Creating a competitor analysis can help a business in many ways. A competitor analysis tells you what your competitors are doing when it comes to marketing and selling products and how their efforts are working. By analyzing the success of competitors, you can even see ways they could improve or do something better: this gives a business an advantage over its biggest rivals.
Creating a competitive analysis is straightforward, and there are even competitor analysis templates that give you a clear direction of what you need to consider and analyze.
What is a competitive analysis?
When you create a competitive analysis for your client, you look at what kind of strategies and methods your client’s competitors use to drive sales and conduct marketing. A good competitor analysis compares multiple competitors so you can create a comprehensive overview of what your client’s business needs to do to beat the competition.
A competitive analysis compares marketing approaches, products, pricing, distribution, strengths, weaknesses, and other factors. By looking at what your client’s competitors are doing, you will be able to break the barriers within a market and improve the success of your business.
What does a competitive analysis look like?
A competitor analysis can look different depending on what you are trying to analyze and learn about. For instance, you may do a competitor analysis around a certain aspect, like the competitor’s marketing approach. Or you might want to create a comprehensive analysis that looks at the competitor’s business model as a whole.
There are many ways to construct and build a competitive analysis, so there is really no set way that an analysis must be conducted.
Below, we have outlined a few areas that you can look at and analyze when conducting high-level competitive analysis. When you look at your client’s competitor’s whole business model, you can consider the following elements, for instance:
- Who their target audience is
- What their unique selling point is
- Key features and benefits they highlight in products
- Price points for products
- How they handle shipping
- How they finance their business (for instance, loans and investors)
Analyzing all of these sections can help you to see how each of the competitors approaches them and what kind of things they are doing differently.
On the other hand, you might also do a more specific competitive analysis and only consider certain aspects of the business. You can look at the following elements, for instance:
- Website: How does the competitor use search tools, product images, and design and layout?
- Customer experience: How does the competitor handle checkout workflows, customer support, mobile UX, and other things?
- Social media: Which social media channels are they using and what is their social media strategy?
- Content marketing: Do they have a blog? How do they market their content?
- Marketing: What is their marketing strategy, and how do they market their products?
- Email marketing: Do they send out newsletters, and how often?
- Customer reviews: What kind of language is used around products? Do they have recurring complaints?
In other words, a competitive analysis can take many shapes and forms, and you can look at only one specific aspect of your client’s competitor’s business or the business as a whole.
Why competitive analysis is essential for your client
In short, it is impossible to effectively compete without knowing who your competitors are, what they are doing, and why and how they are succeeding. After all, if you are unable to differentiate yourself from your competitors, your business will not stand out.
If you are a freelancer creating a competitor analysis for your client, you should consider the following:
- Make more informed decisions in general
- Identify industry trends and needs
- Solidify a unique selling point
- Determine competitive pricing
- Discover new ways of speaking to customers
- Find out how to market your products and services better
It is important to keep in mind that a competitive analysis is not something you only do once: a competitor analysis is a living and breathing organism that should be updated when needed.
Why should a business use a competitive analysis?
A competitive analysis is a vital process that helps businesses stay one step ahead of the competition and to stand out. It can help a business owner to anticipate market changes and upcoming trends and to beat their competitors more effectively.
Competitive analysis can help in strategizing and planning for company growth. By looking at how your client’s competitors handle their day-to-day operations, you can discover opportunities and threats.
Without a competitive analysis, your client’s business is like a boat in the middle of a sea. They will have no idea which way to go to find land (or customers, in this case). A competitive analysis is a beneficial road map that gives your client a direction in which to go. Your client will get an idea of what their competitors are doing, why they are doing it, and what they can do better to stand out and snatch the customers.
What information do I need to create a competitive analysis?
Before you start creating a competitive analysis for your client, you have to figure out who your client’s competition is. While there are many ways to identify the competition, the easiest way is to Google the business: simply Google the business name or business idea, and you will notice how many related businesses pop up in the search results.
If your client is a local business, you should use Google Maps to your advantage. By Googling your client’s business or business type and looking at the results on Google Maps, you will see the nearest related businesses.
When you start documenting the competitors, record at least the following things:
- Name of the business
- Mission statement
- Product offering
The type of competitive analysis is what determines what kind of information you will need. If you look at the competitor’s business as a whole, you will need a broad overview of the company’s day-to-day routine. For instance, you will need to look at their marketing strategy, website, social media, pricing, products, customer reviews, and other things.
On the other hand, if you look at a certain aspect only, such as shipping or email marketing strategies, you will need to break down the aspect you want to analyze. For instance, if you want to analyze their email marketing strategies, you should look at their newsletters, the frequency, colors, content, and so on.
How to do a competitive analysis for your client
Conducting a proper and comprehensive competitive analysis may be time-consuming, but it is well worth it in the end. Below, we have outlined how to do a competitive analysis step by step.
1. Pick 7–10 competitors
The first step is to determine who the competitors are. Start with a search on Google and pick 7-10 top competitors.
You will want to pick the competitors from a broad spectrum. Pick companies that sell similar types of products, and have a similar target audience.
You will also need to divide the competitors by type, which we will talk about further down.
2. Create a spreadsheet such as an Excel sheet
When you collect the data about the competitors, you should keep track of the competitor’s company information and criteria.
First, list the company information, such as:
- Name of the business
- Mission statement
- Product offering
You can also list other things, such as:
- Product price range
- Product offers
- Social media engagement
- First-time visitor offers
- Other traits that are worth comparing
3. Competitor types
The next step is to look at the competitor analysis and categorize each one of them as either a primary or secondary competitor. By categorizing the competitors, you will be able to determine how they relate to your client’s business.
There are three different competitor types that you should categorize: direct competitors, indirect competitors, and tertiary competitors.
- Direct competitors are your primary competitors that sell a similar product to a similar target audience. For instance, Coca-Cola and Pepsi, or Nike and Under Armour.
- Indirect competitors are your secondary competitors that offer either a low- or a high-end version of your service or product. For instance, Victoria’s Secret and Danskin are secondary competitors.
- Tertiary competitors are brands that relate to your business and may market to the same audience, but they do not sell the same products or do not even necessarily compete with your business in any way. For instance, a protein drink and a gym.
4. Identify the positioning of your client’s competitors
Good positioning can be one of the most persuasive and effective marketing tools. Well-conducted positioning can help your business to connect with your target audience and keep them stronger. It can also help you to determine your client's messaging, values, and overall business strategy.
Understanding your client’s competitors will allow you to separate the client’s business from them and build a good reputation in the eyes of their customers. By differentiating their company, your clients will be able to increase brand awareness and justify their prices.
You can analyze the following key channels to allow your client to improve and determine messaging and positioning.
- Social media
- Press releases
- Product copy
- Website copy
When you identify the positioning of the competitors, you should ask these questions:
- What kind of story do they present to their customers?
- How are their products positioned?
- What is the description of their company?
- How does your competitor describe their unique selling point?
By asking these questions, you will understand how the competitors interact with their employees, partners, followers, customers, and shareholders. If you are able to pinpoint the framework of their communication, you will be able to give your client the possibility to position themselves in a different way and stand out from their competitors.
5. Determine their competitive advantages
After you have analyzed and understood the competitor’s messaging, you can take a look at their competitive advantages. Many companies are founded on a competitive advantage or a skill to solve a problem.
For instance, an online store’s competitive advantage might be high-quality products with reasonable pricing and expedited shipping. This kind of unique selling point or value proposition is not always easy to pinpoint or replicate, but by understanding what your client's competitor’s competitive advantage is, you can attempt to do one better.
6. Understand their marketing
Proper marketing is often the key to success. While good products and services are what get your foot in the door, marketing is usually what takes your business to the top. A competitive analysis will allow you to take a look at how your client's competitors conduct their marketing and, again, give you an opportunity to do better.
While most companies are on social media and attempt to rank well on Google, these may not be the only ways your client’s competitor is conducting their marketing. It may be a good idea to assume the role of a customer to get a more hands-on experience.
You can do this by:
- Signing up for newsletters
- Subscribing to blogs
- Abandoning a product in the shopping cart
- Buying a product or service
- Following the competitor on social media channels
As you take a closer look at these activities, remember to document what you see and take notes. Study the approach the competitor is taking and how they offer support via social media and other channels.
7. Create a SWOT analysis
A SWOT analysis is often used in the business world, and it means identifying strengths, weaknesses, opportunities, and threats. By conducting a SWOT analysis of your client’s competitor, you may be able to identify essential elements.
Strengths and weaknesses focus on the present, and they can include the following:
- Product offers
- Intellectual property
- Number of employees
Opportunities and threats are something you cannot control. However, by considering them in your analysis, you will give your client more comprehensive information. These elements include:
- The economy
- Consumer trends
- Market size
- Market demand
A SWOT analysis should be conducted annually. This can help your client to anticipate problems before they happen and to make conscious improvements.
Avoid these mistakes in competitive analysis
Especially when completing your first competitive analysis, you might trip over some common mistakes. Below, we have outlined some of the most common pitfalls when creating a competitive analysis.
1. Doing the competitive analysis only once
A competitive analysis is an organism that lives constantly. It should be updated constantly and whenever needed. Not updating the data can lead to poor decisions and faulty data. Businesses evolve constantly, so it is essential to keep an eye on your competitors.
Competitive analysis is not something that you conduct once and forget: you should update it on a regular basis.
2. Jumping to conclusions
Jumping to conclusions is normal. It is called confirmation bias, and it should be considered when conducting competitor analysis. Be aware of your assumptions and try not to judge or jump to conclusions. Let the data speak for itself.
3. Not taking action
Creating a competitive analysis is useless if you do not act on your findings. After conducting your research and analysis, your client should put the data you provided into use to get the most out of the analysis.
After all, the purpose of this analysis is to give your client an advantage over their competitors.
4. Working harder instead of smarter
Thanks to modern technology, you can use different tools to simplify data collection and put together a highly accurate comparison. Instead of working harder, work smarter and invest in some useful tools that can help you to analyze your findings better.
5. Not having direction
The first thing to do is to define goals and objectives. Ensure that you know what the purpose of the analysis is.
6. Not collecting accurate or enough data
The more information you have, the more effective a competitor analysis will be. You should remember to categorize the competitors and collect enough information about them so that you can conclude with an accurate analysis.
What is a competitor analysis template?
A competitor analysis template can help you to create your own analysis. There is no need to reinvent the wheel: you can download an analysis template and use it to your advantage.
A good and comprehensive competitor analysis template helps you to answer the following questions:
- Who are the other companies your clients are in competition with?
- What can you learn from your client's competitors?
- How does your client’s product or service compare to the competitors?
- What is your client’s unique selling point, and what makes them stand out?
A competitor analysis template allows you to map out your client’s competitors’ businesses and get more insight into their strategies, successes, and opportunities. By utilizing a simple competitive analysis template, you will be able to conduct a comprehensive analysis and get started easier than you would when starting from scratch. Most competitor analysis templates are free, so you will not even have to lay down a penny.
The benefits of the competitor analysis template
With the help of a competitor analysis template, you will get knowledge about the competitor’s product, sales strategies, marketing, and potential business strategies.
A good and comprehensive analysis can teach you more about the market, what works and what doesn’t, and what kind of opportunities there are for your client’s business.
How to use the competitor analysis template
Every competitor analysis template is different, so they will ultimately be filled out differently. However, we have outlined the general steps below.
1. Fill out your company information and competitor’s information
The first thing should be to include information about your client’s company. For instance, you can add the company’s mission, values, unique selling points, and other details.
Then, you should add information about your client’s main competitors. Add information about their products, services, pricing, and marketing, and take note of how they compare to your client’s business.
2. Describe your client’s products and services
Next, you should describe your client’s products and services as well as their competitors’. List some of the similar products and how they differentiate from your client’s products and services.
3. Gather information about the market
You can add the percentage of your client’s market share and compare it to their competitors. Also, you can note the competitor’s social media presence and how their company and competitors are positioned on the market.
4. Conduct a SWOT analysis
Conduct a SWOT analysis and determine what your client’s strengths, weaknesses, opportunities, and threats are in comparison with the competitors.
5. Point out the competitive advantage
Point out the competitive advantage of your client’s competitors and analyze how it relates to their competitive advantage. Determine if there is something your client can do differently to stand out.
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A competitor analysis is one of the secrets that will give a business an advantage over its competitors. By analyzing their competitors and getting insights into how they conduct their business, you will be able to give your client more comprehensive and useful information.
A comprehensive analysis can be especially helpful when it comes to determining marketing strategy and unique selling points. It can help your client to see how their competitors reach their clients, what their position is, how they interact with their customers, and much more.
And if you’re planning to create a competitor analysis for your clients, Indy can make client communication smooth and efficient with our Files tool. Your clients will be able to quickly review your competitive analyses’ and give you feedback and approval right on your work files. You can get started today for free!