Even though competition in business can be scary, the mere fact that you have competitors is a good sign in and of itself. It shows you that you chose a field with a great market share potential.
The same earning potential you saw has also been identified by others. Now it’s just a matter of who will do the best to capture a bigger chunk of the market. That is where competitor analysis comes into play.
If your business is to grow and remain relevant, then you need to identify a few things:
- Critical market gaps in your industry
- Consumer needs
- Current and future trends
If you do everything else but fail to analyze your competition you run the risk of being overrun and outsold in your own field. Competitor analysis is not about copying what your competition is doing (although sometimes this is called for); it is about analyzing your own strengths, weaknesses and those of your competition to try and find an edge that will position you as the industry leader in your own niche.
Competitor analysis is not a one-time occurrence but an on-going activity that should be undertaken periodically if you want to stay ahead of the curve.
How to Quickly Conduct Competitive Analysis
There is a good chance that you won’t be able to find each and every single person, business or website that is in direct competition with you. The truth is you really do not have to.
All you have to do is find the best in your field; businesses or websites that are doing significantly better than you are at the moment. The easiest way to do that is to use a number of tools.
- Find your competitors using keywords on Google: The fastest way to cast a wide net is to input your desired keywords on Google’s search box and see what comes up. The websites that show up on the first page of Google’s results page for those keywords belong to businesses that are competing in the same niche and the fact that they show up before your website does mean that they are doing a much better job at ranking for those keywords than you are at the moment.
- Use available tools to carry out an in-depth analysis: There are tools such as Ahrefs where you get a full list of competing websites and an analysis of what makes them so powerful. You can use that or other tools such as Keyword Spy, or Alexa to get more insight into your competitors.
- Categorize your competitors: You cannot go after everyone right off the butt. You need to categorize your competitors to determine how much effort goes into each analysis.
Once you have categorized your competitors, you should take the time to go through their websites and find out what it is they are doing above and beyond what you are doing to attract and retain customers:
- What kind of product positioning they have?
- How well their websites are structured
- What kind of customer experience do they offer (you can gather this information from their social media and Yelp pages)
- Look at their pricing and offers
- Look at how they handle shipping or money back guarantees
You could even sign up for their newsletter just to see what they have cooking and how they communicate with their customers. The idea is to be so familiar with your direct competitors that you can anticipate their next move or better their marketing strategies.
How to Use Competitive Analysis to Your Advantage
The very first thing that every savvy business owner understands is that it is about much more than just beating the competition. As a business owner, you are in the business of pleasing your customers.
As such, simply running a competitor analysis and coming up with ways to outmaneuver your competition without paying attention to what the customer truly wants will amount to a waste of time.
You need to do the following if you are to succeed:
- Carry out a thorough analysis of your strengths and weaknesses
- Study your competition (their strengths and weaknesses as well)
- Study your idea customer (what is they want and need)
Only once you have all the facts appertaining to those three issues will you be in an excellent position to compete in the market and possibly outsell your competition.
The late Theodore Levitt, renowned Harvard Business Professor, once said this about customer satisfaction:
“People don’t want to buy a quarter-inch drill; they want a quarter-inch hole.”
That phrase clarifies everything you need to know about how to use competitive analysis to your advantage. The entire idea behind it is that you should combine everything you find to try and understand the kind of solutions your customers need.
Once you identify and see how your competition is going about meeting those needs, then you can position yourself better to be a force in your own niche.
What are the Benefits of Competitive Analysis?
The benefits of competitive analysis are rather straightforward:
- It helps you identify and learn the landscape in which your business operates
- It helps you identify and understand the marketing strategies employed by your competition
- It helps you identify opportunities for co-operation with other brands
- It highlights your strengths and weaknesses within your market
- It helps identify mistakes that your competitors have made so you can learn from them
- It better equips you to counter competitor plans
- It helps you to identify market trends and gaps
Best of all, however, is that it helps you understand what your customers need. You can see that by studying the trends and their buying habits. Also by seeing which kind of marketing strategies work best.
Competitor analysis is essential not only to help you identify who your competition is and what kind of landscape you operate but also to show you your position in the market segment.
If your business is to grow and propel itself into the forefront, then you need to know what those who have already achieved that fit did to get there. Once you know that, you can go about formulating better strategies that will give you even more success.