Within the scope of marketing strategy, competitive analysis is a critical component to any business' success. It is considered to be one of the fundamental "pillars" of business strategy along with the 4 Ps (product, price, promotion and place) and SWOT (strengths, weaknesses, opportunities, and threats).
Taken together these tools provide a comprehensive view of the industry in which you operate and an understanding of the factors that influence its success. They also highlight opportunities for strategic growth within your market segment.
Businesses have been using competitive analysis as a tool to inform their business decisions for decades. However, in recent times it has become much more accessible with new technologies that make it easier to gather data and visualize it in informative ways that can be used to create clear strategies.
But what exactly is competition analysis? In simple terms it involves gathering information on your competitors' businesses and then using this information to help you define your own goals. In more complex terms competition analysis entails comparing your position with those of your competitors on both a macro level (i.e., segments) and micro level (i.e., brands).
It's important to remember however that competition analysis is an ongoing process and not a one time activity. It should be performed regularly so you can keep monitoring trends and to stay ahead of your closet competitor. Frequent revisits to competition analysis creates a business strategy that is up to date, clean, and competitive.
One of the first things you should do when you start a new business is to track your competitors' performance. This will help you to:
Plan your initial prices and discounts. If you're starting a new business in an industry where your competition has been established for some time, you may want to offer special introductory discounts or bundle services to build a customer base. Understanding how your competition is positioning their pricing will help you determine what will work best for attracting customers initially.
Competitive analysis. It's crucial to understand how the competition is marketing itself, because this will help you create a plan for how to position yourself in the market that makes it easy for potential customers to see why they should use your services over theirs.
Production scheduling. If you know what your competitors are producing, shipping and selling, you'll have a good idea of when they might be planning on making large purchases or receiving shipments of goods that could be affected by production delays at your end. This information can help you plan accordingly so that any issues with filling orders for your customers don't leave them unhappy with the service provided by your company.
There's a reason why you should be tracking your competitors -- and that reason is that it makes your own business more profitable.
If you know who your competitors are and how they've been performing, you'll know what you're dealing with when it comes to the industry as a whole. For example, if you sell products in the fitness niche and see that a competitor has just released a series of new fitness training videos, then you know to keep an eye out for sales on your own videos (or make sure to get yours out faster).
Tracking your competitors also means being able to predict the moves they'll make next. If you're already watching their sales numbers and rankings on search engines, then seeing a sharp spike could mean a deal with a major affiliate network or an excellent sale price on their store that would be worth matching.
Invariably, some of your competitors will do things better than others. You can use this information to find ways to improve your own business model, too. For example, if one of your competitors' sites is doing exceptionally well in search engine results, then take a look at his backlinks and try to find ways to build more backlinks for yourself.
Here are some tools you should use when tracking down the competition... No matter which competitor tracker tool you choose, remember that most of the work will be done by you and the amount of effort you put into using these tools will ultimately reflect on how successful they are for you.
Statcounter (www.statcounter.com) – This site will show you which websites are the most popular ones at any given time. It also allows you to look at your competitors’ traffic statistics so you know what kind of market share you have and what kind of customers you’re dealing with.
SEMRush (www.semrush.com) – This site focuses more on search engines and keywords than it does on website traffic, but it can still give you good information on how many people are searching for certain keywords and where they’re coming from.
Google Alerts (https://www.google.com/alerts) – Google Alerts is free and easy to use, and it allows you to set up notifications when anything related to certain keywords shows up online.