What Is Marketing Competitor Analysis and How to Do it
In order to run a business smoothly, you need to do a lot of things. These things include doing a certain analysis. You forecast your profitability, decide what combination of resources to use, assign the work order to different employees and so on. The business does a SWOT analysis which is basically finding out the strengths and weaknesses of the company. It also manages to identify possible threats and opportunities the business might face due to external factors. Doing such things will help you to form a marketing strategy. With this strategy, you will look to run your business.
However, all these are for your own company. Marketing competitor analysis is done with relation to your competitors. That is to say, you do the analysis of your competitor’s firm. In marketing competitor analysis, you assess the strengths and weaknesses of your rivals. You try to figure out what situations may provide an opportunity for them. Find situations which are likely to become a threat for them as well.
A marketing competitor analysis is a critical part of your own marketing strategy. By doing the analysis, you can formulate how to run your business. This can be seen as a reactive approach. That is to say that you are basing your strategy as a reaction to how your competitor will run his company.
How to do a Marketing Competitor Analysis
The first step of performing a marketing competitor analysis is to identify your current competitors. Not only that but you also need to identify your potential future competitors. There can be two ways of doing that;
- Look at them from a customer’s point of view
- Look at them from their point of view
By looking at them from a customer’s point of view, you are looking at their major strengths and flaws. In other words, you are doing the first part of the SWOT analysis. You think like a customer would. Why would a customer go for their services? Is it because they do things differently or their quality is top notch? Either way these things are like strengths for the competitors. You put yourself in the customer’s shoes and wonder why you would go for them instead of coming to your own company.
On the other hand looking at them from their point of view will help you understand their firm better. You look at their assets and how you would play them in the marketing field. You try to see what their weaknesses are and how you would compensate for them. Once again, you are doing a SWOT analysis for your competitors.
PEST is the acronym for; Political, Economic, Social and Technological factors. PEST analysis is done so that a company knows how to react when there is a change in any one of the four mentioned factors above. So how is it important for a marketing competitor analysis?
While doing the marketing competitor analysis you have to consider everything in SWOT. For that, you need to assess the external factors. This is where the PEST analysis comes into play. By doing the PEST analysis, you are getting to know how your competitors will react when there is a change. Will they consider that change an opportunity to do better or see it as a threat? This will give you an idea as to how your rivals operate. You can even base your marketing strategy on their ideas. Supposing there is a social change and your competitors cannot deal with it. However, your firm can. So you will try to strategize to take full opportunity of that social change so that you come out better than your opposition.
Questions that are needed to be asked
Before doing a marketing competitor analysis, one has to ask the right questions. Without these questions, you cannot do your analysis. The following are some of the common questions while doing a marketing competitor analysis;
- Who are your competitors?
- What products or services are they selling?
- How much market share do they have?
- What were their past strategies?
- Are they using the same strategy?
- How aggressive are they on the advertising front?
- How competitive are they?
- Are their strengths and weaknesses the same as yours?
- How big of a threat are they to you?
- How do their strategies affect your business?
Another interesting technique to determine the marketing competitor analysis is by using the competitor array. It’s a simple tool where you follow a few steps to determine how your competitors are doing. The steps include the following;
- Define the industry: The nature of the industry you and your competitors are in. The scopes available to produce your goods and services.
- Find out your competitors: An industry is likely to have multiple competitors. You need to find out who is your genuine competitor that can match your level.
- Determine the customers: Find out who your customer base is and what their level of expectation is
- Key success factors: You find out what factors are the leading prospects in becoming successful. It does not matter if those factors have been used by you or your competitors.
- Rank those factors by weighing them
- Rate your competitors: You give your competitors a rating based on how much they each weight on those key factors.
This process will help you realize which competitor is contributing more in the market. It is a big part of the marketing competitor analysis. Once you figure out who is the leading pack among the rest, you can make your marketing strategy based on them.