In both marketing in particular, and strategic management in general, competitive analysis is an integral means of gaining an advantage in an active market where many players are all vying for supremacy. At its core, it is a process that reveals the strengths and weaknesses of all your current and potential competitors as well as the advantages and opportunities for your brand to carve out a true differentiation in the market. However, comprehensive competitive research goes much deeper than just a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis.
The information you gather will be used to create profiles of rivals that informs strategic decision making. In much the same way that marketers create personas of their ideal customer to understand who they are and where their motivations lie, a similar understanding of the competition can help you anticipate their next moves, vulnerabilities, or gaps in current product or service offerings that open the door for disruption in your industry as a whole or in a particular category that your brand serves.
Though competitive analysis is widely recognized as an essential component of long term corporate planning, especially as it relates to marketing, many firms lack systematic processes for analyzing their industry, instead relying on untested beliefs and “gut feelings” about the competition. Like any effective plan of action, you have to go beyond anecdotal understanding and map out clearly defined strategies based in facts and data.
Don’t Just Assume, Know For Sure
It’s true that seasoned professionals understand their fields implicitly. They are tuned into the buzz, are aware of recent developments, and have a good understanding of the competitive environment. Even so, general impressions and gut feelings are rarely as valuable as hard evidence. Blind spots abound and can be dangerous. It’s always better to actually investigate and prove out your hunches.
“Superior knowledge of your rivals is a viable means of achieving a sustainable competitive advantage. It reveals strategic weaknesses that perhaps even they are not conscious of.”
True competitor analysis is a standardized method that builds a realistic profile of likely challengers that can be continually added to and improved — and always with the ultimate goal in mind of developing actionable strategies from that model.
For example, if you know your competition lacks the experience or resources to take full advantage of search engine optimization, it’s probably warranted to move your own budget more strongly in that direction to take advantage of the opening they are leaving.
Conversely, if they have a dominant SEO position, it can be wasteful to try to take them head on, only to be outbid for relevant keywords your firms share. There’s always a smarter way to attack, and it will play to your strengths and their weaknesses.
The heart of a competitor profile is meaningful and accurate data. Key information to gather includes:
- Industry: How similar are the markets you’re competing in?
- Size and Type: Are they bigger or smaller than you? To what degree do your two operations overlap? Are they a direct or indirect competitor?
- Customers: What are their patrons’ expectations, and are they being met? How loyal are they?
- Strengths: How are they supporting their revenue stream? Are they attracting business and repeat business with great pricing, superior branding, better service, extensive selections, etc.?
The end goal is to discover what makes a competitor successful and then to position your own operation in a way that undercuts their advantage. A detailed profile also reveals strategic weaknesses to exploit.
Furthermore, an informational edge keeps you agile, anticipating moves and countermoves, and ready to adjust swiftly. Both changes in the broader marketplace and by individual competitors are inevitable. All things being equal, the firm with more information will always be quicker to adapt.
Going Deeper
A high level profile is a good start, but when faced with a direct competitor, it’s often wise to get more granular and build a comprehensive profile that includes highly specific information, such as:
- Background: How long have they been in business? What is there track record? Who controls them?
- Financials: Are they growing? Where is their revenue generated? What are their most and least profitable divisions? How liquid are their holdings?
- Offerings: What are their current and former product lines? How do they brand them? How much brand equity do those products carry?
- Marketing: What is their marketing budget and mix? What market segments do they target? How do they instill customer loyalty? What are their advertising themes (what brand associations are they trying to impart)?
- Resources: Where are their physical assets? What kind of facilities to they operate? What are their logistical strengths?
- Personnel: How many people do they employ? How do they organize their sales team? What are their areas of expertise? What is their corporate culture and how does it affect employee morale and retention?
The name of the game isn’t to beat the competition on every category That is almost never a practical option, but fortunately customer value is rarely an absolute. It’s almost always understood in comparison to other offerings. You don’t have to be perfect, you just have to be better than the other guy, and often even being even slightly better is enough to steal market share.
This is particularly true in highly commoditized industries. Consider the fact that a company like GEICO doesn’t offer a substantially better (or even very different) product than many other car insurance firms. It became a market leader by outcompetiting them in a few key areas, like it’s widely known and beloved advertising campaigns.
Getting the Goods
Given the value of information, the obvious follow up question is where to get it. One of the most common methods is called media scanning, which is just a fancy name for reviewing the advertising, branded content, and other promotional materials your competitors are disseminating.
Everything from their positioning and segmentation strategy to their branding initiatives and line extensions and contractions can be revealed by regularly scrutinizing their websites, social media channels, and traditional outreach activities.
In an environment where digital promotion is increasingly taking up marketing resources, much of this information is incredibly accessible. Cloak and dagger corporate spy craft isn’t needed to examine a competitor’s online presence.
“Understanding the competition can help you anticipate their next moves, vulnerabilities, or gaps in current product or service offerings that open the door for disruption in your industry as a whole or in a particular category that your brand serves.”
It only takes a few clicks and queries to see their case studies and press releases, or to find out if they have a blog and determine if it’s regularly updated with quality content. Their past performance and lead generating strategies aren’t hidden behind lock and key.
Furthermore, not only can you qualitatively assess their digital media yourself, there are numerous third party platforms like SEMRush, SearchMetrics, and Majestic SEO that will put hard numbers to their efforts. You can easily see what keywords they are bidding on, where their organic search advantage is, and how they are building backlinks.
Another means of gathering useful information is to solicit feedback from your own customers and leads. Ask them in surveys, questionnaires, and form fills about their decision making process. Why did they choose you over the competition (or vice versa)? Who else did they consider when making a recent purchase and why?
Homework Works
Superior knowledge of your rivals is a viable means of achieving a sustainable competitive advantage. It reveals strategic weaknesses that perhaps even they are not conscious of. Capitalizing on those shortcomings (or even just being aware of them) ensures you maintain a proactive position that is nimble, anticipatory, and always ready to adjust to the next major swing in market forces.
Information truly is power. So don’t avoid doing your homework. Study the competition to identify gaps in the marketplace, tweak your offerings and promotions, reveal upcoming trends, and gain insights that enable you to market and sell more effectively.
In-depth research and analysis underlies every aspect of the Hanlon Creative approach to building brands and driving growth. Talk to us today about triumphing over the competition by adding Calculated Creativity to your brand.