To gain a competitive benefit, it is essential to understand what your competitors are doing and how they are positioning themselves in the market research. Market research is a powerful tool for monitoring and analyzing your competitors’ strategies, allowing you to make informed decisions and adapt your business approach accordingly. This article will explore practical methods to monitor your competitors through market research.
What is a competitive analysis?
Competitive market analysis involves determining who your competitors are, researching their strategies, and finding out what they do well (and not so well).
Through this process, you can learn a lot about your company’s strengths and weaknesses and how to remain a serious competitor in your industry.
The importance of competitive analysis in marketing
A thorough analysis of your competitors’ strategies will reveal their product offerings, mission statements, target markets, and marketing strategies. You may even identify new competitors you didn’t know existed.
Identify and fill crucial gaps in your business.
The big ones learn from the big ones. You’re trying to beat your competition, but that doesn’t mean you can’t learn from them, especially if they’ve been around the block a few times.
Seeing what works for your competitors will highlight the gaps in your strategies (as well as the gaps in your strategy) and, ideally, give you some inspiration on how to fill those gaps.
Spot trends and get ahead
Competitive market analysis is not just about understanding specific competitors. It can also reveal the direction in which an entire industry is moving. For example, Blockbuster didn’t evolve with the industry; we all know how it ended. Competitive analysis can help you avoid the same fate.
Recognize product value and pain point solutions.
By analyzing the competition, you uncover customer pain points that they may have overlooked, allowing you to refine the value of your product and address those needs directly. It’s about monitoring your rivals and taking advantage of opportunities to stand out.
Set future objectives for growth.
By examining market leaders, you can set bold milestones for your growth and emulate their tactics. You can also use AI-based tools, such as Google Analytics predictive metrics, HubSpot forecasting tools, or IBM Watson analytics.
These tools can decipher market trends, anticipate prospects, and help you set accurate KPIs. With the help of AI, you can uncover data-driven insights and opportunities that even top-tier competitors might miss.
How to conduct competitive market analysis in 6 steps
Competitive market analysis isn’t just about ensuring a unique selling point. Here’s how to compete, determine your position, and how to stand out.
List your competitors
Start by creating a comprehensive list of everyone operating in your industry. You can weed out less relevant competitors later, but for now, be wary of anyone offering similar products or services.
Start with some basic keyword research. Search for your product category on Google in different ways, perhaps with words like “price,” “cheap,” or “sales” to reinforce the commercial nature of your query.
This will help you identify your competitors and can shed light on the degree of saturation in your industry.
Next, classify the companies you identify into direct and indirect competitors.
- Direct competitors offer products or facilities similar to yours to a target market. For example, Gucci and Prada offer high-end clothing and accessories to fashion-conscious consumers with high disposable incomes.
- Indirect competitors offer different products or services (even if they are in the same category as yours) to a target market similar to yours. For example, gyms and companies that produce home workout equipment may be considered indirect competitors.
As their name suggests, direct competitors tend to pose a more direct risk to your business. That said, secondary competitors can still attract customers and cause you to lose business. You need to identify and analyze both to understand your competitive landscape truly.
Identify your target markets.
Sometimes, a competitor’s target market is transparent, especially if it’s a niche brand. Take Dick’s Sporting Goods, for example, and it’s pretty evident that they target people who play sports (or want to).
For other companies, it is not so obvious. To determine your competitors’ target markets, try the following:
- Study its mission statement: Sometimes, a company’s mission statement will explicitly state who its products and services are designed for. And while it’s not explicit, it will almost certainly provide a clue. Go to their website’s “About” page and soak up all the information you can.
- Analyze his voice and tone: stoic or cheeky? Full of jargon or written for beginners? Your competitors’ tone and wording have only one goal: to reach your target market. Read the company’s blog posts, subscribe to their newsletters, and watch promotional video content, all while paying close attention to the people they appear to be targeting.
- Please pay attention to your social media engagement: Notice who comments on your content and how they respond to those comments. The influencers they spouse with can also shed light on the spectators they want to reach.
Unpack their 4 P’s
Competitive market analysis requires you to analyze the four Ps of your competitors’ marketing: product, price, place, and promotion.
Product
The best way to learn about your competitors’ customer experiences is to become a customer yourself. You’ll gain incredible insights into what works for them and, more importantly, where there’s an opportunity to offer something better.
Whenever possible, try your competitors’ products. Get a free trial, purchase, or sign up for the real deal if your budget allows. When using their products, please get in touch with customer service for more information.
Price
Pricing can be one of the most sensitive aspects of marketing. For this reason, you need to understand and track what your competitors are doing with their prices. Here are some questions to ask yourself about each competitor:
- What is your pricing model? In the form of a subscription, a single purchase or a combination of the two?
- Do they feel like they are using skim pricing or penetration pricing?
- Does your pricing model seem to align with the rest of the industry?
There are plenty of tools to help you, as well as specialized tools for specific industries, like tracking hotel room prices.
Once you’ve mastered your competitors’ pricing strategies, here are your options:
Lower your prices: If price is the only differentiator in your industry (meaning product, place, and promotion strategies are pretty consistent), you may consider lowering your prices to gain a more significant market share. But be wary of the impact this will have on customers’ perceptions of your quality and the risk that competitors will lower prices, pushing everyone’s prices to unprofitable levels.
Raise your prices: If your business is already a market leader by offering unique or higher quality products than the competition, you may want to consider raising your prices. Be aware of the price elasticity of your product before following this strategy, as a slight increase in cost can cause you to lose customers in certain industries.
Match your competitors’ prices: It is much more challenging to sell products at the same price as your competitors. This strategy works if your business has been in business for a while and can offer a unique or niche offering. In this case, the customer will decide to buy based on personal preferences, not price.
If none of the above strategies work for you, you can explore non-traditional pricing structures, such as bundling.
Place
Where do your competitors sell? Is everything online or do you have physical stores?
Each industry evolves differently: shoe brands, for example, tend to have in-person sales locations because most people want to try a pair of shoes before buying them. On the other hand, furniture stores don’t always rely on physical locations. They can provide photos, videos, and product details (such as dimensions and materials) to give customers a “pretty good” idea of what they’re getting.
Promotion
Promotion is not limited to just advertising, but since advertising is very measurable and public, it is the easiest to spy on. To avoid wasting your advertising budget, analyze your competitors’ strategies.
Analyze Customer Reviews and Feedback
Online customer reviews and comments provide valuable information about the strengths and weaknesses of your competitors.
Monitor review platforms, social media, and industry-specific forums to see what customers say about your competitors. Look for recurring themes or common complaints highlighting areas where your competitors fall short.
Conclusion
Keeping an eye on your competitors through market research is essential to maintaining a competitive advantage in today’s dynamic business environment. Identify your competitors, monitor your online presence, analyze your marketing strategies, attend industry events, leverage competitive intelligence tools, conduct customer surveys, and stay informed with industry publications.
Market investigation is a powerful tool for understanding the competitive landscape and ensuring your business remains relevant and thriving in the long term.
