Competitor analysis is essential for businesses that want to stand out in a competitive market. By analyzing your competitors, you can identify their strengths and weaknesses and gain insights into market trends and customer preferences.
In this post, you can read about what a competitor analysis is, why it’s crucial and how to perform a competitor analysis.
What is a competitor analysis?
A competitor analysis is a strategic method to analyze and evaluate the competitive conditions in a market. By analyzing data on competitor performance, strategies and customer patterns, companies can identify opportunities and need(s) for improvement. This makes it possible to create a competitive advantage through strategic implementations in, for example, their sales strategy.
The analysis involves collecting relevant data using various methods such as market research, online research and benchmarking. The purpose is to identify strengths, weaknesses, threats and opportunities in the market and develop effective strategies to outperform competitors.
The importance of competitor analysis
In order to understand the market and its dynamics, it is crucial to perform a thorough analysis of your competitors. By analyzing data, you can identify the strengths and weaknesses of competitors and discover opportunities for differentiation in the market.
A comprehensive analysis provides business owners, CEOs, sales directors, marketing directors and other decision makers with valuable insights for implementing a CRM system and making strategic decisions based on the needs of the market.
Why work with competitor analysis?
Competitor analysis is essential in a competitive market. By analyzing competitors’ strengths and weaknesses, you can gain a deep understanding of the market and identify opportunities for differentiation. This gives your decision-makers the knowledge they need to develop effective strategies and beat the competition.
One of the benefits of working with competitor analysis is that it helps you develop a sharper strategy. Competitor analysis can help define where to market your business, which USPs to emphasize and which customers to target.
By integrating competitor analysis into your strategy development, you have a greater chance of succeeding with your strategy than if it’s based on gut instinct alone.
4 steps: How to do a competitor analysis
When performing a competitor analysis, there are a number of specific steps you need to go through. These steps will give you insight into how you can adapt your own strategy to meet the challenge of your competitors.
Below are four steps to conducting a competitor analysis:
- Identification of competitors
- Analyzing competitors’ strengths and weaknesses
- Market and customer analysis
- SWOT analysis of competitors
1. Identification of competitors
When conducting a competitor analysis, it’s important to identify your main competitors. This can be done by conducting extensive market research and finding companies that operate in the same industry and have the same target audience/ICP as yours.
It’s important to identify both direct competitors that offer similar products or services and indirect competitors that offer alternative solutions to your customers.
2. Analyzing competitors’ strengths and weaknesses
The next step in a competitor analysis is to analyze your competitors’ strengths and weaknesses. This will help you identify opportunities for differentiation and competitive advantage.
Here are some steps you can follow:
- Product and service analysis: Research competitors’ products or services to identify their unique features and benefits. Also analyze their quality, pricing and customer service to assess where you can differentiate yourself. For example, if you have a competitor that focuses on being the exclusive choice, you may have the opportunity to offer a cheaper choice that still focuses on quality.
- Market positioning: Examine competitors’ unique value propositions and their targeting of specific customer segments. This will help you understand how to better position your own business in the market.
- Customer analysis: Assess your competitors’ customer base and understand their satisfaction. Identify any complaints or dissatisfaction that you can use to your advantage.
- Sales and marketing analysis: Analyze competitors’ sales and marketing activities, including their sales strategies and channels to see where they are targeting their customers, with what messages and any offers. For example, should you focus more on Google and SEO in your B2B marketing strategy?
3. Market and customer analysis
In a competitor analysis, it’s important to research the market and analyze your competitors’ activities. This will give you a deeper understanding of market trends and customer needs, as well as competitors’ strengths and weaknesses.
Here you can do the following:
- Market analysis: Examine the size, growth potential and dynamics of the market. Also identify any trends, challenges or opportunities that could affect your business. This will help you understand the competitive intensity of the market and develop a strategy that differentiates you from the competition.
- Customer analysis: Analyze customer needs, preferences and behaviour. Also, identify any untapped segments or audiences that you can target. This will help you understand what your customers are looking for and how you can better adapt your products or services to their needs.
Also remember the importance of monitoring your competitors’ activities on an ongoing basis. Keep an eye out for changes in their product lines, new launches or updates, as well as any shifts in their branding or positioning in the market. This way, you can ensure you’re meeting your customers’ needs in the best possible way.
4. SWOT analysis of competitors
A SWOT analysis of your competitors can give you useful insights into their strengths, weaknesses, opportunities and threats. The analysis consists of the following points:
- Strengths: Identify competitors’ unique selling points, USPs and how they differentiate themselves. This could be their brand, product quality, customer service or market positioning. Assess why customers choose them over you and other competitors and find ways to match or exceed their strengths.
- Weaknesses: Identify competitors’ weaknesses, such as poor customer service, lack of innovation or quality issues. These can be areas where you can differentiate yourself and offer better value to customers.
- Opportunities: Identify opportunities in the market that your competitors haven’t taken advantage of. This could be new segments, markets or trends where you can expand your business and attract new customers. For example, if you’re in a market with one large fixed price, one option could be to offer this as a subscription solution.
- Threats: Analyze potential threats from your competitors, such as aggressive pricing, market penetration by new competitors, or changes in industry or consumer trends. Assess how you can resist or counter these threats and maintain your competitive advantage should these threats arise.
Using SWOT analysis and competitor analysis can give you an in-depth understanding of the market and your competitors. This will help you develop an effective sales process and marketing strategy and identify a development direction for your product that differentiates you from the competition and creates value for your customers.
Competitor analysis model: Porter’s Five Forces
Porter’s Five Forces is a model for how competitive/profitable a market is. The model is based on a number of different factors and how they each influence the market:
- Threats from new entrants can threaten your market share and profitability. It’s important to identify potential competitors and their possible strategies that could pose a real threat to you.
- Substitute products can pose a threat as potential customers may turn to these solutions instead of you. It is therefore important to be aware of which substitute products are on the market and how to position yourself against them.
- The bargaining power of suppliers can affect the cost of raw materials or services, which in turn can affect a company’s competitiveness. Therefore, you should carefully assess the supplier’s strength in the market to ensure favorable deals.
- Purchasing power from the customers’ perspective. If customers have a lot of bargaining power, it means they can push you on price.
- The level of competition in the industry is crucial to the success of your business. High levels of competition can drive down prices and reduce profits, while low levels of competition allow for greater revenue and market share.
A competitor analysis aims to give you an overview of who your competitors are and how you beat them. Winning in a competitive market is not straightforward and requires a planned strategy that can be executed. In order to win in such a market, it’s important that you as a business identify who your competitors are, how they get their customers (strengths) and why they aren’t getting more customers (weaknesses).
Next, it’s essential to come up with a strategy to outperform them and target customers in a different way that creates more value for them.
Empower your business development with Radiant
At Radiant, we’ve helped more than 100 companies succeed in a competitive market. We help businesses succeed with everything from contract management to financial software. We do this based on best practices and more than 15,000 data points on sales activities – we know what works and what doesn’t.
With a structured approach to sales processes, competitor analysis, segmentation and implementation, we have helped many companies beat their competitors. With us you get, among other things:
Improving sales efficiency through the CRM system:
The salesperson’s best friend is an optimized CRM system that can significantly improve your sales efficiency. By implementing a HubSpot CRM, you can streamline and automate your sales processes, resulting in increased productivity and better customer experiences. You can gather relevant customer data, past conversations, previous emails and ads they’ve interacted with in one place to identify what interests them.
We offer this through HubSpot implementation or Sales as a Service.
Maximize ROI with help from Radiant:
The investment in a CRM system like HubSpot should not be seen as an additional expense, but rather as an investment with the potential for a high ROI (return on investment). Imagine you’ve invested in marketing, sales and customer service, but nothing to tie it all together and create synergy between the different solutions.
Are you sure the data from marketing is being used by sales and customer service? Far from most companies can answer yes to this question. There is often too much data, and they typically lack the necessary resources and a unified platform to keep track of it all.
HubSpot as a Service helps maximize your ROI on current investments and ensures that your sales process runs optimally through HubSpot, automating manual work and smart segmentation of your potential customers. This way, you can ensure relevance when approaching potential customers – and reduce the likelihood of sales objections.