Why is a solid competitive analysis essential?
Know your competition: to place your product or service effectively, you need to constantly keep an eye on the offerings and marketing strategies of your competitors. By performing a sound competitive analysis, you can gain valuable insights into your rivals. For example, you can identify what campaigns are received particularly well by your target group and where there is still untapped potential. An analysis of the market environment therefore not only provides you with information about others, but also highlights the areas that offer attractive development possibilities, what your unique selling points are, and how you can optimally reach out to your target group. A competitive analysis is thus an important element of your business development strategy, since it helps you analyze your market opportunities and tap into new business areas.
What does an effective competitor analysis look like?
A competitive analysis is all about getting the most accurate picture possible of the strengths and weaknesses of your competitors. But before you start collecting facts and figures, you first need to narrow down who you are directly competing with in the first place and why that is. To nail down the matter and identify your competitors more precisely, you should therefore ask yourself the following questions:
#1 What is the objective of your competitive analysis?
Your competitor analysis could have various objectives. In the case of a strategic competitive analysis, the focus is on obtaining general or more extensive information about your industry. Analyzing the strengths and weaknesses of the competition is useful for assessing your own position on the market and developing long-term strategies. In contrast, an operational competitive analysis is aimed at more short-term or more specific issues, for example in relation to the current product portfolio, pricing, and marketing campaigns.
#2 Who are your competitors?
You should first think about who your active competitors actually are on the market. Create a list of relevant competitors that are approximately on your level in terms of their product range and price category. If you want to conduct an in-depth industry analysis, you will need to take all competitors into account. In this case, we recommend researching the individual market shares of the competitors.
#3 What target group are you addressing?
A competitor analysis explores what companies serve your target group and who is your direct competition. It is also worth analyzing the channel and form used for communicating with the target group.
#4 What are the USPs of your competitors?
What specific products or services do your competitors offer? Is there anything that hasn’t been presented to your common target group yet and how could you meet those needs?
#5 What marketing strategies do your competitors use?
By conducting a competitive analysis, you can find out what strategies work for your target group and how much effort your competitors put in to reach customers. An analysis of the channels used can prove particularly informative: Are products that are comparable to yours being advertised in more traditional media such as movie theater screens, newspapers and brochures, or can a strong social media presence be identified? You can derive your own measures from how successful the competitor companies are with their strategies.
How to generate data for your competitive analysis
You can use a wide range of research methods to gather information about your competitors. In addition to the relatively traditional sources of information available to you, these include:
- Company websites
- Social media pages of competitors
- Business directories and statistics from industry associations
- Product reviews from consumer organizations
- National statistical offices
- Official gazettes and company registers
These and similar sources give you an initial overview of your industry and market environment. However, these facts and figures are not precise enough for an in-depth competitor analysis. There is a vast array of practical tools you can use to get detailed insights into your competitors. Whether SEO, backlink or audience analysis tools, explore our toolkit to find the best aids for your competitive analysis.