In a competition-based market, every action can make a difference. The analysis of competition, also called Competitive Intelligence (CI), is a fundamental process for any company that wants to establish itself or improve its position in the market.

For this reason, small and mid-size enterprises (SMEs) and large companies should always include competitor research in their Business Plan: they can study new business strategies, improve their approach with customers, understand what mistakes not to make and how to move in the market.

Keeping an eye on the competition enables you to have an overall view of competitors, of which you can get the most out.

 In this article, it will be given every step to analyze competition from a general perspective to specific competitor research methods.

What is a competitor analysis?

Competitor analysis is a process of identifying businesses in your market that offer similar products or services to yours and comparing competitors’ strengths and weaknesses to your business. It helps you determine potential advantages within a market around a product or service and generally helps you identify and monitor products, sales techniques distribution, and marketing strategies of your competitors.  

By studying each competitor, you will have a detailed list of all their pros and cons.

How to do a competitor analysis in 4 steps

1. Define competitors

The first step of a competitor analysis is defining your competitors. There are 3 types of competitors classification:

1. Direct competitors are those businesses that do exactly what you do. It offers the same products and services aimed at the same target market and customer base, with the same goal of profit and market share growth. They could be local brands, local businesses, national, or even international brands, so you have to look at the entire market we are looking at our direct competitors Your direct competitors are targeting the same audience as you, selling the same products as you, in a similar distribution model as you.
2. Indirect competitors provide alternatives. They might provide similar products and services to what you do, but they’re not exact. An indirect competitor is another company that offers the same products and services, much like direct competitors; however, the end goals are different.
3. Replacement competitors: these types of competitors offer other products or services that the customer can use instead of using your products and services. The wallet share is a way to look at your replacement competitors.
   e. you sell chocolate boxes, your replacement competitors are those who sell a bunch of flowers or a bottle of wine.
   The same concept applies to the available time: who else is competing for your customer’s available time?

2. Analyze competitors' profiles

You are aware of the competitors that are being considered by your target market, and you can take action for your study.

Learn about their selection of products or services: 

• What do they have to offer that you don't or vice versa? 
• What price range do they fall under, and how do your prices stack up? 
• How much influence or power do they have in your specialized area? 

Be frank about it; it's crucial to avoid viewing your brand with affection!

It's time to complete your competitors’ profiles by adding basic brand information now that you are more aware of your competitors' target market and market share. This gives you the background that may help in your competitor's analysis of the data and the development of a more effective business plan.

3. Check out the strategies and outcomes of your rivals

Next, draft a written assessment of the strategies and shortcomings of each rival. Finding your competitive edge will be aided by a competitive landscape analysis. It might be a distinguishing quality that resonates with your target audience and on which you can base your brand image and marketing. Alternatively, you can decide to cut your rates and provide fresh discounts if you notice a weakness in the competition.

Write out everything that would influence a customer to choose (or not choose) each rival.  You can decide which aspects of your competitors' companies are worth looking into based on the findings. 

• Pricing, distribution, and delivery plans,
• Market share, newly released goods or services, 
• The identity of their most valuable, long-term clients,
• The standard of their post-sales assistance, 
• The sales and marketing channels are a few examples of these factors.

4. Identify Best Practices and develop a business action plan

It is the time of getting actionable insights from the findings from the competitor analysis dashboard. 

Be careful to keep the following considerations in mind as you determine the best practices for your business:

• Which of my priorities are the most crucial?
• What are my main advantages and disadvantages?
• Which parts of my business plan need to improve?
• What do my customers want?
• Which of the tactics used by my rivals seems to be the most effective? 

It is a continuous effort to include a competitive study in your strategy planning. Every time you have to make a crucial choice for your business, you can always go back and review your study. You should routinely review and update your competitor analysis to keep one step ahead of the competition.

Why competitor analysis is important for your business plan?

Look at the statistics:

According to new data from Crayon, a research firm based in Boston, 90% of businesses report that their industry has become more competitive in the last three years.

Every business, from a small size to a large size, can see an increase in revenue as a result of CI efforts.

According to the data, up to 80% of companies state that competitive analysis is important (44%) or critical (26%) to their businesses.

Conducting several competitor analyses and analyzing data is essential to find out good practices that can be adopted and customized to create an effective business plan.

Competitor analysis helps you:

• Map out all the competitors: greater knowledge of the sector and the target;
• Find out their goals, objectives, strategies, and tactics: what can threaten your business in the long run. A thorough analysis can help you build strategies to market your business more effectively, by understanding what it can be improved, and increase profit.
• Determine their strengths & weaknesses: this information is critical for staying enhancing your business and ensuring both your product and your marketing campaigns are outperforming industry standards.
• Think of your offense and defense: comparing your business allows you to take advantage of opportunities and capitalize on strengths more quickly.

Benefits And Advantages:

There are many benefits this type of analysis provides. You will be able to:

• Anticipate their actions: it’s vital to your business's success to be proactive instead of reactive so that you can predict possible scenarios of the market;
• Understand your unique value: identifying your product’s unique value proposition and what makes your product different from competitors’ can inform future marketing efforts;
• Uncover market trends and tactics;
• Identify gaps in the market in which you can position yourself and prevail (under-served opportunities): it can also show you new strategic opportunities to enhance your products or services, grow your business, and fill a customer’s need. You may notice that you have an advantage that could enable you to make a change that increases your sales or profit;
• Be aware of mistakes in order to avoid them;
• Develop new products and services;
• Be more customer-oriented: putting yourself in the customer’s shoes will help you understand what can be improved. You should learn through customer reviews what’s missing in a competitor’s product, and consider how you might add features to your product to meet those needs;
• Helps you make more effective decisions: the collected data allows you to keep track of every action, and every strategy developed. It will also help reveal who your current or potential competitors are throughout every stage of business.

Competitor Data Collection + Templates And Examples

Some numerous professionals and agencies deal with carrying out competitive analyses for companies, but you do not always have a sufficient budget to start a such activity. For this reason, it is possible to proceed with common methods like:

SWOT Analysis

Is the analysis of the Strengths, Weaknesses, Opportunities, and Threats of a company. It’s useful to highlight the critical aspects of the internal and external environment of the company that could affect its choices.

When we talk about strengths and weaknesses, we refer to internal elements of the company, while concerning opportunities and threats we speak of external elements of the company.

By comparing the characteristics of your company with those of your competitors you can discover new areas in which to invest time and resources and which projects are superfluous. All this will lead you to better position your products/services on the market.

Here is a competitor SWOT analysis example:

Source

PEST Analysis

To carry out an effective competition analysis, the SWOT analysis should be accompanied by a PEST analysis, which focuses on external elements and ensures that the company can face certain risks/crises.

–Policy – Administrative regulations that can affect the market: political stability, fiscal laws, trade restrictions, labor laws, etc.

–Economy – Economic factors that could have an impact on your target market: inflation, interest rates, exchange rates, economic growth, etc.

–Society: Analysis of the socio-economic ecosystem of the industry: demographic data on consumers, lifestyle and cultural background, level of education, etc.

–Technology: This section includes technological advances, and government-made investments in research and development.

–Law

–Environment

The following is an example of a PEST analysis conducted by Nike:

Source

Download SWOT and PEST templates

Download SWOT and PEST templates (Miro) 

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Benchmarking Table

Another framework you can use to organize the data you collected on your competitors is the Benchmarking table.

Competitive Benchmarking allows you to put the characteristics of your product or service on paper (focus on those that have value) and to compare them with those of competitors. Here is an example of a Benchmarking table, which will be useful to demonstrate that, on the features that matter to your potential customers, your company responds better than the solutions marketed by your competitors.

Click here for the template

Click here for the template (Miro)

Gap Analysis: the Capabilities Level Chart

Essentially a chart designed specifically to help you highlight the areas in which you are more or less performing compared to competitors. An easy method to understand, quantify, analyze the “gap” between realities compared and set priorities for intervention.

Click here to download the template (Miro).

Click here to download the template

5 Forces Of Porter

After these analyses, to have a clear picture of the competitive sector in which we move, it is advisable to proceed with the model of the 5 forces of Porter that analyzes 5 variables:

1. customers, who are the recipients of the company’s outputs;

2. the suppliers supplying the materials to the company;

3. direct competitors, which are the main competitors with good production capacity, cost structure, and supply differentiation;

4. potential competitors;

5. producers of substitute goods which, while not producing the same product or providing the same service, can satisfy the needs of the customer.

Here is an example of this method applied to Tesla:

Source

Conclusion

If done correctly, an analysis of the competition can give you numerous qualitative and quantitative information from which to define the next steps of your business. Conducting a competitor analysis is vital for not only matching your competitors but giving you an edge. Unfortunately, some companies, for lack of time or a dedicated budget, fail to develop the analysis of the competition and this decision can lead to concrete damage to the business.

In highly competitive markets, information and knowledge is an asset that acquires more and more value, be sure that your analyses are always updated.

How to Use Pivony for Competitor Analysis?

Pivony provides you with catching valuable insights about your competitors. The only thing you should do is create a dashboard about your competitor and analyze the results.

Social media including Twitter, Facebook, Instagram, and complaint websites are useful platforms to see your competitors’ online presence and their customers’ ideas.

Besides, mobile app and e-commerce reviews are also beneficial to catch ideas about the competition.

After choosing the platform you want to analyze, you can create a dashboard with a few clicks. The dashboard will indicate to you a Data overview and AI topics in a bubble view. For example, you see a bubble view of the Deliveroo Dashboard., indicating the most discussed topics with their sentiments. 

For example, Uber Eats can analyze Deliveroo’s customers’ words to understand what customers need in the food delivery sector.

When you click on bubbles you see a range of analyses including sentiment and intent analysis which will make it easier to detect issues.

Here, almost half of the Deliveroo customers have a negative sentiment about the company, by clicking on the negative part, you can directly see and detect these people’s thoughts.

Intent analysis shows that 32% of customers have a complaint about Deliveroo while 14% of customers suggest something to Deliveroo. If you want to see these suggestions, just click on the suggestion part.

Before this categorization, you do not need to do anything, Pivony’s artificial intelligence learns from the Data and deduces the results.

Of course, these are not the only things that Pivony provides. To discover more, contact us today!

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