A competitive analysis is a crucial part of the research and planning phase for companies who wish to improve their business. Competitive analyses allow companies to view their competitors’ offerings in direct comparison to theirs.
Importance of competitive analysis
An in-depth competitive analysis is important, because it will help you accomplish 3 things:
Understand how your customers and potential customers use and rate the competition;
Identify your competitor’s strengths and weaknesses; and
Provide you a starting point for developing effective competitive marketing strategies in your target market.
Competitive Analysis: How To
Start by producing a list of companies who you believe are your closest competition or who could potentially move into your market. We have produced a two part vlog series thats go more in depth on exactly what to do next:
When constructing a competitive analysis, it is important to choose a list of features that accurately represents not only the tools your company offers but also the features that most other companies offer.
By only including features that your company offers, you are not representing the scope of the competition and limiting the effectiveness of your competitive analysis.
Although this process can be tedious and time consuming, it is essential in identifying where your competition may be surpassing you as well as what advantages you have over your competition. Developing takeaways will help identify these strengths and weaknesses. From there, you can improve your marketing plan by putting greater influence on the features your company offers and finding ways to implement features your company doesn’t offer that seem crucial to gaining customers.
Using a Competitive Analysis to Define Your Market
Many people believe that a competitive analysis is unnecessary because they feel that they have a good handle on who their competition is and what they offer. But a competitive analysis can also be used when trying to break into a new market. By conducting a competitive analysis for an environment you are unfamiliar with, you are able to model a new business that included many features that your competitors are likely to offer as well as some unique ones that may drive customers away from their typical company.
Further Benefits of a Competitive Analysis
A competitive analysis can also help identify which features your customers’ want. If a company who is offering a product or feature that no other company in that space is, is widely successful, they’re doing something right. Try modeling your tools, products or features after them.
Competitive analyses are just one of the first steps in a company’s research and planning, but they are clearly key components in developing an effective marketing plan. You should also be developing your buyer personas, and we have the perfect free workbook to help you do it!
What are your thoughts on competitive analyses? Let us know in the comments section below!