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Competitor analysis is a tool.
It helps firms make accurate decisions based on research about competitors within the industry. It can be considered a guide to leverage advantages while maneuvering away from weaknesses.
The following steps are required; it teaches you how to do competitor analysis correctly.
1. Create a list
You can’t start the analysis without assembling a list of competitors in your market. The first companies that come to mind will be big names. These are the firms who dominate the industry with strong brand power.
But include smaller companies too. While they may not be your biggest competition, they are still competition.
Additionally, some companies may not be directly connected to your industry. But their product or services compete with yours. Those firms too should be added to the list.
Lastly, add up-and-coming businesses. The companies who will be introduced to the industry, or are developing competing products within the coming year.
Information may be scarce now. But new revelations will be released as time passes.
2. Begin the summaries
Beside each corporation on the list, summarize their offerings.
Although I said summarize, this section may take some time. Mostly because you want to brainstorm multiple areas of interest.
You’ll want to study the company’s brand power — are they well known in the industry? What products and services do they offer? And which of the offerings is most popular?
How do they market — online? Offline? What seems to be their primary area of focus?
Look into customers and reviews. What are customers saying about the company? What are their complaints — if any? What can’t they get enough of?
Note: You may be able to find this information on the company’s social media pages. Reviews are a good start, but they are easily bought. On social media, customers tend to be more honest — especially if they truly love or truly hate something about a company.
The point of this section is to have a well-rounded and easily understandable view of:
- Who the company is
- What they offer
- Why it’s valuable
- Who they market towards, and
- How others perceive them.
3. Introducing SWOT analysis
SWOT analysis is a strategic planning tool. It examines strengths, weaknesses, opportunities and threats. In this case, you use SWOT to consider these four criteria for each competitor.
If you don’t have time to examine each category — at least dedicate time to strengths and weaknesses. But you must be objective. Otherwise, the analysis will be muddy.
Business is business. And for yours to succeed, your competitor analysis must be accurate. It must be factual. And it must be reliable.
Consider what they are doing a? It could be their:
- Marketing approach
- Lead generation
- Customer support
- Product innovation and more.
And where are they doing not-so-well?
Customer complaints or negative reviews can help here. But you could also dig deeper than the internet — as vast as it is, it’s also limited in answers.
Call people up — leaders or journalists who write in your industry often. They may point out issues with products or services. That information may be invaluable in your competitor analysis.
4. Study the market
Is your market growing at an alarming rate? Or is it on a slow decline causing competitors to expand into new areas?
Your approach depends on the market.
If the growth is high, customers are everywhere. There is room for you to grow in the industry. But if the market is stagnating? The reason could be a lack of interest from consumers. Or lack of innovation, leaving customers bored and unhappy. Or a new industry is growing, and it has adverse effects on yours.
Trends matter. Trends affect growth. They shift attention and lead to the birth of new niches. You must be on top of these trends to take advantage of opportunities.
Otherwise, the competition will beat you to it.
By examining these primary objectives and categories, you’ll have the right idea on how to do competitor analysis correctly.
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