To crush your marketplace, you need to know who your competitors are and why they`re successful.
Thankfully, for small business owners, you don’t have to spend a fortune on a team of overpriced professionals.
All you need is a competitor analysis that identifies where and how your competitors engage their audiences and make sales, giving you the information you need to beat them.
So, relax while I tell you how to do a competitor analysis for your small business.
What is competitive market research?
Competitive market research finds and compares market metrics to determine how your competitor’s products and services differ from yours.
The results can help you create an effective sales and marketing strategy to promote your brand in ways that engage your target audience’s interests and emotions.
What is a competitive analysis?
A competitive analysis assesses your competitor’s products/services, marketing strategies, pricing, sales tactics, and distribution channels.
Why do Competitor Analyzes For Your Small Business?
You know the saying, “Keep your friends close and your enemies closer?”
To beat your competitors, you must first know who they are, what they’re doing right, and how your brand compares.
It’s all about finding your competitor’s strengths and weaknesses to beat them.
Competitor analysis also ensures you stay in tune with industry trends to improve what you sell and how you sell it while increasing your marketplace rankings.
And in our world of ever-changing sales platforms, running a regular competitor analysis is how you stay relevant.
The Benefits of Competitive Analysis Research
You and your business can benefit from a regular competitive analysis in the following ways:
- Find gaps and opportunities in your market.
- Improve your existing products or services.
- Uncover new market trends.
- Develop new products or services.
- Identify the highest-performing market strategies.
- Create new marketing strategies that sell more effectively
Any of these 6 advantages can help improve your brand’s performance; imagine what they all could do!
Okay, you know the what and why; now, it’s time to learn how to do a competitor analysis.
Let’s dive in.
How to Do a Competitive Analysis
You’ll find competitive analysis variations in every post you read. I’ve taken the key elements to compile this 7-step guide to save you the headache of choosing.
But before you begin, you need to know which competitor analysis questions to answer.
The most effective being:
- Pricing: Compare the prices of your products or services with those of your competitors to evaluate your pricing strategy.
- Distribution channels: Are your competitors selling online or in retail stores?
- Product range: Analyze the breadth and depth of your competitors’ product options to determine how they align with your offering.
- Product features/qualities: Find out what people love about their products/services to improve yours.
- Online shopping experience: Use your competitors’ sales platforms to experience their customers’ journey and identify opportunities to improve yours.
- Shipping: Look at their shipping options to see how they fulfill customer orders and deliver products.
Now, let’s look at how you choose who to analyze:
- Relevance: Choose competitors that operate in the same industry or niche as your business to ensure the insights you get are relative.
- Success: List your most successful competitors so you can learn from their strategies. After all, they`re successful for a good reason, right?
1. Identify your competitors
“Good artists copy, great artists steal,”-Picasso.
Picasso explained that a good artist sees another artist’s style and tries to emulate it. A great artist takes specific elements from another artist’s work to create their masterpiece.
You can do the same, but first, you need to know who your competitors are:
Direct competitors offer similar products and services to your ideal customers in your business’s geographic area.
Here’s how you find them:
- Analyze search engine results (SERPs) for similar product queries. Look into market share statistics from reliable sources like Statista. And identify businesses that source products from the same suppliers or wholesalers you plan to use.
These businesses offer different products/services than yours but fall within the same category.
For example, a winery and a brewery are secondary competitors as they operate in the alcohol industry.
These businesses offer different products and services but target the same customers in your area.
Creating a list of your competitors is how you’ll understand your market, analyze their strategies, and make sound business decisions.
2. Determine what products your competitors offer
Let’s dig into your competitors’ products and services and find valuable insights.
Start by scrutinizing their entire product line by asking questions like:
- What is their market share?
- Who are their ideal customers, and how do they meet their needs?
- Are there characteristics and needs of their ideal customers?
- Are they using different pricing strategies for online purchases versus brick-and-mortar?
- How are they different from their competitors?
- How do they distribute their products/services?
And determine whether your competitors are low-cost or high-end providers and if they focus on volume sales or one-time purchases.
You aim to find what sets your competitors apart. And explore their distribution methods to understand how they get their products or services into customers’ hands.
3. Compare marketing strategies
Analyzing your competitors’ marketing strategies is crucial for understanding their content and online presence, and you do it by:
Exploring their website content
Pay attention to their homepage, product/service pages, and blog section, and analyze the headings, keywords, tone, style, and length of their content to see how it compares to yours.
Assessing their website elements
Note the tone and imagery they use on their homepage. Assess their website speed using tools like Google’s PageSpeed Insights and ensure yours is faster.
Analyzing their social media presence
Consumers say what they feel about a brand on social media, so it’s an excellent place to discover what they think about your competitors.
Here’s what to focus on:
- Who they`re talking to: Find your competitor’s audience and see how they interact with them.
- Platform preferences: See which of your competitor’s social media channels has the highest engagement rates to find where they have a powerful presence.
- Language and content: Examine their language and tone on platforms like Facebook and Instagram to see how they engage their target audience’s emotions.
- Influencer marketing: Check how your competitors leverage influencers to promote their business.
- LinkedIn presence: Explore any LinkedIn channels they have to review their B2B marketing efforts.
4. Research your competitors' sales tactics and results
Here’s where you’ll gain valuable insights into their sales process and help you prepare yourself or your sales team for success.
Understand the sales process
Every brand has a sales journey for converting prospects. Look for information on their sales channels, locations, and factors that give them an advantage. Identify if they are expanding, scaling down, or having partner reselling programs.
Identify customer feedback
Negative reviews provide invaluable information you can use to beat your competitors. Look for weaknesses and areas where you can take advantage.
Evaluate pricing and discounts
See if your competitors offer regular discounts or price variations so you can match or beat them.
Look at your competitors’ pricing, as well as any perks they offer
When pricing your product/service, you must consider your competitors’ charges to ensure you can compete.
Let’s say your product offers superior features to your competitors; here, you could consider setting a higher price than the industry standard.
However, when charging above the industry average, you must show your target audience the extra value your product provides and how it fulfills their need.
I`m not talking about product features; your customers only want to know how it benefits them.
Or you might identify a gap in the market for affordable products and target people looking for high-quality products at affordable prices.
But here’s the thing: price sensitivity isn’t only about quality or features; other elements impact a consumer’s willingness to pay.
And the stats back this up:
- 43% of consumers will pay more for convenience, such as faster shipping or hassle-free delivery.
- And 71% will pay a premium for brands that provide product traceability.
As you analyze your competitors’ prices, pay attention to any “add-ons” or value-added services they offer. Look for ways in which they tie extra value to their prices, going beyond just the dollar value.
By understanding how they justify their costs, you can differentiate your offerings and avoid competing based on price. Because people don`t just buy products, they buy the value they provide.
Ensure you’re meeting competitive shipping costs
Expensive shipping is the number one reason customers abandon their shopping carts. So you`ve got to be competitive.
You assess your competitiveness by examining your competitors’ shipping costs.
If most of your competitors offer free shipping, you`ll probably need to do the same. However, if you can’t afford free shipping, you can use loyalty programs, holiday discounts, or giveaways on social media to provide customers value.
When assessing your competitors, find out what they charge for:
- Same/next day delivery.
- 2-day shipping.
- Standard shipping.
- International shipping.
And remember that e-commerce brands often negotiate bulk discounts for shipping through long-term contracts.
And brick-and-mortar businesses can use options like Buy Online, Pick Up In-Store (BOPIS), or curbside pickups to reduce fulfillment costs.
5. Note your competition's content strategy
Content is how brands engage and convert their target audience, so you must know how and where your competitors do it.
- Find your competition’s content strategy by researching their websites and following any social links to see how many platforms they use.
- Now note if they only use blog posts or a mix of content such as YouTube, Tik Tok videos, or ebooks.
- Evaluate how often they publish. Do they release new content each week or once a month?
Next, review their content’s quality by selecting a small sample and answering the following questions:
- How accurate is their content?
- Are there any spelling or grammar errors?
- Does their content provide in-depth information or only cover surface-level topics?
- What tone do they use in their content?
- Is their content structured for readability with bullet points, headings, and lists?
- Is their content accessible or gated behind opt-in forms?
- Who writes their content? Do they have an in-house team or multiple contributors?
- Are there visible bylines or bios attached to their articles?
Study the visuals they use, such as photos and illustrations
Do they use generic stock photos or custom graphics and imagery? If they use stock photos, check if they customize them with text overlays specific to their business. Are their visuals professionally sourced or done in-house?
Your goal is to understand your competitor’s content marketing strategy because then you can assess its effectiveness.
6. Analyze the level of engagement on your competitor's content
Your competitors most likely use many content strategies to engage their target audience and convert them into buyers.
Now is when you establish what works to emulate it.
Here’s what you should focus on:
- The average number of comments, shares, and likes: Find patterns in engagement metrics across their content to identify topics that generate high engagement levels.
- Comment sentiment: You can improve your content by assessing what people say about your competitors.
- Twitter activity: See which content generates more tweets to find conversation opportunities.
- Facebook engagement: Identify which types of content receive more engagement, such as videos, articles, or images.
Once you find your competitors’ high-performing content, there are 2 things you must do to get the most out of it:
- Categorize it using tags or labels.
- Look for any integrated social media follow and share buttons that increase visibility and engagement.
7. Perform a SWOT Analysis to learn their strengths, weaknesses, opportunities, and threats
A SWOT analysis is a powerful way to assess your competitor`s strengths, weaknesses, opportunities, and threats to understand internal and external factors impacting your success.
The strengths and weaknesses focus on internal aspects, such as your organization’s resources, capabilities, and limitations.
Opportunities and threats examine external factors, such as market trends, competition, and potential risks.
Here are some questions to guide you:
- Strengths: Identity what your competitors do well, like effective content marketing strategies and social media presence.
- Advantage: Determine where your competitor has an edge over your brand, such as market share, products/services, or customer loyalty.
- Weaknesses: Find your competitors’ Achillies heal, like gaps in their product offerings, subpar marketing efforts, or operational inefficiencies.
- Brand Advantage: Identify where you beat your competitors, like customer service or content engagement levels.
- Areas for Improvement: Consider what your competitor could do better, such as enhancing their product quality, refining their content strategy, or improving their customer experience.
- Threats: Evaluate where your competitor threatens your brand, such as a strong market presence, aggressive marketing campaigns, or innovative product developments.
- Identified Opportunities: Determine if your competitor has identified any market opportunities evident through new product launches or expansions into untapped markets.
Comparing your competitor’s weaknesses to your strengths and vice versa is how you identify opportunities and improve your brand.
Determine your competitive advantage
With all the information at your fingertips, it’s time to determine what the results mean for your business.
Reflect on your strengths relative to the competition and identify where you want to concentrate your efforts. Think about the future direction you envision for your brand.
However, while using what your competitors do right and wrong can give you an advantage, don`t let it drive what you do.
Let your unique vision and value proposition guide your strategy.
Remember, your competitors began where you are today.
Sure, some may have had more money or better tech, but all got where they are by ensuring their products/services, marketing, and sales strategies suited their target audience by asking the right questions.
Now you know how to do a competitor analysis for your small business; you can do the same.