Conducting business in an ever-evolving online environment isn't easy. You will have to put in the work to understand your environment fully to survive.
Not knowing your target audience or your competitors can keep you in the dark until it is too late to recover. Consistently monitoring your business’ competitors will allow you to have a full understanding of the market that you are in.
Conducting a competitive analysis is one of the quickest ways to get to know your market and industries. It isn't as difficult as it may sound.
Read on and find out how you can efficiently conduct one for your own business.
What is a Competitive Analysis?
A competitive analysis is a comparison of key elements of your competitors' businesses. Examples of such elements are the business strategy, strengths, weaknesses, and target audience.
Completing a competitive analysis with a handful of competitors will assist your company to understand how direct your competitors' tactics are being executed.
It is also a great idea to include your own business within a competitive analysis along with about 5 to 10 relevant competitors. If you do plan on doing an in-depth analysis, then start out with just five competitors.
If you only plan on analyzing a few aspects of a business (such as shipping and marketing) within a competitive market, then try to work with more competitors.
Including yourself in the competitive analysis will tell you how far behind (or ahead) your business is in regards to specific aspects such as opportunities and resources.
Continuously comparing yourself to your competitors can assist you in becoming more aware of your business’ market.
This way you will be able to plan on how you can adapt to market changes.
What Does a Competitive Analysis Include?
A competitive analysis can differ according to the objectives of your business. As mentioned earlier, you could analyze just a single aspect of the business, such as operating hours, or website.
You can also go in-depth and look into a competitor’s entire marketing strategy. Research areas such as your competitor’s target demographic and price points.
Your competitive analysis can be custom made to suit your business’ current needs. You basically research aspects of your business that requires answers.
If you intend to commit to an in-depth analysis of your competitors, then you should consider looking into these valuable points:
- Key features (product or service)
- How they ship their products
- How their business is funded
- Product price points
- Target customers
- The unique value of their products or services provided
- Brand image
With the brand image, you look into how the company perceives themselves while projecting this brand image onto clients.
Two examples are Apple Computers and Nespresso who pay a tremendous attention to detail and make sure they go the extra mile in satisfying customers.
You can also further customize your competitive analysis by including some of the following elements:
- Social media channels
- Website design and features
- Email marketing approach
- Mobile strategy (mobile app)
- Customer reviews/feedback on products
Should Online Stores Conduct a Competitive Analysis?
A competitive analysis seems like something that only large corporate franchises would do. The truth is, even e-commerce stores can't really compete without understanding their competitors.
There is no specific way of running an online store and the game seems to be changing every year.
There are more brands entering the world of e-commerce, making the playing field more competitive than ever. This is one of the reasons why there is always a constant need for innovation.
One of the ways of keeping up with innovation is to know what your competitors are doing.
A competitive analysis can also assist online stores to determine their pricing strategy while creating new benchmarks. Analyzing competitors is how online stores identify trends in their industry while also finding a gap in the market.
Completing a competitive analysis isn't just for startup companies. All stores should periodically research their competitors as the online marketplace is always evolving.
Conducting a Competitive Analysis
Create a List of Competitors
As mentioned earlier, try to come up with around 5 to 10 competitors that you can analyze. You will probably already know at least 2 or 3 of your competitors of the bat.
Search for more similar businesses in your area on Google and even Amazon or other marketplaces.
Be on the lookout for companies that have similar products to your business. These companies should cater to a similar audience.
However, it is ok if their demographic is slightly different. This will allow you to discover a wider audience. The companies you search can be both established or new.
Work on a Simple Spreadsheet
Create a spreadsheet using Office Excel or Google Docs. A simple spreadsheet that lists all the areas you wish to research, one on top of each other.
In the next column, include your business’ results, then add your competitors one by one in the coinciding columns. You can start off simple then build on the information you have towards a more complex report.
Determine Your Primary and Secondary Competitors
Be sure to make it clear who your primary, secondary, and tertiary competitors are. Primary competitors are your direct competition.
These are businesses that have a very similar product or service that caters to your target audience.
Secondary competitors are businesses that are not always in the same industry as your business, yet they still compete with you. An example would be a supermarket chain store that sells clothing is a secondary competitor to a fully-fledged clothing store.
Tertiary competitors are unrelated businesses that could possibly venture into your market. An example is Under Armour, a clothing brand who began manufacturing headphones.
They now compete with Beats headphones where in the past they were only focused on clothing.
Data Collection and Research
If your competitors do have established websites with a clear online presence, then it is possible to gain valuable information just by using some simple online tools.
Here's a few to get you started:
BuiltWith - Enter competitors URL and receive a whole host of information regarding all of the tools used to build their website. You can even get marketing analytics such as monthly average advertising spend.
Mailcharts - Gives you insights into your competitors' email marketing strategy. You can also gather useful information such as frequency, email sends, and subject line strategy.
SimilarWeb - Gain insight into estimated monthly website visits and traffic sources. WIll give you an idea of the audience your competitor is targeting.
It is also advisable to conduct some personal research yourself. You can do this by posing as a customer who engages with your competitor's website. Subscribe to their blog and follow them on social media.
If you are looking to find out who handles their shipping, then perhaps purchase an item that you really need and wait to see who delivers it and how long it took.
There are a few things to remember when conducting a competitive analysis. Researching and analyzing data is meaningless if your business does not put in place a plan to act upon the information received.
Researching your competitors and testing out similar tactics in your business is an ongoing thing. Something your competitor does may not work right away with you.
You will have to be in it for the long run. That is why you should try to keep at every new strategy you adopt.