What is Competitor Analysis and How to do it

Let’s get started right away with what is competitor analysis and how to do it.

Competitor analysis is a fundamental activity for any company.

It consists of studying the competition to understand their sales and marketing strategies and analyze their product. The goal is then to do better than them and, in this guide, you will find out exactly how to do it, also thanks to the templates we have selected.

1. WHAT IS COMPETITOR ANALYSIS?

Competitor analysis is an activity that provides you with a clear picture of your direct competitors on the market, with their products, sales techniques, and marketing strategies.

But who are the competitors?

A competitor is not only the one who offers the same product or service as you.

Did you expect it?

Competitors are also all those who, through their business, satisfy the same need.

Imagine that you are the owner of a streaming movie and TV series platform.

You would have both direct competitors: all other streaming platforms.

But also, indirect competitors: anyone who satisfies the need for “entertainment”.

There is therefore no single type of competitor but we will see this better later.

Now you just need to know that there are no startups without competitors and therefore the analysis of the competition is a must in any sector or market.

Making a competitor analysis, therefore, is a complementary activity to market analysis, useful for contextualizing the environment in which you work and on which to base strategic and operational choices.

But how exactly is a competition analysis done?

2. HOW TO DO A COMPETITOR ANALYSIS?

The process of competitor analysis can be divided into three parts:

• Competitors’ identification and classification
• Collect data about them
• Analyze what you have collected.

2.1 COMPETITORS IDENTIFICATION AND CLASSIFICATION

As we anticipated, competitors can be of two types: direct and indirect.

Recognizing them is important because it greatly expands the effectiveness of the analysis.  

• Direct competitors

By direct competitors, we mean the set of companies that operate in the same market in order to sell similar products. In general, two direct competitors are also characterized by overlapping prices and availability, to the point that in some cases a consumer would not be able to distinguish the different offers and attribute them to one or the other of the competitors.

• Indirect competitors

Contrary to direct competitors, indirect competitors have the characteristic of satisfying the same needs in the same market, but with different products and services. Prices and availability can therefore be very different from those of direct competitors in a given category.

• Direct Competitors V/s Indirect Competitors

What substantially differentiates direct and indirect competitors is above all the type and business model. For example The direct competitors of a multistore chain of libraries are obviously all the other libraries. In fact, all bookstores are characterized by satisfying the same need and operating on the same target (the public of readers).

Are online bookstores also to be considered a direct competitor? Obviously yes: regardless of the channel, in fact, the potential demand is perfectly superimposable, even if in fact the secondary demand presents traits of exclusivity given by the preference of part of the public for one channel over another. An indirect competitor, on the other hand, will be those who offer a substitute for the library’s value proposition.

For example, we will include any platform dedicated to the use of audiobooks: products with completely different characteristics compared to paper books, but which in fact satisfy the same needs on a market objective potentially overlapping with that of libraries. In the same way, we can consider newsstands, supermarkets that have a section dedicated to books within them, and in general any point of sale that has a value proposal partially overlapping that of the bookstore, while dealing mainly with something else.

2.2 COLLECT DATA ON COMPETITORS

Now that you have the list of your direct and indirect competitors you can proceed to the actual analysis.

In a nutshell, what you need to pay attention to is:

a) What product or service do they market?

b) What is their sales strategy?

c) Do they implement particular digital marketing strategies (display, SEO, content marketing.etc.)? Are many active on social media and what do they communicate?

A) PRODUCT OR SERVICE

Specifically, you have to deepen the features, price, functionality, and technologies.

Here are a few questions you might ask yourself:

• Do they offer a service at a high or low price?
• How do they distribute what they sell?
• Do they sell in volumes or one product at a time?
• How does the startup differ from others?
• Do they mainly sell online or offline?

B) SALES STRATEGIES

Although it is not easy to obtain this type of data, here are some questions that will help you identify it:

• How does the sales process work?
• Are there any sellers involved in the sale?
• What sales channels do they use?
• Do they often discount their products or services?
• If they have physical stores, how many do they have and where?
• Why do some customers decide not to buy their products? And why do they stop doing it in some cases?
• Are they growing or decreasing?
• Do they have any sales partners?

Once you have answered, you can analyze the communication and marketing strategy.

Let’s see how to do it.

C) OTHER MARKETING COMMUNICATION STRATEGIES, SEO, AND SOCIAL MEDIA ACTIVITIES

To analyze the marketing strategy, you will need to look mainly at the websites of your competitors.

Here are several questions to ask yourself:

• Do they have a blog?
• Do they publish paid and/or free guides or eBooks?
• Do they offer case studies?
• Do they have a podcast? Do they post videos or do educational webinars?
• Do they use visual graphics to present products or services?
• Are they using the press to launch a new product or service?
• Is there a FAQ section?
• Do they write sponsored articles?

Knowing how your competitors communicate and advertise will help you identify the most effective strategies that push your users to make purchases.

In these terms, it is also useful to focus on the SEO and Content marketing strategy of your competitors.

To analyze the keywords, they rank on and their content density, you can ask yourself:

• Which keywords do your competitors write the most on?
• What is the difficulty, both in terms of writing and positioning for this keyword?
• Are their contents linked to other sites?
• Who is sharing their content?

At this point you will have to carry out a qualitative analysis of this content, but how to do it?

You certainly can’t read every article and eBook published by your competitors.

To analyze the content marketing strategy of your competitors, you can then proceed by choosing 10 contents and ask yourself:

• How detailed are the topics and how deep are they?
• Is there a summary or an opening to the article?
• Are there any grammatical errors?
• What tone of voice do they use?
• Who writes the content? Do they ask for help from outside writers or do they rely on the internal team?
• Is the content free or do you need to create an account or pay to access it?
• How often are they published?
• Are the contents structured to facilitate reading?
• Are the images customized or were they taken from stock archives?

It then ends with analyzing the presence and activities they carry out on social media.

When you do it try to identify the platform with which they can engage more followers, to do so keep track of the following:

• Number of followers;
• The frequency with which they post;
• The number of comments, likes and shares in the various posts;
• The virality of the contents.

However, one of the most important questions of competitor analysis remains open.

Where can all this data and information be collected?

TOOL TO FIND DATA ON YOUR COMPETITORS

Below you will find all the free tools you need. If you would like to learn 30+ pro tools and learn digital competitor analysis (paid & organic strategy) in-depth with practicals and use cases, at NIDE, we have two courses; the Diploma in Digital Marketing and the Performance Marketing Course. We have one of the best Digital Marketing online courses in India. For more details, you may contact us.

Let’s look into these free tools now;

• Google: the most used search engine on which to find the main information you need;
• YouTube: uses the most used entertainment platform in the world to find topics or market niches;
• Crunchbase: a platform to find financial information (but not only) on the business of private and public companies;
• Similarweb: offers some estimates on monthly visits and traffic generated by certain keywords of a certain website;
• Mailcharts: to obtain data on the e-mail marketing of your competitors;
• Buzzsumo: discover their most successful content along with sharing statistics;
• Alexa: to identify the demographics of readers and related searches of a website;
• Facebook Audience Insight: to obtain a series of information on the audience of one of the largest social networks in circulation.

3. WHY DO THE COMPETITOR ANALYSIS?

All companies should do a competitor analysis because it provides a series of qualitative and quantitative information from which to draw to make future business choices.

Whether you have a startup, to be able to outline your offer well and above all understand if there is a market actually interested in what you offer.

Whether you have a traditional company, to understand future market changes and to identify new niches.

Furthermore, knowing your competitors will help you to play the role of the customer, to understand his decision-making processes in the purchasing phase, and to understand how to communicate your product/service effectively.

These are just some of the advantages that a correct analysis of competitors brings, do you want to know others?

Competitor analysis will give you creative ideas for your business.

Is there anything your competitors aren’t doing? How do you improve your product/service?

A good competitor analysis must help you answer these questions, especially if you have a startup, it is essential to center the product market/fit of your product/service.

You can also, to that end, use these questions to identify your blue ocean.

In fact, competitor analysis can help you position yourself in an unoccupied niche.

You will be able to start from the data collected and then develop a Minimum Viable Product that distinguishes you in the market.

Now that you understand why it is important to analyze the competition, remember that you have to do it repeatedly.

4.   THE PARAMETERS FOR THE COMPETITOR ANALYSIS

To this end, it will be necessary to evaluate the main competitors on the basis of a parameterization of the characteristics relating to some fundamental areas, among which we can mention for example:

• The business models
• The acquisition channels
• Commercial acquisition and retention policies
• The pricing
• Brand communication
• Product communication
• The target
• The use of customer care and customer contact channels (including for example social media)
• Positioning on search engines
• The use of online advertising platforms
• The use of offline advertising and direct marketing.

These 11 parameters, however, do not exhaust everything that needs to be explored when proceeding with the analysis. For each company, product, and market segment, we will also have to identify all those aspects that may be peculiar and significant for that business.

5.   THE SOURCES FOR THE COMPETITOR ANALYSIS

Generally, in the case of competition analysis, it is difficult to have recourse to primary sources of data – sources, that is, such as interviews or research that directly involve competitors. The choice will therefore be to turn mainly to secondary sources.

• Website Analysis

Corporate websites are often an important source of information that can include data related to partners, business models, customers, and organization charts. Often the data on websites can also include detailed information on products and their characteristics, data sheets, videos, presentations, and so on. Naturally, in evaluating these sources, it should be remembered that they are often affected by positive biases and that therefore the information must be appropriately filtered and, as far as possible, verified.

• Product Analysis

Among the analyses normally possible on a website, one of the most important concerns is the parameterization of the characteristics of the products or services offered. This analysis will be invaluable when evaluating a differentiation matrix for your products.

• Web Traffic Analysis

Equally valuable will be the analysis of the metrics available for web traffic, whose estimates are normally available online thanks to specific tools such as Similarweb, it will be possible to make comparative estimates of the traffic developed by the sites being analyzed that also contain evaluations on traffic sources (or acquisition channels) and on its geographical distribution.

This type of analysis is essential to quantify the popularity of a competitor’s brand and even to determine the strategy used online. For the same purpose, we can use Google Trends, which offers us, as is known, an overview of the trends related to specific search keywords over time, which could concern both products and brands.

• Search Engine Positioning Analysis

As for the positioning of competitors on search engines – specifically, on Google, if we are in a European or Western context – it will be convenient to use tools such as SEMrush, which offers the possibility of evaluating the evolution over time of the organic positioning of websites. of competitors.

• Social Media Analysis

Finally, an essential evaluation will be that of social media: type of use, sentiment, mentions, popularity of the brand, and engagement will be very important parameters to make a comparative analysis of competitors according to their social presence and determine, also in this case, best practices and differentiating factors.

In many cases, an analysis conducted with these criteria will be sufficient to provide a fairly truthful reference framework with which to compare to determine the relative positioning of each brand with respect to its own. In some markets, however, such an analysis may be, although necessary, not sufficient to provide an exhaustive picture of the competitive system capable of coherently guiding choices and decisions of a strategic nature.

6. FREQUENCY OF COMPETITOR ANALYSIS

Competitor analysis is an operation to be repeated cyclically throughout the company activity.

In an increasingly fast and accessible market, the players present are many and constantly evolving, for this reason, it is useful to monitor their growth.

So, let’s say that it is a good practice to analyze your competitors at least once a year, although it would be recommended to do it every time there are significant changes in your business.

Furthermore, doing a competitor analysis regularly will allow you to track the results of both your path and that of your competitors so that you can compare them.

I hope at this point you should be able to understand what is competitor analysis and how to do it! Now it’s time to get to work!