| Knowing who your competitors are, as well as | | | | against. |
| their strengths and weaknesses is an essential | | | | Analyze strengths and weaknesses |
| part of assessing the market for your product | | | | After you have figured out who your competitors |
| for your product or service. Most businesses have | | | | are, determine their strengths and find out what |
| direct and indirect competitors. | | | | their vulnerabilities are. Why do customers buy |
| 1. What is competitive analysis? | | | | from them? Is it price? Value? Service? |
| A competitive analysis is a formal evaluation in | | | | Convenience? Reputation? Focus on as many |
| which you review the businesses of one or more | | | | "perceived" strengths and weaknesses as you do |
| companies that compete, directly or indirectly, | | | | on actual ones. |
| with your own. Online, competitors have access | | | | Tabulate the strengths and weaknesses in a table |
| to each other's company information and | | | | format (template attached). This will allow you to |
| marketing materials that they might not be able | | | | see, at a glance, where each competitor stands. |
| to gather as easily in the offline world. This allows | | | | Look at opportunities and threats |
| for even greater opportunities to benefit from | | | | Strengths and weaknesses are often factors that |
| competitive analysis data. But how can companies | | | | are under a company's control. But when you're |
| improve by analyzing their competitors? And what | | | | looking at your competition, you also need to |
| is the best way to implement a thorough | | | | examine how well prepared they are to deal with |
| competitive analysis? For a business to succeed, | | | | factors outside their control. These are called |
| you need to know almost as much about your | | | | opportunities and threats. |
| competitors as you do about your own company | | | | Opportunities and threats fall into a wide range of |
| and customers. Unfortunately most business | | | | categories, such as technology, regulatory and |
| owners make the mistake of waiting until a | | | | economic. |
| competitor opens up shop across the street and | | | | You should consider the following guidelines when |
| is cutting into profits to find out who and what | | | | conducting competitive analysis. |
| they are up against. | | | | 1. Utilize a multitude of resources to identify your |
| A Competitive analysis allows you to identify your | | | | competitors. Who else is bidding on your PPC |
| competitors and evaluate their respective | | | | terms? What sites come up as natural search |
| strengths and weaknesses. By knowing the | | | | results for your terms? Check trade association |
| actions of your competitors, you will have a | | | | memberships and business registries. Use your |
| better understanding of what products and | | | | referrer data to identify what sites your visitors |
| services you should offer; how you can market | | | | are coming from. Don't overlook word-of-mouth |
| them effectively; and how you can position your | | | | information from your customers and investors. |
| business. | | | | These sources should yield a number of direct |
| Competitive analysis is an ongoing process. You | | | | and indirect competitors. Narrow the scope of |
| should always be gathering information about your | | | | your analysis if necessary, but the most effective |
| competitors. Look at their Web sites. Read their | | | | competitive analysis will compare at least three to |
| product literature and brochures. Get your hands | | | | five leading companies in your market. 2. Identify |
| on their products. See how they present | | | | key success factors (KSFs) for your industry and |
| themselves at trade shows. Read about them in | | | | rate yourself and others on each of them. One |
| your industry's trade publications. Talk to your | | | | useful tool is the "strategic group map", which is |
| customers to see hoe they feel about | | | | part of a supporting Word document available for |
| competitive products or services. | | | | download: 3. Identify the competitive strengths of |
| 2. What are the benefits of conducting a | | | | each company in the analysis, including your own. |
| competitive analysis? | | | | What makes each company unique? Do they own |
| The benefits of conducting a competitive analysis | | | | patents or copyrights that give them a |
| include: | | | | competitive edge? Is there a dominant company |
| 1. You will identify WHO you are competing | | | | with market share at or near "critical mass" level? |
| against. You will be able to assess the threat | | | | 4. Identify the revenue models of your |
| levels presented by other companies in your | | | | competitors. How do your competitors make |
| market. 2. You will identify your own weaknesses. | | | | money? Are you overlooking potential sources of |
| Companies who do not pay attention to their | | | | revenue? 5. Do your competitors utilize |
| competitors may not understand just what they | | | | partnerships, outsourcing, or other strategic |
| are doing wrong because they have no frame of | | | | relationships? Could your own company benefit |
| reference. Studying your competitors offers you | | | | from such relationships? 6. KEY POINT: In the |
| a perfect opportunity to find out how you can | | | | course of your analysis, make note of unique or |
| better serve your customers. 3. Once you've | | | | creative elements or approaches your |
| identified those weaknesses, you'll be able to | | | | competitors may use. Often, the greatest insights |
| improve your business in a number of ways. The | | | | will come from where your competitors depart |
| order in which those improvements should be | | | | from convention. 7. Utilize search engines to |
| implemented will often be dictated by the analysis | | | | discover the sources of your competitors' |
| of your competitors. For example, if all of the | | | | incoming links. These sites may be potential link |
| other companies sharing your target market have | | | | partners for you as well. For more on linking |
| a certain feature considered essential to that | | | | strategies, see our research brief on that topic: 8. |
| market, this will be one of the first things you will | | | | If practical, make purchases from your |
| want to remedy. 4. You will also identify your | | | | competitors. How is their customer service? Are |
| strengths. By comparing your own online presence | | | | they utilizing drop-shipping or other forms of |
| to those of your direct competitors, you will | | | | outsourcing? What can you learn from watching |
| discover what sets your business apart from | | | | how they do business? 9. Monitor your |
| theirs. These qualities can then be emphasized in | | | | competitors over time. Sign up for their email lists |
| your marketing efforts. 5. Additionally, you will be | | | | and analyze their marketing messages. How |
| able to identify or confirm your Unique Value | | | | strong are your competitors' brands? 10. Analyze |
| Proposition (UVP). Your UVP is the single most | | | | your competitors' Google, Overture, and other |
| important element of your business that sets you | | | | PPC ads. Knowing the best keywords for your |
| apart from your competitors. Do you have the | | | | market, it shouldn't be hard to locate your |
| largest catalog of products? The lowest prices? | | | | competitors' ads. These may give you ideas |
| The best customer service? Competitive analysis | | | | about how to modify your own campaigns. 11. |
| will help you develop your UVP and test the | | | | Analyze your competitors' ratings and rankings on |
| validity of the claims you make about your | | | | a number of platforms, including Google PageRank, |
| business. 6. You will be able to determine what | | | | Alexa, BizRate, comparison engines, and incoming |
| factors drive success in your market space. | | | | links from other websites. The following |
| These may vary greatly from market to market, | | | | spreadsheet may be useful in helping you track |
| and may not be what you originally expected. You | | | | this analysis: Once you have compiled this data, |
| will identify what specific actions you need to take | | | | you should be able to use it to gauge the |
| in order to improve your competitive position | | | | effectiveness of your competitors' marketing |
| Identify your competition | | | | efforts compared to your own. 12. Depending on |
| Every business has competitors; you need to find | | | | entry and exit barriers for your industry, your |
| out who your customers can approach to get a | | | | competitive environment will change over time. |
| product or service that fills the same need as | | | | Competitors will enter and leave and the most |
| yours does. Even if your product or service is | | | | resilient among them will learn and evolve. |
| truly innovative, you need to look at what else | | | | Continue to analyze your competitors as time |
| your customers would purchase. | | | | progresses. Consider performing a competitive |
| Begin looking at your primary competitors. These | | | | analysis update on an annual or semi-annual basis. |
| are the market leaders, the companies who | | | | No company exists in a vacuum online. If you |
| currently dominate your market. Next, look at | | | | ignore your competition, you will lose the |
| your secondary and indirect competitors. These | | | | opportunity to discover your own strengths and |
| are the businesses who may not go head-to-head | | | | weaknesses. Effective competitive analysis gives |
| with you, but who are targeting the same general | | | | you the information you need to "remove the |
| market. | | | | blinders" and see your company as your |
| Finally, look at potential competitors. These are | | | | customers and investors do, and to tune your |
| companies who might be moving into your | | | | marketing and business strategies for success. |
| market and who need to prepare to compete | | | | |