Competitive analysis, also known as competitive analysis, is defined as a process of identifying competitors and analyzing their marketing strategies. This analysis is mostly performed to find and determine competitors’ strengths and weaknesses. Analysis can be performed on a higher level or a specific aspect of a competitors’ business.
Performing competitive analysis can also help business owners understand the market, identify industry trends, set benchmarks for growth, predict market supply and demand, forecast market trends, redefine company objectives, etc. There are multiple steps when performing competitive analysis; some of the most important steps include identifying your competitors to have some kind of a list of businesses your customers would buy from if they did not buy from you, gathering their background information, defining your competitors’ target customers, creating comparison criteria, choosing a framework, one of the most popular being the SWOT analysis which looks at competitors strengths, weaknesses, opportunities, and threats, etc.
When performing competitive analysis, inexperienced marketers can easily make some critical mistakes. Since the whole process can be very time-consuming, even those with more experience can sometimes make the same mistakes.
We will try to point out some of the most common mistakes marketers can make and should avoid making when performing this analysis.
Conducting weak analysis (or even skipping it).
Competitive analysis is very important for assessing risks, preventing threats, and making sure your product is competitive enough. With this in mind, it is important to perform a detailed analysis and take your time doing it. In case you skip this process, chances are your strategies will have faults that can further cause the failure of your business. Conducting proper analysis will provide you with valuable information that will save you time and money in the long run.
Not knowing who your competitors are.
If you want to get the most precise information, you have to perform a very detailed analysis of your competitors. That means doing a microanalysis per se, analyzing every product and service in detail. If the analysis is performed correctly, your list of competitors should include both large and small businesses. That way, you will not be blind-sighted when a new or small competitor grows in the market. Looking at search engine rankings is also a good way to find competitors. Also, taking into consideration small competitors will prepare you to face niche companies.
Not following industry news and trends.
Most industries and trends develop and evolve quickly, so keeping up with them is essential in providing a quality, competitive analysis. Another way to lose momentum is not knowing what is happening in the industry, which products or competitors are new, etc. Your marketing strategies can suffer and seem outdated, further disconnecting your brand from customers.
Only doing it once and occasionally updating.
As we mentioned previously, the market changes overnight, and keeping up with the market is essential for business success. Doing competitive analysis once or not updating it regularly and thoroughly can lead to losing market share and customers leaving your brand. Even though analysis can be time-consuming, it will pay off in the long run. It can be beneficial to do a competitive analysis before a new sales push, product launch, or a new marketing campaign. Just like all of the other mistakes, this one can also quickly get your business out of touch with the current market and lead to a decrease in sales or marketing campaign failures.
Too wide or not wide enough scope.
Although being detailed in analysis, this can also be a disadvantage if irrelevant insights are taken into consideration. In this case, the hardest part is figuring out which insights are important and which are not. To figure that out, listen to your customers and what they are talking about. This is the best way to find out what interests your customers the most and where you should focus—on the other side, not having a broad enough scope can lead to similar problems. If you consider only a few aspects of the market, that can lead to poor business decisions. For the final report, consider the product, the marketplace, technologies, finances, distribution, etc.
Manually comparing and analyzing data.
In the era of process automation, it is very outdated to perform competitive analysis manually. Monitoring social media, SEO, ads, blog content, and all other factors is almost impossible to perform manually. Some metrics cannot be manually calculated and obtained, even if you invest all your time. Many spy tools available on the market can help reduce time spent on performing a detailed analysis while providing accurate results. By automating some steps of the process, you can invest your time in other parts of your business, bringing greater benefits.
The main objectives of competitive analysis include market analysis, supply and demand forecast, building a strategy, studying trends, etc.
While avoiding previously listed common mistakes, you can also consider following some of the next steps in competitive analysis. Inquire about product features, pricing, business model, target customers, location, culture, technologies, etc. Keep in mind that competitive analysis is an ongoing process. It is simply not enough to perform this analysis once since the market and your competitors are constantly changing. Aside from analyzing your competitions, it is always good to analyze your own business too. This way you will be aware of your strengths and weaknesses, which will help you improve on those weaknesses and leverage your strengths for the best results.