Competitor research is an important part of any business plan, and it involves finding out who your competitors are and studying their business strategies. In doing effective competitor research, you need to 1) assess your current situation, 2) identify your competitors, 3) gather information about your competitors, 4) analyze and compile your findings, and 5) develop/improve your business strategy.
A successful business is the result of clear and timely decision-making. For this to happen, you need to be well-informed about your business environment and the choices available to you in terms of competitors, opportunities, and threats. Identifying your competitors and analyzing their business strategies is an essential aspect of any business plan because it helps to understand what businesses are doing better than you and what can be done to improve your operations.
1. Assess your current situation.
What kind of data should I be looking at? One of the most overlooked pieces of information when it comes to researching your competitors is identifying what exactly you're competing against and their strengths and weaknesses.
Your first instinct might be to start looking at other companies in similar industries, but this requires you to understand your company first. Before researching other companies, ask yourself some important questions about the nature of your business. What's my product? Who is my audience? What makes me different from other companies?
Having a solid understanding of your business, your goals, and your competition will allow you to make more informed decisions about how to market your business, how to reach the goals that you set for yourself, and how to formulate a plan for success. More importantly, when you finally have a grasp of your market position, you can begin to narrow down companies that offer the same products and/or services as you and start looking at them as your competitors.
2. Identify your (top) competitors.
Now, identify all the companies that are in the same market as yours. You may have already done this step by identifying who your customers are and who your target customers are, but pull back and view the larger picture: who are your competitors? List down all of them, and once you have your list, it's time to start classifying them. Who has the most customers? The best products? The greatest number of followers? You can look at industry reports, the people who attend relevant trade shows and conferences, and industry news to find out who your competitors are. You can also make use of digital tools to research and scan through different keywords that might best describe your product, service, or solution. This will help you add more businesses to your list right away.
However, it's important to note that it's impossible for anyone to analyze every single competitor in their industry. It would take far too much time and effort—probably weeks or months—to consider every single potential competitor in your space. Generally, you should only choose the top 3 to 4 competitors that have the highest market share and are most likely to substantially affect your sales. Sort them according to their size and scope of business, then pick up to 2-3 major competitors for analysis.
3. Gather information about your competitors.
Once you have identified your top competitors, it is time to gather information about them. Research their content. Look at their website design and layout. Look at their emails, landing pages, services, and product lines. Find out their demographics and statistics. The data should include the company's size and structure, its major products and services, prices, sales volume and profits, suppliers, customers, geographic locations, key personnel, and websites.
Particularly, collect information based on these questions: Who are they targeting? What are their product lines/services? How often do they market themselves (e-newsletter frequency, social media posting frequency, etc.)? What kinds of content marketing strategies do they use? What kinds of ads are they running on various channels (Facebook ads vs. Google Ads vs. YouTube Ads)?
Next, analyze the competitor's market position: What are the reasons why customers prefer that particular brand over others? What kind of marketing strategies are adopted by my competitors? How is my competitor performing in terms of financial growth? Which business tactics have been applied by my competitor? These questions would provide you with information about how well your competitor is doing in his business area.
4. Analyze and compile your findings.
After you have gathered all the necessary information about your competitors, you need a way to organize your findings by identifying their strengths, weaknesses, opportunities, and threats (SWOT). A SWOT analysis is a great way to figure out what your competitors are doing well and how you can improve upon their efforts. This analysis will also help you identify any gaps in the marketplace that you might be able to fill. By making an overview of their strengths and weaknesses, you'll be able to figure out what went wrong and why, or if it worked well for them, why you should adopt the same strategy.
It is also important to look at the trends and gaps in the data. You can identify what is changing, what sets them apart, etc. If there is an area of opportunity, think about how you can take action on it. These trends and gaps will help you to create a marketing strategy and tactics.
Once you have all this information, write it all down in a clear and orderly manner. With all this information gathered about our competitors, you can now use it in making business decisions related to your product or service.
5. Develop/improve your business strategy.
If you don't already have a plan in place, formulate one now using the information that you have gathered. This will help you stay focused and consistent in your efforts. After analyzing SWOT, develop a strategy based on your findings. If your business is like most others, you'll want to focus on the areas where you excel while minimizing the areas in which you're lacking. This will help you create a marketing plan that's most effective and makes the best use of your resources. You should also adjust your preexisting marketing strategies accordingly when necessary. Use the information to change, grow, and expand your business.
However, it is just as important to know what your competitors are good at as it is to compete. When you're up against a top-notch competitor, it's best to switch to a different product or customer base to avoid tough competition. Keep in mind that someone is also looking at you as a competitor. Competitor research that is done well will give you useful information that, when put into action, will help your business do better overall.
Competitor research can be fun and rewarding. After all, that's where you get to know your industry and its climate. More importantly, it will help you in planning the future of your company. You can make use of tactics that others haven't used before and you can avoid the mistakes that your competitors have made because those are now part of your analysis. Adopting these steps into your business strategy will certainly improve your chances of achieving success. The process can be difficult, but the sense of fulfillment when you see competitors adapting to what you're doing will be worth it!
Now, as an exercise, try to find 2 competitors of your business and make a competitor analysis of them. Make sure to research them thoroughly!