Competition Analysis.Understand why it is important to know the strengths and weaknesses of your competitors and how to obtain this information.
How to do a competitive analysis?
Okay, you already know that you need to know the companies that compete in the same market as yours and that want to win over the same customers that are part of your target audience. However, in practice, what needs to be done? We have prepared a brief guide for you to understand how to do this.
1. Define who your competitors are
The first question may seem simple, but it is not: who are your competitors? Companies that sell similar products cannot always be considered competitors, especially due to the target audience.
Your competitor is one who wants to reach the same target audience as your company. This includes age, income and geographic location. A physical store that sells the same products as you, but located in another state is not a competitive parameter, for example.
2. Define the objectives
“Knowing the competitors” is a very broad concept, you have to get straight to the point. What information do you want to know about them? For example, you can do an analysis from the point of view of investments in marketing or profit margin on sales.
The more specific you are in your question, the greater the chances of getting good results. Define clearly what your questions are and what aspects of analysis are relevant before going out to get the results.
3. Define the criteria to be analyzed
Refining the objectives further, we arrive at the criteria that will be effectively compared. The list here is extensive, and practically infinite, but you can stick to more common and useful aspects, such as:
- Products:what are the characteristics of the product marketed by competitors? Do they use the same raw material? Are they imported? Are they handmade? Know how to identify the differences between what you and your competitor sells.
- Price and competitive advantages: are prices similar, lower or more expensive? If they are more expensive, do they offer any advantage or benefit? Identify why people are paying more (or less) for the same items.
- Consumer and target audience:Does your competitor focus on the same target audience as yours? If not, why did he make that choice? Could you go the same way or is it better to stay on the current one? Understand who your competitor’s customers are.
- Website and social networks:what is the public saying about your competitor? Do they praise or complain? What do they recommend? What do they think needs to improve? Obtain this data to draw a more complete profile of the competitors.
4. Strengths and weaknesses (SWOT analysis)
SWOT Analysis, also known as FOFA Analysis , is a matrix in which the Strengths, Opportunities, Weaknesses and Threats to the business of its competitors are listed.
- Strengths: theseare the positive aspects of the company that can represent competitive advantages over competitors. In theory, competing against strengths, whatever they may be, is more difficult.
- Opportunities:this table lists the potentially positive aspects, but for some reason are not yet used or explored by the company in question. The idea is that, by investing in an opportunity, it can become strength in the medium or long term.
- Weaknesses:these are the weaknesses of the competitor’s business. The first step is to recognize them and the second is to work to gain an advantage over them. Anything that puts you at an advantage over other companies is potentially positive.
- Threats:the scenario may be positive for a business today, but will it always be this way? Threats are external factors that can cause complications for the company. Exchange rate hikes or changes in legislation are examples of this.
5. Supplier profile
Which companies supply the items that your competitor sells? Are there many alternatives on the market or are they the same companies? Understanding how products and raw materials reach your competitors is essential to understand their price formation.
It is necessary to find out, for example, if there are discounts for larger purchases, if there are ways to facilitate payment, or even if there is no option to import the goods at a more interesting price. This study will serve as an indication of the way your company operates and the more information you can gather, the better.
6. Create a questionnaire
A satisfaction survey helps your company understand what customers think of your products and services. You can design a questionnaire online or in print, but remember that it must be objective.
In summary: don’t ask for irrelevant information just to have more data. Try to understand what your customers like and what they don’t like and look for alternatives to improve what is possible.
7. Analyze the results
Finally, after getting the information you want, it’s time to look at the results, cross-check the statistics and do the data analysis. Many relevant insights can emerge from this exercise. We think we know the market well, but when we are faced with more detailed samples there are always some surprises to be considered.
Free tools that can help you analyze your competition
If you choose to do research online, there are many free tools that can help you obtain information of the most varied types. It is worth getting to know them and exploring them to find out if they meet your needs.
Google Alerts: allows you to create personalized alerts so that you can monitor relevant information about your customers in the media. Usage is simple and alerts are sent to your email.
Ubersuggest: this tool allows you to check where your competitors’ organic website traffic comes from. In addition, you can also identify the most relevant terms and compare them with your own results.
Complain Here: Brazil’s leading consumer complaints site, it can serve as a great thermometer to identify recurring problems from your competitors – and how the competition is handling the situation.
Google Trends: the most relevant topics at the moment within a given segment can be checked by Google Trends. This type of information can be used in many ways, from designing showcases to contextual offers.
Understanding your competitors’ work is the first step towards offering better or more suitable products and services to your customers. From the external analysis we obtain information that is relevant in internal processes. Use and abuse this type of analysis to obtain a competitive advantage in the market.