How to Conduct a Competitor Analysis and Improve Your Marketing Strategy
Creating a successful business in 2023 takes a lot more than just time, effort, and money. While those things are essential, you also have to know the ins and outs of your industry, who your competitors are, and their marketing efforts. And to get that information, you have to conduct a competitor analysis.
What is a Competitor Analysis?
Otherwise known as a “competitive analysis,” a competitor analysis is a process that allows you to identify important aspects of your competitors’ businesses that you can use to improve your own.
It’s kind of like spying but in a totally legal and ethical way. By analyzing what your competitors are doing to market their business, you can identify specific opportunities to improve your own products, services, marketing, content, and more.
Why is a Competitor Analysis Important?
The truth is, you can’t know everything, and it’s unlikely that you’ll always do everything right. Even with a top-notch marketing team, a dynamite sales team, and the best content in the world, you will miss some opportunities that your competitors won’t. And if you do, you need to know what they are and how they work.
That being said, a competitor analysis is important for several reasons. For starters, it can help you identify gaps in the market that your competitors are missing. If you can see what your competitors are lacking, you can swoop in, put specific emphasis on those areas, and corner the market. It also shows you what they’re doing that you’re missing, so you can correct mistakes you’ve made in your own marketing.
A thorough competitor analysis will also show you what your competitors are doing to market their business and how well it works. This information enables you to compare your efforts and results to theirs and ultimately use that information to improve your business. If a competitor has a sales, marketing, or content strategy that works for them, there’s reason to believe it might also work for you.
A Step-by-Step Guide for Conducting a Competitor Analysis
Of course, there’s a big difference between wanting a competitor analysis and doing the legwork to conduct one. And that’s why we’ve designed this step-by-step guide to help you complete a thorough competitive analysis of your competitors. So, let’s start with the basics.
Step One. Identify Your Competitors
The first step to conducting a competitor analysis is knowing who your competitors are. It’s important to find a wide range of competitors in terms of sales, marketing, and success. After all, you can learn just as much from people’s mistakes as you can from their triumphs. And the more data you have, the better.
Also, you may want to pay close attention to businesses that are similar in size and scope to your own. For example, if you’re a one-person operation firing on all cylinders, it might be unwise to compare yourself to a 200-person team with a multi-million dollar marketing budget.
Once you have them, it’s time to split your competitors into two categories: direct and indirect.
- Direct Competitors: A direct competitor will be similar to your business. Their products are services will be comparable or even interchangeable with your own.
- Indirect Competitors: An indirect competitor provides a service or product that isn’t the same as what you offer but fills the same need.
For a good example of this, let’s look at fast-food restaurants. McDonald’s direct competitors are Burger King and Wendy’s, while their indirect competitors are Popeye’s and Taco Bell. While all those restaurants serve fast food, McDonald’s doesn’t provide the same type of food as Taco Bell and Popeye’s, so they aren’t direct competitors. If people want tacos or fried chicken, they aren’t going to go to McDonald’s. So, they have less they need to learn from Taco Bell and Popeye’s.
When conducting a competitor analysis, it’s important that you stick with direct competitors because they can offer insight into what you offer. While you could still learn much from your indirect competitors, it won’t be as valuable.
Step Two. What Do They Offer?
Once you’ve lined up your direct competitors, it’s time to figure out who they are and what they’re offering. Competitors can fall all over the spectrum regarding quality, price, and reach. So, take a moment to figure out everything you can. Here are some questions you can ask:
- What’s their best-selling product?
- What’s their worst-selling product?
- Are they low-cost or high-cost?
- Are they about quality or quantity?
- Do they focus on one-off purchases or high-volume sales?
- How much market share do they have?
- Who is their ideal customer?
- What does that customer want?
- Do you provide that solution?
- What is their unique selling proposition (USP)?
- How do they deliver their products or services?
While this information may sound rudimentary, it’s vital that you understand your competitors’ businesses top-to-bottom. These questions will give you thorough insight into their business and what they offer, which is information you can use.
Step Three. Analyze Their Pricing Structures
Once you know what your competitors are offering, it’s time to look at their pricing structures and how they compare to yours. Are there huge gaps between their prices and your prices? If so, why? If they offer a subscription-based model, what do they charge per day, month, and year?
To find this information, you can usually check out their websites or online stores. But, of course, some businesses hide their costs initially and disclose them later during the sales process.
So, if you’re having trouble locating their prices online, check out comparison blogs, social media, and review sites. Customers typically list their pricing when discussing a company’s services. Or you can simply reach out for a quote yourself. This information can help you identify whether you’re pricing your products and services appropriately.
Next, you should find out if your competitors offer specials, deals, or discounts. How are they affecting their business? Might you benefit from applying similar deals to your products and services? As you go through this process, think about ways to use the information you’re gathering to improve your marketing.
Step Four. What is Their Online Footprint?
Once you have their products and pricing information down, it’s time to move on to one of the most important aspects of modern business – their online footprint. Ask questions like:
- What are their go-to social media platforms?
- How many followers do they have?
- How high is their engagement?
- How often do they post?
- What kind of content are they posting?
- How well is their content performing compared to yours?
- What are the primary differences between what you’re posting and what they’re posting?
Tools like Sprout Social, Phlanx, BuzzSumo, and Social Blade can help you identify your competitors’ performances on different social media platforms. These tools offer in-depth insight and analytics, including engagement levels, follower counts, audience growth, and more!
Step Five. Analyze Their Marketing Strategies
Analyzing your competitors’ marketing strategies is possibly the most important step in this process because it gives you access to a lot of usable information that you can use for your own business. It’s like testing out a bunch of marketing ideas at once without spending any of your own money.
Of course, obtaining this information can be more challenging than you’d think. First and foremost, you must follow them on every social platform possible, even if they don’t follow you back. If it bothers you, we recommend putting your ego aside because if you want to stay up to date with what your biggest competitors are doing successfully (and unsuccessfully), you have to follow them.
If you’re having trouble finding information about their marketing efforts, don’t worry! There are many tools available online that can help you identify and analyze your competitors’ marketing strategies:
- SEMrush: This nifty tool helps uncover your competitors’ search engine rankings and ad performance. It can also show you what keywords they’re using to rank on Google and other search engines, which is absolutely invaluable when creating your own SEO strategy.
- SpyFu: As the name suggests, SpyFu is all about sneaking around and getting intel on your competitors. It can show you their keyword rankings, ad history, and even their entire PPC strategy.
- Owletter: This tool is like your own personal email spy. It can show you what emails your competitors are sending out, so you can see what types of promotions they’re running and how often they’re reaching out to their subscribers.
- Ahrefs: Ahrefs is excellent for digging into your competitors’ backlinking profiles. You can see what sites are linking back to their pages so that you can identify potential link-building opportunities for your own business.
- MozBar: This handy browser extension can give quick insights into your competitors’ SEO efforts. You can see their domain authority, page authority, and even what keywords they’re using on their pages.
Step Six. Conduct a SWOT Analysis
Once you have all this information, it’s time to conduct a SWOT analysis of all your competitors. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Most business owners use it to evaluate their own business and identify areas for improvement or growth, but it can and should also be used for competitors.
It’s an important tool in competitor analysis because it can give you a clear picture of where your competitor currently stands. By identifying their strengths and weaknesses, you can get a clear picture of where they shake up compared to yourself.
Of course, this won’t work if you haven’t done the same work for your business. So, we highly recommend conducting a SWOT analysis for your brand, as well. Once your analyses are complete, you can make side-by-side comparisons and learn all the information you need to fix your trouble spots and maintain a healthy lead over your competition.
How to Conduct a SWOT Analysis
- Identify Their Strengths: What are they doing well? What sets them apart from their competition (including you)? What advantages do they have?
- Identify Their Weaknesses: What are their biggest pain points? What are they struggling with? What do they need to do to improve?
- Identify Their Opportunities: What trends or changes in the market could benefit their business? Where are the gaps in their business that they could benefit from filling?
- Identify Their Biggest Threats: What challenges are they facing? And do they seem capable of meeting them? What are their competitors doing that could hurt their business? Are you one of their biggest threats?
Keep in mind that this process shouldn’t be super time-consuming. If you’ve followed the steps outlined above, the answers to these questions should come naturally. In fact, we recommend doing the SWOT analysis as you research to save time.
Once you’ve identified these four areas for your competitors, turn around and conduct a SWOT analysis on your own business. Then compare the two. With this information, you can start developing concrete strategies for improving your marketing efforts and growing your business.
Analyze Your Competitors Today
If you’re looking for the best ways to improve your marketing efforts and grow your business, look no further than your direct competition. By conducting a thorough competitor analysis, you can identify what your competition is doing right and use that information to make your business better.
So, what are you waiting for? Use our step-by-step guide to create your very own competitor analysis today!
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