How to Complete a Competitor SWOT Analysis
Have you ever wondered what sets industry leaders apart from the rest? It’s not always about having the best product or the most innovative ideas. More often than not, it’s about understanding the competition better than anyone else and leveraging that knowledge to your advantage.
For every successful business, behind the scenes, there’s a strategy that often involves a thorough analysis of the competition. And that’s where competitor SWOT analysis comes into play. Competitor SWOT analysis is a powerful tool that lets you peek into your competitors’ playbook, revealing their strengths, weaknesses, and potential moves you can make.
What is a Competitor SWOT Analysis?
A competitor SWOT analysis is a strategic tool that breaks down and evaluates your competitors’ Strengths, Weaknesses, Opportunities, and Threats. It goes well beyond just a surface-level competitor evaluation, diving deep into various aspects of their businesses.
The “Strengths” and “Weaknesses” parts focus on internal factors like company culture, operational efficiency, marketing, social presence, and proprietary technology. Meanwhile, the “Opportunities” and “Threats” sections zero in on external factors, like market trends, shifts in consumer behavior, or even global events.
The goal of a competitor SWOT analysis is not merely to identify what others are doing but to comprehend the nuances of their strategies, successes, and shortfalls. By dissecting these elements, you can decode the competitive landscape, gaining clarity on where your competitors shine and where they might be vulnerable.
Why is it Important?
In today’s hyper-competitive business world, merely understanding your own business isn’t enough. Developing a deep understanding of your competitors provides a broader perspective, enabling better strategic decision-making.
By pinpointing your competitors’ Strengths, you can understand what sets them apart and why customers might choose them over others. This offers a benchmark, helping you elevate your own offerings. By picking out their Weaknesses, you identify potential market gaps, problems to avoid, trends that don’t work, and opportunities for differentiation, allowing you to address potential problem areas better than anyone else.
Additionally, understanding external Opportunities means you can be agile, pivoting or adapting your business and marketing strategies to tap into new or evolving trends and market demands. And if you’re aware of Threats to your competition, you’re also aware of potential threats to your business. This will leave you better equipped to mitigate risks and help you avoid or solve problems before you ever experience them.
The information you get from a SWOT analysis can offer invaluable insight into how you should operate your own business. It’s like getting to run multiple tests on the market with absolutely no stakes or money involved – it’s a win-win!
How to Perform a Competitor SWOT Analysis
In this guide, we’ll walk you step-by-step through crafting a competitor SWOT analysis, ensuring you’re always a step ahead of your competitors. Let’s get started!
Step 1. Understand the Basics
Diving into a competitive audit like a SWOT analysis means understanding the core of your competitor’s business. But to start, you have to understand what a SWOT analysis is. In simple terms, it’s an anagram for “Strengths, Weaknesses, Opportunities, and Threats.” In broader terms, it’s a strategic tool that deciphers your competitors’ moves, giving you insights into their strategies and potential vulnerabilities.
Step 2. Identify Your Competitors
A successful competitive audit starts by knowing who your competitors are. So, the first thing you’re going to do is identify your competitors. You likely already know a few, but you should also explore potential emerging businesses or indirect rivals that could lend insight into your industry or business. Sometimes, a competitor isn’t just the one offering the same product but those fulfilling the same need in a different way.
Step 3. Gather Data
Research is your best ally during a SWOT analysis. So, dive deep into market reports, use online analytics tools, study customer reviews, and even make mystery shopping trips. The goal is to understand your competitors from a customer’s perspective. The more comprehensive your data is, the richer your competitor SWOT analysis will be.
Once you think you have enough, push a little further. Learn everything you can about that other business, write it down, and keep it organized. This information will help you decode some of the more complicated facets of the SWOT analysis process and help you understand your competitors’ motives.
Step 4. Analyze Strengths
Once you know who you’re dealing with, it’s time to start the SWOT analysis. The first part of the SWOT process is recognizing what your competitors do exceptionally well – their strengths. Are they renowned for their customer service? Do they offer a feature that no one else does? Do they have an exceptional online presence and high-performing content strategy?
By identifying their strengths, you get a clearer picture of what attracts their customers. You can then use that information to build up your own business.
Step 5. Pinpoint Weaknesses
Next, you’re going to pinpoint your competitors’ weaknesses. No business is without flaws, so it’s your job to unearth these weak spots. It could be anything – a less intuitive user interface, higher prices, or maybe just poor post-purchase service. If you can identify these gaps, you can fill them with your own business.
Step 6. Spot Opportunities
Next, you will use all the information you gathered about your competitors and industry to seek new opportunities. Remember: the competitive audit isn’t just a defensive strategy; it’s a launchpad for growth.
So, monitor industry trends, customer behavior shifts, and market changes. If there’s a rising customer need that your competitors aren’t addressing, it opens a window of opportunity for your business. If you can meet the demands that your competitors are missing, that’ll keep you one step ahead.
Step 7. Identify Threats
Anticipating challenges is half the battle. That’s why the final part of the competitor SWOT analysis is so essential. Threats might range from a competitor’s groundbreaking product launch to a global industry shift that could tank your product launch or marketing efforts.
By acknowledging these threats to your competitors, you also acknowledge threats to your own business. As Will Smith once said, “…if you stay ready, you ain’t gotta get ready…” And that is how you should run your business.
Step 8. Reflect on Your Own Business
Once you’ve completed the SWOT analysis, it’s time to use all this newfound knowledge. So, take a moment to do some introspection. How does your business look by comparison? Remember to identify your strengths as well as your weaknesses. Use this as an opportunity to celebrate what you’re doing right and strategize on areas of improvement.
Step 9. Strategize and Implement
A SWOT analysis without subsequent action is a missed opportunity. So, use your findings to tweak your offerings, refine marketing strategies, or even pivot your business model. It’s all about using knowledge gained by analyzing your competitors to craft informed decisions about your business.
Step 10. Repeat Steps 1-9 Indefinitely
A competitor SWOT analysis isn’t a one-time thing. It’s something you have to perform on a regular basis for as long as you’re in business – which, hopefully, is a long time! Remember, markets evolve. Today’s leader might be tomorrow’s underdog. So, make sure your competitive audit remains a recurring task. We recommend performing them once every three to five years, depending on the volatility of your market.
Perform a Competitor SWOT Analysis for Your Business Today!
Embracing the competitor SWOT analysis is the hallmark of a proactive business leader. Whether you’re steering a startup or an established brand, the insights gained from this exercise are invaluable and can help you truly transform your business.
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