The better you understand your competitors, the better chance you have of beating them. It’s not a new concept, but when’s the last time you ran a competitive analysis for your brand? Just checking the websites and social media profiles of everyone in your niche doesn’t count.
If it’s been a while or you’ve never done a competitive analysis, you’re likely missing out on important intel that could put you ahead of the rest.
Competitor or competitive analysis is the process of identifying, categorizing, and evaluating other direct and indirect players in your space. By understanding the competition’s strengths and weaknesses, you can improve your business strategy and your brand position.
You’ll look at basic stats like revenue, company history, milestones, areas they operate in, etc. But also:
Some say you should review these monthly, some say quarterly, some say yearly. These are good benchmarks, but you shouldn’t run your business based on arbitrary suggestions.
Here are three real-life situations when you should run a competitive analysis.
Investopedia says the number one reason why new businesses fail is because owners don’t research the market they plan to serve. Blindly entering a market that’s already saturated with solutions exactly like yours is just silly. And a surefire way to waste a bunch of time and money. You can avoid that by doing thorough market research and robust competitive analysis. Generally, you’ll come to one of three conclusions:
Unfortunately, products fail all the time. Sometimes, it’s because they’re lousy products. But many good or even great products also fail—in which case the problem is either there isn’t a market for it, or you haven’t figured out how to position yourself in that market. By spending some time stalking (researching) and ranking (analyzing) your competitors, you’ll learn:
And also critical, but often overlooked questions like:
By skipping this step, you risk being among the 80% of new consumer products to fail each year. (Harvard Business Review)
Last year, parents became ad hoc school teachers, yoga studios became online course creators, and restaurant owners became delivery drivers. Social distancing forced us to draw a new blueprint for doing business. Watch and learn—how your competitors adapt to retain customers during a market shift may tell you next steps or what not to do.
But a market shift doesn’t have to be world-altering. Changing fads, political parties, cultural events, and social trends all affect consumer behavior. Just think about what the rise and fall of the ‘hipster’ archetype have done for filter coffee, beard care products, and ironic t-shirts.
Because markets fluctuate rapidly, competitive analysis should be an ongoing process throughout the lifespan of your business.
When the market research is done, don’t let your hard work go to waste. Create a list of actionable goals and objectives to ensure you implement what you’ve learned from your thorough competitive analysis.
So you want a 360-degree view of your business, but not sure if market research is right for you? Here are 4 reasons you should invest in market research in 2021.