If you were heading into a stadium to run a race, would you rather know who you’re about to compete against or go in completely blind? Well, unless you’re a surprise junky, we’re guessing you’d rather know about who else will be on the starting blocks with you.
The same thinking goes with launching a new business. You want to know who the heck you’re going to be competing against so you can prepare as much as possible to achieve success. And that’s where a competitor analysis comes.
Knowing who your competitors are and what they’re up to will help you build a stronger strategy for your new business. In the battle for customers, your business will need to offer something bigger, better or more unique than your competitors. But to do that you need to know what you’re dealing with first.
What is a competitor analysis?
When we talk about competitor analysis, we don’t just mean have a quick look at the websites and social media accounts of the top two or three players in your target industry. That’s just the tip of the iceberg.
Real competitor analysis is an in-depth process of researching, analysing and comparing all the most relevant competitors in relation to your business. It involves taking a good look at your industry and identifying other businesses who will be competing for your customers.
Investing time and resources in a thorough competitor analysis can reap a number of rewards, most notably the clarity and confidence of understanding the market you’re about to launch into, and the knowledge to shape your business to be as competitive as possible. In other words, it prepares you for your A game.
Here are some important questions that a strong competitor analysis will answer for you:
- What makes my business unique?
- How will we stand out?
- Where are there opportunities in the market?
- How can my business be more competitive in the market?
And competitor analysis isn’t just a one time thing for launching a business. It’s something you should do on a regular basis. The market changes like the wind and players are entering and leaving the market all the time. Stay on top of your game by regularly carrying out fresh competitor analysis throughout the life of your business.
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Why do competitor analysis?
Well, if the idea of going into an Olympic 100m sprint blind wasn’t enough to sell the idea of a competitor analysis that’s a worry. If you don’t know who and what is already out there, how the heck are you going to be better than them?
Anyway, moving on. Fortunately, we have a few more reasons that should help you realise it’s a remarkably good idea to know your competitors.
A competitor analysis will:
- Identify opportunities in the market that are currently under-served
- Help you improve your product by taking advantage of your competitors weaknesses
- Refine your product or service to develop your unique value proposition.
- Allow you to make informed decisions about your marketing and business development strategies.
- Help you create sustainable competitive advantages
- Highlight the priorities for your product development
Identifying your competitors
Put bluntly, if you don’t put in the work you’ll end up with crappy results that won’t help you or your business win the race. The competitors you choose for the analysis will determine the insights you get and the benefits you can reap. Also, some of your key business decisions in the future could be heavily influenced by those insights – so make them count.
As well as the top players in the industry that everyone knows about, pay attention to other kinds of competitors – big and small, direct and indirect. If you want genuinely useful results then your competitor analysis needs to be thorough.
Want a quick tip? Google your product category and see which businesses appear in the top 50 results. And don’t skip on the ads displayed too. Chances are there will be some names in there you hadn’t thought were competitors, hadn’t heard of, or you’d forgotten about.
What if I don’t have any competitors?
Dream on! If you don’t think you have any competitors, you’re off your rocker. No matter what business you’re starting there will be someone else out there doing something similar or related in some way. So thing again. And get Googling!
Questions to ask about your competitors
Here are some of the questions we always focus on when carrying out a competitor analysis:
- What products or services do they offer?
- How much do they charge?
- Who is their target audience?
- What are their strengths and weaknesses?
- Should I be threatened by their strengths?
- Which weaknesses can you exploit?
- What’s their customer service like?
- What do recent customers say about them in their reviews?
- What can I learn from those customer comments?
- What’s missing from their offering?
“Understanding your competitors is absolutely vital. Not in a weird ‘lets all get intimidated’ kind of a way, no – purely so you know exactly what you can play on to give yourself the best chance of success. You’re bound to have a heap of weaknesses, especially when you’re starting out – but what can your USP be in the early days? Sometimes it’s as simple as… you’re smaller, so you can give a waaaay better customer experience, as you’ll do things the big boys simply can’t.“
– Eddie Whittingham, FounderRead more
Competitor SWOT analysis
You’ve probably heard of a SWOT analysis before, or even used them in planning your business idea. If so, perfect. It’s time for another SWOT analysis. This time we recommend you do one for competitors.
If this is the first time you’re hearing about SWOT analysis, have a read of our guide to SWOT and SOAR analyses.
Now, by looking at your competitors’ strengths, weaknesses, opportunities and threats from a customer’s point of view, you can better understand their business. And when you understand them better, you can exploit that knowledge to improve your new business.
To do the SWOT analysis, put yourself in a customer’s shoes and ask yourself:
- What made me choose this brand?
- Is it just because they’re different, better, cheaper, local, more choices?
- Why would I choose them over another brand?
- Would I be prepared to swap to a different brands? If so, what would cause me to swap?
Competitor analysis template
To get you started, we’ve put together a competitor analysis template you can download. Handy, right? You’re welcome.
Carrying out a decent competitor analysis isn’t a 5-minute job. It can take time and involve putting effort in to collate as much information and data as you possibly can about all your competitors. But it will be worth it. The time you spend now will pay dividends down the line.
Plus, competitor analysis is something you need to repeat regularly so the sooner you start, the sooner you’ll become a pro at digging up the data. Watch, listen, learn. Then make changes to your business to make it even more badass than it was before.
Check out our other articles for more tips, tricks and advice to help your startup succeed.
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