What is competitive analysis?
Definition of Competitive Analysis
Competitive analysis is a process that involves researching competitors in your industry to gain insights into the benefits and standard operating procedures in the industry space. Competitive analysis, the name itself, implies the process of examining your competitors to improve your organization.
The information synthesized from a competitive analysis can be used as a point of comparison to uncover your company’s strengths and weaknesses relative to the various competitors. It gives a way to improve your own company’s performance and evaluate the competitors’ strategies to uncover their shortcomings and strengths, setting a benchmark for yourself.
Advantages of Conducting a Competitive Analysis
An ongoing competitive analysis should be considered a means of keeping tabs on your competition’s strengths and their flaws, possibilities, and dangers. Competitor analysis is something that most firms already undertake, although many small business owners don’t see it. There are numerous commercial advantages to keeping tabs on your competitors’ products, penetration pricing strategies, staffing levels, research and development, and other market facets.
For example, knowing the flaws of your competition (such as poor customer service) can assist you in attracting dissatisfied customers in the future, hence increasing your sales. But more importantly, there are other reasons why you should conduct periodic competitive analysis, including the following:
- Understanding your particular market: It is possible that during the exercise, you might find companies that you either weren’t aware of earlier or didn’t consider as a part of the competition before. It increases the understanding of a particular market, which can be regarded as the essential first step in surpassing the competitors.
- Identify Key Industry Trends: A very robust way of understanding how an industry is moving is to study the competition. However, there is a word of caution, never do something just because your competitors are doing it. Always keep your particular position and circumstances before trying to emulate the competition.
- Obtain benchmarks that will assist you in evaluating your progress and growth: Every industry is very different in how it functions and how success is defined. Hence there is no one size fits all benchmarking standards for a firm. Therefore studying the competition becomes inevitable to set realistic expectations and benchmarks.
- Capitalize on the competitor’s vulnerabilities while building on their strengths to improve your brand’s overall performance: It is always better to include larger and smaller companies than your own when doing a competitor analysis. Studying the well-established and legacy companies will give you an idea of what traits are considered must-haves in the industry. On the other hand, studying new entrants gives an idea about the existing vulnerabilities of the industry.
- Discover new market segments that your competitors aren’t currently serving: Making a thorough examination of what your competitors have to offer may also assist you in identifying areas where your market is underserved somehow. Identifying and filling gaps between what your competitors are giving and what customers want can help you get ahead of the competition and grow your products to meet those unmet customer needs.
A question might arise: who is the target audience to appeal to the value proposition for competitive analysis? All businesses should be performing competitive evaluations. Apart from the variety of reasons listed above, perhaps the most important cause is to be aware of what you’re up against. As long as there is competition, there is a place for competitive analysis in business.
Example of Competitive Analysis
Competitive analysis can be significantly diverse depending on the industry in question. A generic SaaS will be used as the basis for demonstration. Hence for a SaaS tool, a few things that you might keep track of to gain the upper hand would be as follows:
- The speed at which a website loads: The rate at which a page loads is essential. Customers are not always willing to put up with even the tiniest setback.
- The number of visitors to a website: It is beneficial for a company to know how many individuals visit their primary website each day.
- Sources of traffic: What is the source of all the traffic on the tool? What works well for the competition may work well for you if you follow their lead.
In this way, while conducting a competitive analysis, you can track various easy indicators and analyze the competition under the purview of the same. If done correctly, this can provide you with really crucial information.