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5 Reasons To Do Competitor Analysis
Do you know who you have as competitors in the market? When was the last time you did a competitive analysis? Is there anything fresh or innovative they're working on? Do you have any idea what strategies they're using to achieve goals?
It's critical to know your main competitors, no matter how big or little your company is. It can be compared to entering a competition without knowing what it's about, where it's located, or who is competing. Before we get into why it's so crucial to know your competition, we must first understand what a competitor analysis is.
What is a competitor analysis?
A competitor analysis compares your company to others in the same field or industry. The main purpose of a competitor analysis is to understand the strengths and shortcomings of your competitors in relation to your own business. The reason for this is to locate a gap in the market.
In other words, competitor analysis involves the process of gathering as much information about your competitors as you can. You can then utilize the data you've collected and make a viable marketing or business strategy. You can either act in response to competitor plans or customer behavior.
So, that sounds really intriguing and makes you curious to know more, but what do you stand to gain from conducting competitor analysis? What makes it worth the time and resources you'll be allocating toward its completion? Here are 5 established reasons why you should consider doing a competitor analysis.
1. Improved Understanding of Your Business
Understanding your competition allows you to better understand your industry and identify ways to improve your own business strategy.
Understanding the strengths and shortcomings of your competitors allows you to see what works and what doesn't. It also gives a glimpse of how to make better judgments and avoid mistakes. As a result, you'll gain a better understanding of your own company's strengths and limitations.
Competitor analysis also identifies your Unique Selling Proposition (USP). By analyzing internal and external factors, you can determine what sets you apart from the competition.
It allows you to learn what not to do and understand your competitors' strengths and flaws. For example, you can take a look at previous customer feedback and reviews your competitors received. Observe which areas they're doing good in and what sort of complaints they receive most often. Doing so will give you an understanding of what to do and what not to do.
Additionally, content analysis can help you gain an advantage over your competitors. Observe the type of content your competitors publish on their social channels. Do they prefer to publish articles, blog posts, or videos? Once determined, we can assess the content's quality and how frequently it is updated. It helps you realize what you need to work on and where you should focus your efforts.
You may also track down your competitors on social media and see how they use their profiles. Examine their success if they are well-known and have decent material. I'm confident you'll find some of the strategies and techniques they employ quite useful.
2. Increased Knowledge of the Market
It's critical to understand market demand and growth. You must research your competitors and determine whether you need to improve your marketing plan in order to be more effective.
A competitor analysis will assist you in expanding your knowledge of the industry. Once you establish yourself as an expert and an authoritative figure, you can earn your consumers' trust more easily.
Competitor analysis also aids in the understanding and identification of market gaps. This will assist you in determining what you can do to outperform your competitors in these areas in order to maintain your customer's interest.
For example, one of your competitors may be focusing on younger generations. And so, you notice none of your competitors are making changes to their products to appeal to an older audience. You can use this information to adjust your strategy accordingly.
Understanding your competition also entails looking at companies that are similar in size to yours. If you want to develop your business, you should look at larger competitors to see what they're doing right and what they're doing wrong. You can find areas for internal or external development as well as growth opportunities. You might also discover potential new markets to expand your business.
Industry trends can be identified by a thorough competitor analysis. It's critical to know where your industry and competition are headed. Examine the threats and opportunities that these trends may bring, as well as what you can do to address them.
3. Get Insight Into Customer Behavior
Your competitors sell products or services in a variety of categories. Customer perceptions of competitors' offerings also play a significant role in defining the market.
At times, you and your competitors may have the same content strategy. However, your website traffic is insufficient. It's possible that your potential customers are going to your competition because they post new material more frequently. Don't forget that consistency is just as vital as quality. You will not receive more visitors if you post every day, but your material does not capture attention.
Audience response on social media platforms can help you understand your competitor's market position, as well as yours. You'll stay several steps ahead of the competition at all times, and you gain the advantage of being unpredictable.
Customer feedback and customer research can be used in a more extensive competitor analysis. It's possible to conduct an internet poll or focus groups with direct customers of your competitors. You can compare and contrast the most loyal and steady consumers with the most disloyal and irresolute customers to answer a variety of customer satisfaction queries.
4. Predict Future Market Trends and Competitor Plans
Another motivation for competition analysis is to foresee market trends. By doing a competitive analysis, you can figure out where you fit in the market. It can assist you in making decisions on how to improve your customer and competitor interactions.
You'll also be able to spot the threats and difficulties that your competitors may pose to the market. As a result, you'll be ready and won't be caught off guard. Competitive analysis may swiftly reveal not only the status of your competitors' businesses but also your own. You can look at critical metrics, including income, costs, and production amounts.
You can discover a new competitor plan or strategy if you conduct a more thorough competitive analysis. For example, you can gather news articles about competitor expansion, location changes, redevelopment, and other such information. Doing so might help you construct a marketing plan to counteract any marketing plans your competitors have in store.
A competitor analysis might also aid in the development of your marketing plans. Are you aware of the keywords or marketing channels that your competitors employ? You may begin to grasp the cost of marketing and how much they spend to gain new customers by looking at where the competition spends. You can, for example, assess whether you should compete directly or utilize more cost-effective marketing channels.
5. Save Resources and Reduce Costs
Another benefit of doing competitive analysis is the prospect of becoming more cost-efficient. A proper competitive analysis can pinpoint viable markets, audiences, and strategies that prove beneficial to your business. Also, it can lay out the foundation for potential expansions.
If you want to break into a new market, you must first conduct a competitive study. It offers a lot of information on the market's saturation, size, and propensity for profit or loss. By doing preemptive competitive analysis, you will save both time and money.
After highlighting why a competitive study is needed, it's time to discuss how to do it.
How to Conduct a Competitor Analysis
It doesn't have to be difficult to conduct a competitive analysis. You may perform a rudimentary SWOT analysis on each of your competitors as well as your own company. Understanding each rival's Strengths, Weaknesses, Opportunities, and Threats will often make up most of the analysis.
There are many venues where you may find publicly available competitor data. You can utilize social media pages such as verified Facebook pages, Twitter and Instagram profiles, or YouTube channels if there are any available. Your competitor's official website also holds valuable information. It may contain data such as technologies used, products and services provided, and the number of employees. Most importantly, their website could contain customer feedback, which is vital information.
Most companies post blogs and articles to enhance their online presence and traffic. You can use such materials to build upon your competitive analysis. Lastly, you can take a look at news articles, online advertisements, or marketing campaigns to determine potential variables you can use for your SWOT analysis.
To summarize, competitor analysis is an essential part of the business planning process. You stand to gain a lot by conducting it and risk losing out by neglecting to do so. With today's technology making information more accessible, doing competitor analysis is relatively easy and employed at various levels.