current market or you’re just getting ready to start your business for the first time, this post describes a strategy for performing a competitive analysis that any business may apply.
The resources you need to do a successful competition analysis are provided here, along with tips on what information to take notice of (such as price, social/search presence, etc.). Even better, we’ve included a free competitor analysis template that you can use as a guide and complete on your own.
What is a competitive analysis?
A competitive analysis, also known as competitor analysis, compares the tactics of rivals to assess the benefits and drawbacks of different marketing techniques within a certain sector.
It aids a company in identifying possible market advantages and obstacles around a good or service and typically aids brands in keeping track of how direct and indirect rivals are carrying out strategies like marketing, price, and distribution.
Competitive analysis example: what does one look like?
Depending on what you want to discover about your rivals, a competitive analysis might take many different forms. A competitive analysis might be focused on a particular element, such as a competitor’s website strategy, or it can take a broad view of their marketing strategy as a whole. The ultimate objective is to assist you in identifying your capabilities and expanding your clientele.
Let’s take a look at the many sorts of data that are typically used in this kind of study as there are many different methods to arrange a competitive analysis.
There are a few key components you should make sure to include while doing a high-level competitive analysis about rivals’ market positioning, such as:
- who their intended clients are;
- what makes their business and products distinct and what that value add is;
- key benefits/features they emphasize in sales brochures;
- price ranges for goods sold on various online markets;
- the way they handle shipment;
- How much money or venture capital they have gotten?
These parts will assist you in getting a close-up view of your rivals’ differences from one another and their strategies for standing out from the competition in your niche.
Consider including parts like these in your competition analysis if you wish to examine more particular aspects of your rivals’ strategies:
- Customer experience elements ( checkout workflows, customer support, mobile UX, etc.)
- Customer reviews (language used around products, recurring complaints, etc.)
- Website features ( search tools, product images, design/layout, etc.)
- Copywriting tactics (product descriptions, calls to action, etc.)
- Content marketing tactics (blog topics, content types, etc.)
- Marketing tactics (types of promotions, frequency of discounts, etc.)
- Email marketing approach (Newsletter, abandoned cart emails, promos, etc.)
- Social media approach (channels used, frequency of posting, engagement, etc.)
This offers you a general concept of what may be included in the various components of a competitive analysis, however competitive analysis can generally take many different shapes and forms based on what a firm needs to analyze about its rivals.
Why competitor analysis matters for ecommerce
Okay, but why does competition analysis important to me as a business owner or marketer, you might be asking at this point.
This exercise is crucial because you can’t compete successfully if you don’t know who your rivals are, and you can’t set yourself apart if you don’t know what it is that makes you unique.
An examination of your competition will help you if you’re starting an ecommerce business to:
- Make better marketing decisions;
- Recognize industry trends
- Compare yourself to your competition.
- Create a distinct value proposition;
- Determine your pricing strategy (upmarket, downmarket, or midmarket);
- Discover new ways to communicate with consumers, or even with new customers to speak to;
- Find a marketing gap and make sure there’s a market in it.
This kind of study is also not just for new e-commerce retailers. As a business develops and becomes more mature over time, a competition analysis may and should be a dynamic document that is continually changing.
Keep track of how your brand compares to the competition with the aid of a resource like this. It may also help you determine how you’ll continue to succeed in the future.
Do you require a reference case? Here is an example of how a competition analysis may appear:
How to do a competitor analysis
When you’re prepared to begin your competitive analysis, follow the instructions provided below to maintain the proper structure and organization of your research.
1. Select 7–10 competitors
Start by conducting searches for your product and business idea on Google, Amazon, and Alexa to find relevant rivals to include in your research. You need a variety of rivals that:
- Sell similar types of products;
- Have a similar business premise;
- Market to similar and slightly different audience demographics;
- Are both new to the marketplace and more experienced.
It’s a good idea to stay with a group of seven to ten relevant rivals to compile a list of different competitors that will offer you a thorough understanding of the competitive landscape and that is neither too tiny nor too vast.
2. Create a spreadsheet
Keep the information you gather on this group of rivals structured in a table or spreadsheet that can be readily shared and modified over time. You will contrast and compare rivals using many criteria in this article, including
- Price range;
- Product offerings;
- Social media engagement;
- The first-time visitor offers;
- Content used for lead generation;
- Other traits that are worth comparing.
3. Determine competitor types
Start your spreadsheet by classifying each rival on your list as a major or secondary competition. This will enable you to more accurately predict how they will interact with your business.
- Direct competitors, or major rivals, to your company that cater to comparable customers with a similar product. Example: The main rivals are Nike and Adidas.
- Indirect competitors are supplementary rivals that provide a premium or budget version of your goods to a different clientele. For instance, Walmart and Victoria’s Secret are minor rivals.
- Tertiary competitors are connected brands that could target the same customers as you, but they don’t offer the same products or engage in any direct competition with you. If they decide to grow their business, they can become future rivals or partners. Gatorade and Under Armour are two examples.
4. Identify your competitors’ positioning
The most effective marketing strategy for a business is positioning. Effective placement keeps your target audience interested and engaged for longer. Your messaging, values, and overarching business strategy are also influenced by it.
Understanding the positioning of your competition is crucial for this reason. You may discover how to set yourself apart and develop a positive reputation in the eyes of your clients. To justify your rates and raise brand recognition, differentiation is also important for your business’s bottom line.
To define positioning and message, analyze these important channels:
- Social media;
- Website copy;
- Press releases;
- Product copy.
Asking yourself the following questions can help you determine how your rivals are positioned:
- What story do they tell customers?
- How do they market their products?
- What is the business’s description?
- What would you say is their special value proposition?
Recognize how rivals communicate with their fans, clients, staff, partners, and shareholders. You may position yourself differently and distinguish yourself from rivals if you can identify their communication structure.
5. Determine competitive advantage and offerings
Examine their competitive advantage and product or service offering after you have a handle on their message. The great majority of prosperous businesses have a distinct “secret sauce” in comparison to their rivals.
For instance, offering high-quality, affordably priced products and speedy shipping services may be a fashion retailer’s competitive edge. A teacher who works online can have 20 years of combined teaching and professional experience. These kinds of special selling points are difficult to imitate and can help a company build its brand reputation.
Spend some time examining and contrasting the products and services of your rivals with your own. Check out the target market’s internet reviews to see why people choose to do business with them. It can be because they focus on sustainability or provide comparable products at a lesser cost. In any case, you should identify their competitive edge and consider how you may outdo them.
6. Understand how your competitors market their products
The key to the most prosperous ecommerce stores is marketing. The barrier to entry is a strong offering, but marketing propels you to the top. Unfortunately, the majority of companies neglect to evaluate the marketing strategies of their rivals. They make the mistake of assuming that everyone uses Instagram, advertises on Facebook, and optimizes their website for search.
Many of them are, too. However, viewing how your rivals sell their products from a different angle. What deals they are advertising, how they are creating and maintaining their contact lists, and how they are disseminating information online are all things you should learn more about.
Get hands-on with your competitive research in addition to the research you conduct using software and tools. Consider yourself a potential client, and investigate the marketing strategies of your rivals.
You can do this by:
- Purchasing a product;
- Subscribing to their blogs;
- Signing up for their newsletters;
- Following them on social media;
- Abandoning a product in the shopping cart.
Make careful to take notes on each strategy you encounter while you carry out these tasks so that you may later review your results. You may identify fascinating strategies your rivals are doing to draw in new consumers and increase sales by observing their methods for preventing cart abandonment and how they provide help on social media (and other platforms). For your sales staff particularly, the information you acquire during this stage might be quite beneficial.
7. Conduct a SWOT analysis
Think about performing a SWOT analysis in addition to the facts you gather. It’s a framework for doing a competitive analysis that identifies the advantages, disadvantages, opportunities, and dangers facing your business. It also aids in establishing your entire marketing plan. To identify development opportunities, SWOT considers the strengths of your rivals and compares them to your business.
Both strengths and weaknesses are present-oriented. They are factors that you can modify over time and that you can control, such as:
- Market share;
- Product offering;
- Intellectual property;
- Several employees.
Threats and opportunities are beyond your control. Although you may plan for changes, you cannot control these factors. They consist of:
- Market size;
- The economy;
- Market demand;
- Consumer trends;
- Competitors’ products.
Plan to do a SWOT analysis each year. It maintains track of the competitive environment and provides information for your break-even study. You can foresee issues and make ongoing adjustments to your business. An updated SWOT analysis should be included in your proposed business plan if you decide to apply for finance.
Collect data with these competitor analysis tools
It’s time to get started with your competitive analysis by conducting research and gathering data once you’ve decided which immediate rivals to analyze. The good news is that a variety of tools and software are now readily available, which may make gathering data for your competition study easier, faster, and more precise.
Let’s take a look at a few different tools that may assist you in gathering important information on various facets of your competitors’ marketing strategy, including their product or service positioning as well as their content marketing and social media initiatives.
- Ahrefs identifies the top-performing organic keywords for every URL and provides traffic reports for those phrases.
- Alexa: assists in defining search rankings and audience demographics for both your website and those of your rivals.
- SE Ranking: displays the paid and organic search performance, plan, and keywords of rivals.
- SimilarWeb: provides information about a website’s expected monthly visitors and important traffic sources. This is useful for estimating your competitor’s market share.
- SpyFu: assists you in researching and downloading the most successful keywords that your competitors are utilizing in their PPC campaigns.
- iSpionage: displays how many keywords rivals are using and which ones they are targeting on Google Ads, as well as their expected monthly budget.
- SEMrush: assists in identifying your competitors’ keywords, doing a site assessment, and examining backlinks.
- WhatRunsWhere: gives information about rivals’ online advertising strategies.
Social media performance
- RivalIQ: demonstrates how frequently rivals publish on social media, their average interaction rates, and their most effective material.
- Followerwonk: Twitter information on follower demographics, major influencers, and performance indicators is provided.
- Sprout Social: benchmarking rivals’ social performance across social networks, identifying and reporting influencers.
- Owletter: changes sending frequency and identifies patterns in rivals’ emails.
- MailCharts: collects emails and gives insight into email send frequency, subject line strategies, and more.
Content marketing performance
- BuzzSumo: allows you to view the top-performing content for certain themes and rivals, as well as total social shares.
- Monitor Backlinks: this lets you track backlinks whenever someone mentions your content or that of your rivals.
- Feedly: organizes information as it is released, allowing you to research themes covered by rivals in one location.
Begin collecting data using these tools and entering it into your competitive analysis spreadsheet so that your results are all saved in one, structured location.
A competitive analysis template
If you’re still unsure how to begin putting out your template for your analysis, here’s an example and template to help you started.
Assume you offer cosmetics brushes. You’ll learn how to compare rivals’ methods (and what you can do to stand out):
|Competitor 1 (Primary)||Competitor 2 (Primary)||Competitor 3 (Primary)||Competitor 4 (Secondary)||Competitor 5 (Secondary)|
|Company Name||Name 1||Name 2||Name 3||Name 4||Name 5|
|Target Audience||Women ages 18-25||Women ages 18-30||Women ages 18-30||Girls ages 13-18||Women ages 40-65|
|Key competitive advantage||Large Instagram following||Free shipping year-round||Aggressive Facebook ad spending||Price||Luxury angle|
|Marketing strategy||Newsletter and Instagram ads||Newsletter, some social media, retargeting||Facebook ads||Cheapest on Amazon||Magazines, TV, commercials, and some social|
|# of products||75||100||85||525||40|
You may add as many parts to your template as you like, but keep your group of key and secondary rivals to seven to ten to ensure that your frame of reference is extremely relevant.
Do you need a quick competitive analysis template to help you get started?
Free: Competitive Analysis Template
You may begin to design ways to provide your company advantage by examining the strengths and shortcomings of your competitors. Download our free competitive analysis template to obtain a competitive advantage.
Six pitfalls of competitor analysis in marketing
Now that you understand how to construct a competitive evaluation, let’s go through some of the major traps to avoid that might throw off the insights you’ve acquired.
1. Competitive analysis is not a one-and-done exercise
Never going back to your initial insights—or, for that matter, never changing them—can result in inaccurate data and bad judgment. It’s crucial to bear in mind that businesses are continuously changing, so monitoring your competition should be a continuous activity rather than something you do once and then never again. If you want to grow your market share, you must ultimately constantly perform at the top of your game.
2. Confirmation bias is real
As humans, we have a propensity to base our decisions on our preconceptions. This is known as confirmation bias. As you do your analysis, it is critical to be conscious of your initial assumptions and rigorously examine them rather than relying on what you “think” is true about your competition. Allow the evidence to guide your judgments rather than relying on preconceptions.
3. Data without action is useless
If you put in the effort to do a competitor analysis, make sure you act on the results rather than burying them in an obscure file folder on your computer. Create a strategic plan based on your findings and use the unique viewpoints and techniques you uncovered during this approach.
4. Working harder instead of smarter
With so many fantastic resources accessible today that ease the data collecting process for competitive analysis, creating a top-notch, highly accurate comparison is easier than ever. Don’t reinvent the wheel or do things the hard way: invest in solutions that accelerate the process and deliver the critical insights you need to make educated data-backed business decisions.
5. Starting without a direction
If you are aimless when compiling your competitive analysis and have no defined end goal, the process will be much, much more difficult. Define your aim and what you intend to discover about your opponent before beginning your investigation. What do you want to achieve? What do you intend to construct? After all, it is your own business!
6. Not accounting for market timing
When analyzing competition data, be sure to look at how organizations have evolved and improved through time rather than focusing on a single fixed position.
Understanding how your rivals’ methods have changed through time might be just as valuable as knowing what they did at the beginning (or what they’re doing today). Understanding historical, present, and future industry trends will assist you in making more informed judgments.
Competitive analysis: your business edge
Starting a business requires competitive intelligence. You may stay ahead of your competitors by conducting regular market competition analysis. You’ll be able to enter new markets, launch new products, and track the clients of your rivals, offering you a cutting-edge approach to a small business that keeps your business or startup nimble.
Competitive Analysis FAQ
1- Who are the target clients of competition are;
2- What is their current market share?
3- What are their primary competitive advantages?
4- Product characteristics and advantages; Product pricing, even across several markets;
5- How do they handle the shipment
6- If they’ve gotten any venture capital or investment.
A competitive analysis examines your rivals and how your business compares. You may begin to design ways to provide your business advantage by examining the strengths and shortcomings of your competitors.
1- Select seven to ten competitors.
2- Make a spreadsheet to keep track of your data.
3- Determine the sorts of competitors.
4- determining to position
5- Determine your competitive edge and product offering.
6- Learn how your competitors sell themselves.
7- Make SWOT analysis.
SWOT analysis is a framework for competitive analysis that may be used to obtain insight into a current business scenario. SWOT is an acronym that stands for Strengths, Weaknesses, Opportunities, and Threats.