Competitor analysis is a very useful tool to study competitors and create an updated and effective business strategy: here’s how to do it?
Creating an effective business strategy requires carrying out a series of precise actions, carried out clearly and without ever thinking of being able to rely on chance. One of these is the analysis of the competition which consists in evaluating the strengths and weaknesses of the current and potential competitors: here is how to do the analysis of the competition in the right way and what are the advantages it can bring to a business.
- Analysis of the competition what it is and what are the advantages
- How to do competition analysis
- Competition analysis: which tools to use
- Quantitative data processing and personal considerations
- Competition analysis: how to use data
How to do the analysis of the competition in the right way?
Analysis of the competition what it is and what are the advantages?
In marketing, the analysis of competition consists in observing the choices and strategies of competitors’ companies in a given market segment.
Analyzing this data is essential to improve the business strategy because, if implemented correctly, it allows you to avoid errors that can prove fatal for an activity and be inspired by good practices that can be adopted and customized.
This also applies in the particular moment in which we are living, helping companies to develop effective strategies despite Covid-19 and the associated economic restrictions.
Unfortunately some companies, due to lack of time or a dedicated economic budget, are unable to develop the analysis of competition and this decision can lead to concrete damage to the business: among the advantages of the analysis of competition, in fact, a greater knowledge of the sector and target or niche of reference , a study of best practices and an awareness of what are the most serious errors that can be committed at a strategic level.
How to Do Competition Analysis?
There are many professionals and agencies involved in carrying out competition analysis for companies, but you do not always have a sufficient budget to start this business. For this reason, it is possible to proceed with an analysis carried out on the web, identifying some basic steps:
- Identify the market segment in which you operate and the type of product or service you propose;
- On the basis of the first step, you can start selecting which are the main competitors in action;
- Then the strategies carried out by the competitors are examined, identifying their weaknesses and their strengths.
After identifying what are the three main steps to follow to carry out the analysis of the competition, the work can begin. First of all, it is advisable to consider competitors not only those who produce the same identical product or provide the same service, but also those who manage to satisfy the customer’s needs with products and services different from their own.
You must then create a list of the names of companies / commercial activities or freelancers who go out on search engines and start collecting information on each one including: company name, products and services offered, type of customers, strengths, points of weakness, type of communication, estimated website traffic, presence on organic and paid search and backlink activity, including internal links to the site.
This type of research can be carried out with the help of some paid and free tools such as Google Alert, Mention and SeoZoom. Another important tip is to browse the competitors’ sites and study their social communication channels , to see what type of user experience they offer to customers and how the customer care service offered and the copywriting conveyed by social networks is.
After collecting all the information, it is advisable to create summary sheets where, for each competitor, current and future strategies are examined with evidence of the impacts on the market with respect to their own strategies. This type of exercise can be fundamental to verify possible attack and defense scenarios compared to the competition.
Competition Analysis: Which Tools to Use?
To make an analysis of the competition as complete and precise as possible, you cannot resort exclusively to searches on engines like Google, but it is advisable to rely on free and paid tools, here is a short top list.
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Seozoom and Semrush offer a lot of useful information such as estimated traffic on the site, the presence on PPC, the best keywords used, presence on organic search, the display of competitors’ landing pages in the SERPs for each keyword, the location of advertising campaigns, Display Advertising and backlink analysis.
Trackmaven is excellent for social and content analysis, and offers some reports, case studies and templates for analyzing the competition. Wayback Machine allows you to see what the competitors’ website was like in past years and therefore what changes they have chosen to adopt to improve the user experience of the users.
To analyze the social pages of competitors, having available the number of followers, the engagement rate and other information, it is advisable to opt for Likealyzer , while to study the sponsorship campaigns of competitors, you can rely on ADespresso.
The use of these tools is very important for social listening : knowing how to listen to competitors’ consumers is crucial and to do so it is possible to become consumers in turn. To do this, simply create an account to test the services of others, sign up for the newsletter to evaluate the type of communication proposed, study the reviews and evaluate how they perform the problem solving in case of negative criticism.
Through social listening it is possible to have important quantitative data available, but also to extrapolate personal considerations that can prove decisive in the study of the analysis of competition and the creation of new proposals, from social channels to the usability of the site.
Quantitative Data Processing and Personal Considerations
After gathering all the information on the competitors, it is important for each one to create a summary sheet with all the factors and variables identified, distinguishing the quantitative data from the personal considerations.
Quantitative data are numbers, or in any case all that is statistical data , from which an objective data is extrapolated. This is an important element at the basis of data driven marketing strategies. In an analysis of the competition, it is necessary to provide statistical data, also to understand, through the numbers, in what situation a customer is compared to the competitors examined.
The personal considerations rather subjective data are processed on an aspect that was widely-depth, compared to other dimensions that could not be seen with quantitative research methods. These considerations, if made in a precise and punctual way, can prove to be very valuable in the subsequent phase of creating an ad hoc strategy.
Competition Analysis: How to Use Data?
Once the analysis phase is over, it is important to start reflecting on the differences with the other competitors and to understand which gaps must be filled. Identifying clear and likely objectives, such as the purchase of new machinery, an investment in the communication sector and the addition of new services, can transform one’s weaknesses into new strengths.
To do this you can rely on a very useful tool which is the Swot analysis that highlights the weaknesses, strengths, threats and opportunities in a 4-part chart: all elements at the basis of an efficient business plan. After this analysis, to get a clear picture of the competitive sector in which we move, it is advisable to proceed with Porter’s 5 forces model which analyzes 5 variables:
- Customers, who are the recipients of the company’s outputs;
- The suppliers who supply the materials to the company;
- Direct competitors, which are the main competitors that boast good production capacities, cost structure and differentiation of the offer;
- Potential competitors;
- Producers of replacement goods which, although not producing the same product or providing the same service, can satisfy the customer’s needs.
The SWOT analysis, combined with Porter’s 5 forces model, allows the company to get a complete picture of its competitive position, establish behaviors and improve strategies to be adopted, without the risk of running into errors.
Competition Analysis: Rely On Professionals
After analyzing the best modus operandi to carry out an analysis of the competition through the use of online tools, it is important to underline that there are numerous agencies and many freelancers who dedicate themselves full time to this type of activity, providing a highly specialized service. It is also dedicated to the study of the financial part, helping companies to divide the budget between SEO NYC, social networks and advertising tools.
Carrying out this type of analysis does not have to be an isolated case over time, but requires constant comparison and updating, to improve the measurability of its own performance and that of its competitors, always keeping in the forefront when it comes to novelties that simplify the experience of its customers. For this reason, the competitive analysis is in effect an instrument essential to improve their business strategies, pursuing ever more ambitious and innovative goals.