To strengthen the success of your product, competitive analysis is used to identify competitors in your market and analyze their strategies. Using online tools, you can access and monitor competitor’s digital information including domain authority, social media outreach, and keyword analysis.
Why competitive analysis
The point is to see what’s working for your competitor, what isn’t working (or what they’re ignoring), and what this means for the success of your product.
For example, after some digging, you may see your competitor used primarily Facebook Ads to reach customers. They’ve run multiple campaigns but each time the duration has been reduced.
Why is that?
Perhaps they’ve had less outreach with each campaign. Perhaps they’ve seen fewer conversions. Or maybe they’re now targeting a new audience who are mostly found on Instagram or Pinterest.
Regardless of the reason (though it’s beneficial for you to find it), the competitor did not get the results they were expecting. So they’ve shifted focus. And if you hadn’t seen this correlation, you might’ve burned money. But since you used competitive analysis and saw the pitfall, you’re consciously able to avoid it.
How to use competitive analysis
When conducting competitive analysis, many areas should be covered. You’re evaluating competitor’s marketing efforts and successes, profitability, and patterns of growth. It’s an analysis of each step they’ve taken and how to avoid their mistakes or capitalize on their success.
You can do a competitive analysis on your own. It’ll only cost you time to answer these questions:
- What products/services do they offer?
- Who is their target audience (and why)?
- What’s their current marketing strategies?
- What was their past marketing strategies (and why did they change)?
- Which social media profiles do they have (if any)?
- What are their strengths? Their weaknesses?
- How could they threaten the livelihood of your business?
While some answers will be strictly analytical, it’s important to identify the why whenever you can. For example, why do they offer that specific product to that particular group of people? Or why did they choose that marketing channel over others?
You want to get inside their head and understand their reasoning. It can help you understand the market better and help you realize their weaknesses. If you can identify the weaknesses, your firm can capitalize on it. This includes:
- Developing products around customer complaints
- Acknowledging user bases currently ignored
Competitive analysis helps identify potential threats while they’re developing. In turn, this lets you prepare for threats, saving you from potential revenue or profit loss.
For example, your competitor has found a manufacturer who can cut their costs down by 20%. They’ll advertise the savings or possibly dedicate a campaign to attract new and previous customers. You can offset potential backlash by offering upgrades (additional value) despite your costs being 20% more than your competitors.
When to use competitive analysis
Use competitive analysis when developing a product or business. Or when the competition is developing a new service. In truth, to see a trend or change in their strategies, it may be best to do a competitive analysis every couple of months.
To offset any threats or potential challenges, exploit weaknesses, and regulate competitor strengths, use competitive analysis and get an edge on the competition.