In this blog, you will get know about what is competitor analysis? why competitor analysis is important? who needs competitor analysis? Types of competitor analysis & frameworks of it.
What is competitor analysis?
Competitor analysis is the technique of comparing and studying the strengths and weaknesses of competition to identify their techniques and become aware of possibilities for growth. It is an crucial a part of enterprise approach because it presents precious perception into marketplace landscape, competitor behavior, and demanding situations and possibilities withinside the enterprise. Competitive evaluation allows businesses to recognize their function withinside the marketplace, become aware of regions of aggressive advantage, and broaden techniques to advantage an area over their competition.
Why Competitor Analysis Is Important?
Competitor analysis is vital to any enterprise for lots reasons. First, it enables to recognize the marketplace and enterprise wherein the corporation operates and its function in that marketplace. Competitor analysis lets in businesses to decide their strengths and weaknesses and become aware of areas that want development to turn out to be greater aggressive in the marketplace.
Second, aggressive evaluation gives insights into competitor techniques and tactics. By studying those techniques, businesses can become aware of possibilities to distinguish themselves from their competition and advantage an area withinside the marketplace. This consists of developing unique products and/services, enhancing customer experiences, improving customer service and incorporating technologies to improve customer experience
In conclusion competitor analysis helps your businesses to identify potential threats, risks & opportunities in the market, which eventually helps you to position your products and/services correctly in the market.
Who needs competitor analysis?
Any business of any size that wants to succeed in competitive market. Here are a few examples of customers who might also additionally want aggressive evaluation:
Startups and SMEs:
Understanding your competition is important for start-ups and small corporations to live to tell the tale and develop withinside the marketplace. They won’t have the sources or emblem attention in their large competition, so that they want to pick out regions in which they are able to differentiate and compete effectively.
Company Established:
Established businesses should additionally preserve an eye fixed on their competition to hold their marketplace function and live in advance of latest challengers. They might also additionally want to regulate their approach to preserve up with marketplace modifications or fend off new competition.
Marketing & sales team:
Marketing and sales team want to apprehend their competition if they want to craft powerful messages and promotions. They want to realize how their services and products align with their competition and what makes them unique.
Product development teams:
Product development teams want to apprehend the aggressive panorama if they want to pick out possibilities for brand spanking new merchandise and features. They may additionally want to take into account the strengths and weaknesses of our competition while growing our personal merchandise and features.
Types of Competitive Analysis
There are several types of competitor analysis that companies can use to gain insight into their competitors.
Direct Competitor Analysis
This type of analysis focuses on direct competitors, i.e. companies that offer similar products or services. A direct competitor is a company that your customers might choose over you. This type of analysis helps companies understand their competitors’ strengths and weaknesses and identify opportunities for differentiation from their competitors.
Indirect Competitor Analysis
Indirect Competitor Analysis analyses companies that offer similar products and/ services but are not direct competitors. For example, a company that sells coffee can analyse, strategies and tactics of nearby bakeries, which may offer similar services and attract the same customers. Indirect competitor analysis helps companies identify opportunities to grow their customer base and acquire new customers.
Alternative Competitive Analysis
The substitute Competitor Analysis analyses companies that offer alternative products or services that customers can choose in place of their own products. For example, a company that sells bicycles can analyse the strategies and tactics of companies that sell cars and other modes of transportation, such as public transportation. This type of analysis helps companies identify potential threats to their market position and develop strategies to mitigate those risks.
Potential Competitor Analysis
Potential Competitor Analysis includes analysis of potential future competitors. For example, a company that sells traditional bicycles can analyse the strategies and tactics of a company that sells e-bikes. This is because it can pose a potential threat to your market position. This type of analysis helps organizations anticipate potential threats and develop strategies to mitigate those risks.
Competitive analysis framework
There are several framework companies can use to analyse their competitors. These include:
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SWOT Analysis
A SWOT analysis is a framework that companies can use to identify their strengths and weaknesses as well as market opportunities and threats. This framework can be adapted to analyze competitors by identifying the strengths and weaknesses of each competitor and the opportunities and threats they face in the market.
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Porter’s Five Forces Analysis
Porter’s Five Forces is a framework that companies can use to analyse their competitive position in the market. This framework identifies five forces that shape the competitive landscape.
bargaining power of suppliers, bargaining power of buyers, threat of new entrants, threats of substitute products and/ services & competitive rivalry within industry
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Competitor Strengths and Weaknesses Matrix
This framework creates a matrix for comparing your strengths and weaknesses to your competitors. This allows companies to identify areas where they need improvement to become more competitive in the market, or where they have a competitive advantage.
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PEST analysis
PEST analysis is a framework that enables companies to analyze external factors affecting the market, including political, economic, social and technological factors. By analyzing these factors for both their own business and their competitors, companies can better understand market conditions and identify opportunities for improvement.
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Value chain analysis
Value chain analysis involves decomposing a company’s activities into individual components and analysing how each component contributes to the company’s overall value. By analysing the value chains of competitors, companies can identify areas where improvements in their own value chains could give them a competitive advantage.
- Growth matrix
The Growth Share Matrix, also known as the Boston Consulting Group (BCG) Matrix, is a framework that classifies a company’s products or services by market share and growth potential. By analysing a competitor’s growth share matrix, companies can identify areas where their competitors may be investing heavily and develop strategies to compete more effectively.
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Benchmarking
Benchmarks compare your company’s performance to that of its competitors. By analysing the performance of competitors, companies can identify areas that need improvement and develop strategies to close the gaps.
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Analysis of customer feedback
Customer feedback analysis involves analysing customer feedback and ratings for both your own business and your competitors. By analysing customer feedback about competitors, businesses can understand customer preferences and identify areas where they can improve their products and services.
To conclude
Competitive analysis is an important part of any business strategy. By analysing the strengths and weaknesses of competitors, companies can better understand the market situation, identify areas of competitive advantage, and develop strategies to gain an edge over their competitors. By analysing competitors using these frameworks, companies can develop strategies to compete more effectively and succeed in the market. Hire us to do competitor analysis for your business today.
