Conducting a detailed competitor analysis: Startup guide
To build an effective business strategy, you need to test the waters before launching your product. Here is a step-by-step guide to help you perform competitive analysis the easy way.
Competition is inevitable no matter what the industry. To run a successful business, you need to be aware of the competitive landscape. Doing competitive analysis is the best way to understand your positioning in the market and see where your competitors are outrunning you.
Here is a quick guide to help you do competitive analysis.
What is competitor analysis?
Competitor analysis is the process of analysing your competitors, specifically their products, services, marketing strategies, strengths and weaknesses to compare them with your own business. This is a healthy practice to identify opportunities where your company can strive or improve its position in the market.
How to conduct a competitive analysis
Here is a step-by-step guide to conducting a competitive analysis for your business.
Step 1: Identify your competitors
First of all, you will need to prepare a list of potential competitors. This may seem obvious but it is essential to categorise the rival businesses.
- Direct competitors: Businesses that offer similar products or services and also target the same group of customers as your company. For example, Google and Bing are each other’s direct competitors. In short, these are organisations that you need to watch out for the most.
- Indirect competitors: Businesses that may sell similar products or services as your company and fall in the same general category, but it is not their core focus or source of revenue are your indirect competitors. For instance, if you have a business that sells premium desserts, your indirect competitors can be restaurants that also serve ice cream along with food.
- Replacement competitors: These firms provide products or services that are similar or different from your company but solve problems in your target niche.
How to find competitors?
Before you analyse your competitors, it is important to know how you can find them. Here are some steps.
Market research
Market research is a classic method to get in-depth insights about your customers, competitors, etc. While performing the research, your primary focus should be on analysing what your competitors offer and how they present themselves in the market.
Closely observe how your competitors are reaching out to their target audience, are there any trends they strive for? Or how good is their visibility on digital platforms? Prepare a list of all these attributes and compare it with your business to understand the strength of your positioning.
Social media
Leverage the power of social media to see what customers are talking about your company and your competitors. Networking platforms such as Reddit, Quora, Instagram, and Facebook are good resources to read customer reviews or opinions. This is a great way to understand what your target audience is looking for in a product/service.
SEO positioning and keyword ranking
Most customers search online for products and services. So, you need to ensure that as a business your startup ranks on the top page to be seen by customers. Make a list of important keywords where your SEO visibility is high and low and find out where your competitors are lacking.
Step 2: Dig deeper into your competition
With a clear idea of how to look for your competitors, it is now time to assess them on the basis of the 4 P’s of marketing.
- Product: Compare your competitor’s products/services with your own to find out their strengths and weaknesses. Determine its key qualities or attractive features.
- Pricing: Next is to see how your competitors price their products or services in the market. Do they offer any sales or discounts? Overall, you need to understand their pricing structure.
- Place: Analyse the locations where your competitors are currently doing business. Are there any niche hotspots where they are popular? How does it compare to your startup?
- Promotion: Observe and assess the reach and marketing strategies used by your competitors. Try to see how they engage with their customers or their activities on social media.
Step 3: Time to find the good, bad and the ugly
Once you have features that you want to compare, you need to see how your competitors are marketing themselves. You will need to analyse the following aspects:
- Sales tactics and outcomes: Research which channels your competitors make sales, their process, results and overall revenue.
- Content strategy: Evaluate the quality and effectiveness of your competitor's content across various channels. You will need to assess their content structure, tone, readability and appeal.
- Shipping costs: Most customers do not make purchases when shipping costs are high. Check the current rates that rival brands are offering and try to maintain a similar price structure.
- Digital presence: Compare the digital presence of your competitors on multiple platforms. Analyse their followers, comments, feedback and overall brand image, especially on social media and see if there are any perks or gaps.
You can highlight the key points that make your competitors so likeable in the market, it could be anything from affordable pricing to quality of service.
It would be best to get data-driven insights for better evaluation. However, relying solely on data is not sufficient. While numbers do show how you compare with other rival firms, they cannot find out the “why”.
The takeaway: Find the competitive spark
To overtake your competitors, you will need a fantastic business strategy to impress your target audience. So, search for elements that truly make your startup stand out from the competitors in the market.
After that, you can shift your branding image, tone, startup story and marketing efforts towards your competitive advantage aka spark that appeals to your customers.