Sizing up the competition; you might think that it’s only for pro-athletes training for an important match. In fact, conducting a competitor analysis is vital for any business that wants to see success.
The process helps to identify major threats to the prosperity of your brand and uncovers potential opportunities for growth within the market. Without it, you will enter your market blind, meaning other competitors will quickly overtake you in terms of strategy, ingenuity and innovation.
What is a Competitor Analysis?
Competitor analysis is a strategic method of analysing potential threats and opportunities posed by a company’s competitors.
Step 1: Identify your competitors
Your competitors are anyone who sells the same products or services as you and/or targets the same audience segments as your business.
Step 2: Divide your competitors into two types
These are companies that sell the same products or services that you do to the same target audience segments. Direct competitors pose a current threat to your success as they are vying for the same revenue stream.
These are companies that sell the same products as you do but to different customer segments. It’s important to closely track your indirect competitors as they have the ability to cross-over and become a direct threat to your prosperity.
Step 3: Pick between 1-3 competitors to focus on
You will find that you have a lot of competitors within your market, but don’t let that overwhelm you. It would be impossible to analyse every competitor, so you must figure out who is the most important and focus your attention accordingly. Conducting market research, speaking with your current customers and deploying social listening tactics will help you to understand which competitors pose the biggest threat.
Step 4: Deploy the R.A.C.E. acronym.
Analyse the following area of each competitors’ business:
Want to find out more about how you can beat your competitors to the top? Check out this handy infographic below for plenty of tips and statistics to point you in the right direction.
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