For students of modern business practices, and even those who are only mildly interested, it is obvious that business has changed. It brings to mind the old automobile ad which admonished us that “This is not your father’s Oldsmobile!”.
To be sure, this is not your father’s business environment. At the core of this change is the availability, accessibility, and sheer quantity of information. This information, now commonly being lumped together under the label “big data”, is available anywhere, any time, and on any device. From the casual observer to those who want a deep dive, information is at your fingertips. As we have all observed, this can be good thing… or it can have negative implications.
For inquiring minds, the “good” side of the equation is the ability to dig as deeply as we like into a topic. File this under “knowledge is strength”. On the “negative” side of the information firehose there is just too much to absorb, so we end up taking a cursory look and do not dig beneath the surface. The caveat here is to think of the iceberg effect, where 2/3rds of the subject is beneath the surface… meaning appearances can be deceiving.
What we don’t know can in fact hurt us. In business, a great example of a need to know (beneath the surface) is an honest assessment of the competition. The old adage of keeping your friends close but your enemies closer is more accurate today than ever before. This begs the question of why this is so, and what to do about it. Consider the following as the rationale and “need to know” relative to a competitive analysis and the processes therein.
The primary reason we are where we are, business-wise, begins with the emergence and appearance of parity and commoditization of the vast majority of products and services on the market.
Yes, there are a few products that are (for a time) truly unique and even disruptive; as a result, there is no parity or commoditization for that product at the outset. What we do know is that even those unique technologies will soon be copied or approximated (think patent workarounds) and ultimately fall into the parity and commodity trap.
For a time, a company with a unique product can drink their own Kool Aid but sooner than later, everybody will have the same flavor just under a different brand name.
Now the challenge becomes standing out from the crowd and what the audience sees as apparent equals. This involves what I call the big three: marketing, telling story that will resonate with the intended audience, and differentiation. The point to understand and embrace is that no matter what you may think, you are not alone.
There are others out there that at the very least look like you to the casual observer. While every company needs to focus on differentiation, whether they admit it or not, many competitive companies will shortchange the big three. This may be lack of understanding (ignorance is bliss), lack of funds and/or staff, or just laziness. Think about it this way… if everyone did a great job at differentiation then the noise level would be deafening.
Not to worry though. This is not likely to happen beyond the few who really “get it”. You know who you are!
Differentiation boils down to three issues. The first issue is truly understanding who your company is. This can be complex to say the least. At a minimum this involves the mission statement, business plan, and product and/or services, and your sales approach.
The second issue is to identify and understand who the intended audience is. This is driven by the product and/or service, keeping in mind that one size or message rarely fits all. The third leg of the stool that makes it stable is truly understanding the competition you face. This is the area that is most often underestimated and overlooked by the uninformed.
Experts in conducting marketing analysis for companies agree that the two issues that are most pervasive are having “company blinders” on and not understanding the competition. In our own SWOT analysis questionnaire, among an array of questions, we ask one that is simple yet powerful in its implication…Do you objectively know your competition, or just know OF them?
The majority of respondents typically admit that they just know of them, but even those who claim to know the competition are revealed in our follow-ups to not truly understand them. In a world of parity and commoditization understanding the rivals, who they are, what they offer and how they do so is key, hence the need to keep your enemies close. This necessity requires a thorough understanding of precisely what you need to know.
The following is an amalgamation of what some of the most noted experts in industry tell us, as we explore what we need to know about the competition and how this benefits us.
In it most elemental form, a competitor is a person, business, team, or organization that competes against you or your company. If somebody is trying to beat you in a “race”, that person is your competitor. In business, we call a close a competitor a rival.
In other words, rivals are the same size and make similar products. If two companies are leaders in their field, we refer to them as archrivals. For our purposes, the following definition from the Warton School fits:
“A company which rivals another. Two companies that operate in the same industry, make similar products, and target the same consumers, are competitors.”
When you identify competitors, you have three types to consider: direct, indirect, and replacement:
- Direct competitors are the businesses that sell a similar product or service in the same category as you. This category also includes aspirational competitors who want to get into the fray. (These are the competitors you most often think about.)
- Indirect competitors are the businesses that sell a product or service in the same category as you, but it’s different enough to act as a substitute for your product or service.
- Replacement competitors are the businesses that sell a product or service that’s both different in category and type than you, but one which your customers could choose to spend their money instead.
If we separate the wheat from the chaff and avoid drinking our own brand/flavor of Kool Aid, we will identify/focus on direct competitors but keep an eye out for indirect. In addition, do not totally ignore replacement competitors.
These are competitors for dollars spent and can be just as powerful as a direct or indirect competitors. This all fits under the umbrella of a competitive market analysis.
Defining a Competitive Market Analysis
Conducting competitive analysis is a strategy that involves researching major competitors to gain insight into their products, sales, and marketing tactics.
A competitive analysis can help you learn the ins and outs of how your competition works and identify potential opportunities where you can outperform them. In the analysis you can see what they are saying and what makes your product different from them.
Done properly (and with an open mind), it also tells you what competitors are doing right and where they are falling short. File this under classic benchmarking.
Benchmarking and performing a competitor analysis, not only tells you about the competition but you’ll be able to identify gaps in the market and help in developing new products and services. This research will reveal market trends and, in the end, allow you to market and sell more effectively.
The first step in doing a competitive analysis is identifying your competitors. Some will be obvious and known to you but others make take some research.
Try not to go overboard here with a dozen competitors from each type… it’s a nightmare to keep up with, and you likely won’t be truly competing with that many anyway. If you begin to feel your list creeping past five or six of each type, consider focusing on only the ones who have the biggest market share.
Conducting a competitive analysis is essential to growing your business. However, it can be incredibly tedious and time-consuming — especially if you’re looking at multiple competitors. Luckily, there are many online research tools to make the process easier and more efficient. These tools can help you identify competitors, track their content, and analyze the results.
To find profiles of businesses, simply do a web search or use websites such as Owler, D&B Hoovers, Crunchbase, Linkedin Sales Navigator, and Product Hunt to help you find similar products and services and conduct market research. Find as many direct and indirect competitors as possible to better understand who you’re up against.
Overview – Conducting a Competitive Market Analysis
1. Determine who your direct competitors are.
2. Determine what products your competitors offer and their pricing including shipping costs.
3. Research your competitors’ sales channels, processes, and results.
4. Analyze how your competitors market their products and assess their content strategy.
5. Observe how they promote marketing content.
6. Look at their social media presence, strategies, and go-to platforms.
7. Perform a SWOT analysis to learn their strengths, weaknesses, opportunities, and threats.
Analyze How your Competitors Go to Market
The fastest way to gauge their marketing efforts is by analyzing your competitor’s website. Take note of any of the following items and copy down the specific URL for future reference:
· Do they have a blog?
· Are there featured articles and whitepapers?
· Do they post videos?
· Are they conducting webinars and/or virtual events?
· Do they have a podcast?
· Are they using static visuals such as infographics?
· What about slide decks?
· Tip sheets and product guides
· Configuration and evaluation tools
· Do they have a FAQs section?
· Are there press releases?
· Is a media kit available?
· Are there application case studies?
· Do the post testimonials?
· Are there product demos and comparisons?
· Do they publish buying guides and data sheets?
· What online and offline advertising campaigns are they running?
Look at the quality of each content type. Compare it against your own content. What types of content are published most pervasively?
What is the frequency at which your competitors produce new content? If your competitors publish three or four times a week, you may want to invest in a dedicated copywriter or content creation service just to keep up. Remember (and apply) the old adage “out of sight, out of mind”.
When analyzing your competitor’s content, consider the accuracy, depth, structure, readability, and quality. When you have a solid understanding of your competitor’s content marketing strategy, it’s time to find out if it’s truly working for them.
While creating and maintaining quality content is one thing; getting it in front of your audience is a whole other ballgame. Today more often than not it involves social media in addition to a website and traditional advertising.
With the same critical eye, you used to gauge your competition’s content marketing strategy, take a detailed approach to look at and analyze their social media strategy.
· What kind of content are they posting?
· Are they more focused on driving people to landing pages, resulting in new leads? Or are they posting visual content to promote engagement and brand awareness?
· How much of this content is original?
· Do they share curated content from other sources?
· Are these sources regular contributors?
· What is the overall tone of the content?
· How does your competition interact with its followers? How frequently do their followers interact with their content?
After you collect this data, generate an overall performance assessment for the quality of your competitor’s content. This will help you compare the rest of your competitors using a similar grading scale and compare it to your own.
Perform a Competitor SWOT Analysis
As you evaluate each component in your competitor analysis (business, sales, and marketing), get into the habit of performing a simplified SWOT analysis at the same time. This means you’ll take note of your competitor’s strengths, weaknesses, opportunities, and threats any time you assess an overall grade.
Some questions to get you started include:
· What is your competitor doing well? (Products, content marketing, social media, sales channels, industry partners, etc.)
· Where does your competitor have the advantage over your brand?
· Where does your brand have the advantage over your competitor?
· What is the weakest area for your competitor?
· What could they do better?
· In what areas would you consider this competitor a threat?
· Are there opportunities in the market that your competitor has identified or missed?
You’ll be able to compare their weaknesses against your strengths and vice versa. By doing this, you can better position your company, and you’ll start to uncover areas for improvement within your own brand.
Conducting a general SWOT is a good place to start, but there are several other components to consider in a competitor analysis. It is important to include as much information as possible to create an accurate assessment of how your business compares to others.
You will need to collect information on potential competitors and their features, pricing, service quality, strengths, and weaknesses.