The competitive analysis identifies a company’s competitors and evaluates their strategies to determine strengths and weaknesses relative to the company’s brand.
A competitive analysis frequently contains a SWOT analysis. This SWOT analysis assists the marketer in defining a competitive strategy plan. To identify opportunities and risks, it delivers a defensive and offensive strategic context. It is an important element of corporate strategy.
How to Conduct a Competitive Analysis [Steps to conduct Competitive Analysis]
The standard method that builds comprehensive profiles on all important competitors is known as competitor profiling. These profiles give a detailed explanation of the competitor’s background and finances. They also give a detailed description of commodities, faculty, facilities, markets, and strategies.
1.Define the Industry
Define the essence of the industry. Select indirect and direct competitors for analysis. Obtain summarised knowledge of all competitors.
2. Rate your competitors
Based on all key factors, grade or rate your competitors.
Find out what solutions stack/technology the competitors use. Understand how the competitors approach the market and acquire customers.
This includes the following:
- P-E ratios, Dividend Policy, and Profitability
- Various Financial Ratios, Liquidity, and Cash Flow
- Profit, Growth; Method of Growth (organic or inorganic)
5. Manufacturing & Operational Facilities
Plant capacity, capacity utilization rate, age of the plant, plant efficiency, capital investment, location, logistics cost, etc.
6. Product Analysis
Inspect everything that the product has to offer. Examine the characteristics, rate, strengths, and weaknesses, and also of it’s given as a freemium or free trial.
Paying attention to the competitor’s all-around business model is very important. Recognize the channels used by competitors to promote and deliver products.
7. Pricing Analysis
Pricing strategy is the most critical element and possible competitive advantage of an online business. It’s important to understand how much the target market ready to pay. Have an insight into potentially reasonable prices that may be good for business.
8. Review Social Media
Study the satisfaction level of the competitor’s customers. It’s crucial. Bank on the rise of social media like Facebook and Instagram. The help of social media pushes the business to capture opportunities and outperform competitors.
9. Check Competitors Customer Reviews
Research as many competitor reviews as possible. Cover all bases like product reviews on the website, business reviews on social media, and comments on blogs. NEED TO KNOW WHAT CUSTOMERS
Purpose of Competitive Analysis
Competitive analysis fulfills the purpose of determining the strong suits and limitations of competitors within the market. It helps determine strategies that will give unique advantages. With its aid, barriers can be created to avoid competition from entering the market. Competitions’ exploitable weaknesses are exposed.
Techniques for conducting Competitive Analysis
1. Competitor Array
Competitor array is a fascinating method that can be utilized to determine the marketing competitor analysis. This modest tool helps determine the status of your competitors in a few steps.
2. SWOT Analysis
SWOT is short for strengths, weaknesses, opportunities, and threats. It involves business, competition, or project planning. The characteristics of an organization that aid in accomplishing its goals are called strengths.
The drawbacks preventing the organization from attaining its goals are called weaknesses. The circumstances happening outside, which assist the business, are called opportunities. External conditions having the capability to badly affect the business performance of the organization are called threats.
Porters Five Force Analysis
This business strategy tool helps examine the appeal of an industry. The model states that the competitive strength of an organization in a business circumstance is regulated by five factors or forces. Three forces out of the Five focus on competition. They are
The magnitude of competition between rivals in an industry is called industry rivalry.
2. Threat of New Entrants
When companies lose their market share because of the entry of new players, it is called the threat of new entrants.
3. Threat of Substitute Products
The ability of a consumer to effortlessly shift to the competitor’s services and products is referred to as a threat of substitute products.
Competitive Analysis Example
Example – Netflix’s Competitive Analysis
Example – Tesla’s Competitive Analysis