What does competitive analysis mean?
As the name suggests, the term ‘competitive analysis’ refers to the process of identifying and analysing your competitors to gain valuable insights on how you can outdo them and secure more market share for your business.
If you want to learn more about this topic, check out the FAQ section below:
Question #1: What types of information does a competitive analysis provide?
The types of information a competitive analysis provides include:
- The unique value proposition of your products or services
- What your main competitors are doing correctly
- What your main competitors are doing incorrectly
- What you are doing correctly
- What you are doing incorrectly
Let us take a closer look at each one:
First, performing a competitive analysis allows you to identify and better understand the biggest competitors of your products and/or services. This, in turn, allows you to better position your offerings so they stand out better.
Second, performing a competitive analysis would also allow you to see what your competitors are doing right and how it is helping their business so you can make the same changes in your own operations.
Third, such an analysis would also reveal any shortcomings your competitors have. Of course, if you know what they are doing wrong and how you can do better, it becomes easier for you to steal market share from them.
Fourth, a competitive analysis would also show you what you are doing right so you can double down on it. As a general rule, if it is bringing in new business, keeping your existing customers happy, boosting the morale of your team, or doing all three, then you should do more of it.
Finally, a competitive analysis would also reveal the things that you are doing wrong and should work on.
Question #2: How do I perform a competitive analysis?
To perform a competitive analysis, you will need to follow these 12 steps:
- Identify your competitors
- Identify your competitors’ products and/or services
- Find out what sales tactics you competitors use and what results they bring in
- Analyse your competitors’ pricing (in addition to any other perks they offer)
- Check if your shipping costs are competitive
- Research what marketing tactics your competitors use
- Analyse the content strategy your main competitors use
- Identify the technologies your main competitors use
- Take a look at the level of engagement your main competitors’ content gets
- Observe how your main competitors promote their marketing content
- Analyse their social media presence, techniques, and platforms
- Do a SWOT analysis
Feel free to skip any step that does not apply to the type of business you are running, but keep in mind that the more of these steps you perform, the more valuable insight you will get as to how you can outperform your competitors.
Question #3: What are the benefits of doing a competitive analysis?
As we have seen earlier, the main benefit of doing a competitive analysis is that it provides you with valuable insights as to how you can outdo your main competitors, such as:
- Gaps in the market
- Issues your competitors’ customers have with their products, services, or business practices
- Strengths and weaknesses of competing products and services
- Strengths and weakness of your competitors
The more information you have on your competitors and the market your business is serving, the easier it would be for you to develop better strategies for things such as growth, continuous improvement, customer acquisition, and customer retention.
Question #4: What is the difference between a SWOT analysis and a competitive analysis?
The difference between a SWOT analysis and a competitive analysis is their scope.
As we have seen earlier, a competitive analysis typically takes into account significantly more data than a simple SWOT analysis, allowing it to provide businesses with more of the information they need to outperform their competitors. In fact, a SWOT analysis is just one of the many steps involved in performing a proper competitive analysis.