Whatever type of business that you are running, understanding the competition and their strategies is essential to your success. Taking the time to understand and analyze the competition – their marketing strategies, pricing, advertising campaigns, market share, and other areas – is called a competitor analysis. Importantly, a competitor analysis will help you understand the strengths and weaknesses of your competitors.
What are the Benefits of a Competitor Analysis?
Position Yourself Amongst the Competitors
A competitor analysis can really help you optimize your marketing and advertising campaigns. One of the most important benefits that a competitor analysis can bring is that it allows you to position yourself amongst your competitors. Once you know what the competition is like – and what sort of marketing strategies they use, who their target audience might be – you can have a much clearer understanding of how your business is unique from the competition.
Understand the Competition
In addition to understanding how your business is unique from the competition, there is another benefit to a competitor analysis: you can thoroughly understand your industry and competitive landscape. Though you already might have an idea of who your competitors are and what they are doing, a competitor analysis will provide you with a detailed understanding of who exactly is out there, what changes might be happening, and how you can position yourself amongst the competition.
How Can I Conduct a Competitor Analysis?
Now that we know what a competitor analysis is and how it might help your business, you might wonder how exactly one might go about analyzing the competition. So, now we will turn to the four steps you can follow to conduct a competitor analysis.
Step One: Compile a List of Competitors
This is probably your first time conducting a competitor analysis. So, with that, you will want to make a list of all the major players in your industry. You may begin this process by listing all of the competitors that you are aware of. More often than not, these competitors will be local to your business’s location and services. But how can you find out about competitors that you are unaware of?
Find Organic Competitors
You might have some keywords that your marketing campaign is targeting. To find out who and where the competition is, search some of those keywords on Google and see what the organic results yield. Pay attention to which businesses continue to be found through a few keywords – those are businesses that you are directly competing with. Write those businesses’ names down, and maybe poke around their website, see how their business differs from yours, and take note of what you see.
Step Two: Create Competitor Profiles
By now, we have an idea of who exactly the competition is. Now, it is time to create some competitor profiles and see how your business stacks up against theirs. This second step will require three different actions.
Analyze Market Share
Market share can be understood as the amount of the market a given business takes up. The more market share, the more control a business has over its given audience and market. Market share is calculated by the number of sales a business makes or what its revenue is like. For our purposes, however, digital marketers might also consider active users. By consulting with Ella or using a Market Explorer Tool, you can get a good picture of what your market share is like.
Using a Market Explorer Tool, find the ‘Find Competitors’ option and see what you can find. By looking at Market Dynamics data, you can compare the competitors in your market, see how many active users the respective competitors have and some larger trends within your market. Competitors who have more active users have a larger share of the market.
Understand Your Audience Demographics
Understanding who exactly your target audience is is very important. One quick and easy way to figure out who your audience is is by distributing a questionnaire to your users, asking them basic questions such as age, race, gender, occupation, or any other questions that are relevant to your specific inquiry. By building up what the audience demographics are and what your competitor’s market share is like, you will be well on your way to developing nuanced and detailed competitor profiles.
Step Three: Identify Product, Pricing, Placement, and Promotional Strategies
Understanding the products, pricing, placement, and promotional strategies is essential to a marketing strategy. Now that we have a thorough list of the competition, now is the time to deepen our understanding of the competition and really comb through their websites. When doing this research, you will want to pay attention to any pricing strategies, like sales or discounts, any promotions they offer, like free trials, and which products or services they seem to be highlighting. A Traffic Analytics tool can ascertain which product(s) are the most popular for that particular business. This way, you can glean what that business’s particular strength is.
Step Four: Identify Best Practices and Generate a Plan
By now, you have done a ton of research, and you should have a pretty good idea of what the competitors are doing. So, you will want to turn this research into something actionable. And now that you have identified what some of the competitors’ strengths are, you should also have noticed where your business might be lacking. Based on those insights, you can create a plan of action that leverages all of the crucial research you just conducted. This work you just did is also not just a one-time deal; you will want to revisit and revise the work you did. However, if you need personal assistance for this research and analysis, work with the team at Ella Interactive; our software and expertise can help you with competitor analyses, among many other digital marketing practices.