A detailed analysis of your business’s competitors is crucial when conducting market analysis. A comprehensive analysis will help you assess the strengths and weaknesses of your competitors so you can improve your strategies and gain a competitive advantage. The process starts with identifying who your competitors are, determining their attributes, and conducting a SWOT analysis.
Identifying your competitors
Before you can even begin with competitive analysis, you’ll have to know who your true competitors are. Think about the services other companies are providing, if they are targeting the same target audience, and if their operations are like yours. These questions will give you a starting point for determining your competitors. Typically, there are three different types of competitors:
- Direct competitors- competitors offering the same services and products aimed at the same customer base and target market, with the same goals, are direct competitors. Direct competitors are operating in a similar model, selling the same thing you are selling to the same audience.
- Indirect competitors- a company offering the same services and products but with different end goals is an indirect competitor.
- Substitute competitors- a company offering any service or product to your customers that you are currently providing.
Once you consider the type of competitors you would like to compare yourself against, it is easier to conduct a thorough analysis. Competitive analysis is just as important as undertaking a market analysis when building a trading plan. Fortunately, websites like Ask Traders offer thorough market analysis reports, so you don’t have to. Whether you are a beginner or an experienced trader, having this information on hand is beneficial.
Conducting a competitor analysis
When conducting a competitor analysis, your goal is to identify your competitors and the marketing strategies they utilize. Having this information can provide you with a clear idea of how to improve your business to become more competitive. Here are the four steps of conducting a competitor analysis.
Identify your competitors
Start by making a list of your top competitors. This will allow you to get a better understanding of who is competing with your business and whom you should focus on when conducting a competitor analysis.
Once you have a list of your top competitors, it’s time to get some information about them. Create a profile for your top competitors. Benchmark the important details for each of them, such as audience demographics and market share.
The four Ps
The next step in the process is to identify the four Ps of marketing, product, promotion, place, and price:
- Product- the way their products are meeting the needs of their customers.
- Promotion- methods they are using for promoting their products and services.
- Place- the place or location where customers are looking for those products.
- Price- the price they are charging for their products and services.
Conduct a SWOT analysis
The next step in the process is conducting a SWOT analysis. Doing this will allow you to gain actionable insights from the information you have collected. Identifying strengths, weaknesses, opportunities, and threads will allow you to identify areas where you are currently doing well and where you can improve.
Identifying who your competitors are and analyzing them will provide you with a clear indication of how you can improve your own business.