Digital Marketing

7 Simple Steps to Conducting a Competitive Market Analysis

With the right sources, you are ready to begin your competitive market analysis. Which, as you might have guessed, begins with knowing the opponents.

Faustinus Angmortey

Writer

10 min read

competitive market analysis

Unless you are making coffee cups out of coconut shells, you’re probably having to contend with other companies offering similar services or products. Even the slightest advantage you have over your competition can put you at a great position in the market. However, just knowing their marketing strategies and aligning yourself with those strategies may not be enough. With the introduction of technology and specialized marketing tools, businesses can gain better insights into their competition. Adopting competitive market analysis is crucial for strategically positioning yourself ahead of the crowd. 

What is Competitive Market Analysis?

Competitive market analysis, otherwise called competitive research, is the strategic research conducted by businesses to collect and review vital information about rival companies in their industry. This tactic allows firms and business entities to assess the actions of their competitors and determine the threats they present for their future and financial well-being.

With the help of the internet, business owners, marketers, entrepreneurs, and just about anyone can collect data on companies than was otherwise not possible earlier. Therefore your business can remain one step ahead by conducted competitive market analysis regularly.

Why - How

Before we cover the “how” of successfully conducting market analysis, a closer look at why competitive market analysis is so crucial for business success. You will find it’s worth the time to gather and review the current moves your competitors are making.

Like Sun Tzu said in The Art of War, “All warfare is based on deception.”

Hence, you can’t afford to be deceived or make any wrong assumptions about the state of affairs in your industry. As such, you need to analyze your competition. One common question people ask, “Why waste valuable time conducting a competitive market analysis instead of trying to improve my product?”

Why You Need to Conduct Market Analysis

According to Sherry Smoak, director of the D.K. Hardin Center for Market Research at Elmhurst College, “Most people conducting a competitive marketing analysis are trying to understand how their business, product or brand is positioned.”

Your business model must take into account current business trends. Therefore you want to know about competitor campaigns and strategies. Also, a quick journey back in time reveals the disruptive effect of many new technologies. Industries like music and marketing have changed forever as a result of market analysis.

Companies that saw the pending shifts were able to reposition themselves, adjust their business models, and survived. On the other hand, those who were too late to adapt perished. A competitive market analysis would have alerted most of the later businesses of the new trends and the impending doom.

In an attempt to outline the key benefits of such an analysis, here are some advantages your business could derive.

  • Rate different segments of customers and competitions.
  • Identify the strengths and weaknesses of various market segments
  • Minimize adverse selection.
  • Use results for better price-setting through price optimization and price discrimination for different regions or segments.
  • Potentially increase business growth and improve profitability.
  • Understand your competitor’s position concerning your audience.
  • Develop new strategies to move into new markets.

Like the name implies, competitive market analysis focuses first on the competition. Therefore, you need to develop a clear plan of action before you engage your competitors, even if it is just for analysis.

But who are your competitors?

The answer to this question becomes crystal clear once you embark on the analysis journey.

Steps to Successful Competitive Analysis

competitive market analysis

Ideally, the steps you take to analyze your competition should be such that you can conduct this process on an on-going basis. Also, you need to be extra cautious about your sources. Since the entire value of this procedure to your business is based on the accuracy, relevance, and validity of the information you collect.

Choosing the Sources of information

You need to pay extra attention to the source you select for your information. Different industries employ different techniques to collect data in their market. However, for an online business, the primary source of information remains the internet. Of this option, Google has all the answers. Yet, you must know how to assess the search engine result page (SERP) and pick only the most relevant results.

In addition to this, you need to know the different indicators on a website to tell if it is a credible source for information. Signs such as site encryption, references, and citations are good. 

Generally, you can trust information from the following sources.

  • Financial filings
  • Public domains
  • The company compiled reports like Hoovers and Dun & Bradstreet
  • Local Newspaper articles
  • Nexis Files
  • Online News sources like PR Newswire
  • Online databases like the Standard & Poor’s and the U.S. Securities and Exchange Commission.

With the right sources, you are ready to begin your competitive market analysis. Which, as you might have guessed by now, begins with knowing the opponents.

Identity your Competition

Like it or not, the competition is real, and there are out there. And probably just as ambitious as you are. You definitely can’t tell the opponents you are up against until you decide to find out. How then could you ever hope to surpass them if you don’t know them?

Hence, you want to have a process that quickly discovers any new competitors in your industry and keep a tab on each of them (both old and new).

Finding your Competitors

There are several ways to find the main threats to your business in your industry. But you want to begin by asking a simple question.

Which companies are your top ten competitors?

Like every great story, the heroes always have supervillains that threaten to outperform them. Therefore, no matter how original your ideas or how new your market, it’s only a matter of time before another business gives you a run for your money. Whether your business operates internationally, nationally, or locally, you’ll find another business that’s hot on your trail.

It all begins with a simple search.

Here are some simple tips for identifying some of your top competitors.

  • Conduct an online search for your business name, overarching business ideas, and product types.
  • Check out online communities and organizations.
  • Use online tools like SEMRush to get an idea of the other businesses ranking for your target and related keywords
  • Use other essential sources like Hoover, ReferenceUSA, Alexa, Ahrefs, and Keyword Spy.

Usually, the level your business operates at will determine the number of competitors rallying against it. Mostly, companies at the national level compete with hundreds or thousands of businesses. All of which are targeting the same leads.

Categorize the Competition

competitive market analysis

With the above tools and tips, you should find many competitors and embark on a more in-depth competitive market analysis. Next, you need to categorize them according to the level of competition your business receives from each company.

Here are the main categories you should separate your competitors from. From direct competitors to companies competing with yours at the moment but are very likely to pivot.

Primary Competition

These are all the companies that directly compete with yours. Either they offer the same services or products or target the same audience – also could be both.

Secondary Competition

Companies with either a low-end or high-end version of the product you offer fall within this category. It could also be companies that provide a different product or service but have currently targeted a different audience. If you run a ford car dealership, a secondary competitor might be a Lamborghini dealership.

Tertiary Competition

In this category, you will put business not directly related to yours but could be formidable competitors if you decide to enter a new market, or they choose to branch into yours. Usually, this would be trending and related products, accessories to the products you currently offer, or companies that could be great business partners in the long-run. For instance, if you sell cars, a tertiary competitor may sell car parts.

Ideally, this information would be organized in a database or spreadsheet. Hence, making the tracking of names, mission statements, services/products offered, strengths and weaknesses, and their respective categories easier.

 

Audit Competitor Content

Now that you have identified your competitors. You can set the ball rolling with your competitive market analysis and look beyond the surface. Here, you want to discover and understand the content marketing approach of your competitors. The analysis of their content can reveal major weak points. Thus, you can capitalize on these and improve the content on your site.

Also, focus on the kind of content they promote on their website. Are they into case studies, blogs, or premium content?

Here are some of the main types of content to be on the lookout for:

  • Visual content
  • Buyer guides
  • Featured articles
  • Case studies
  • News
  • eBooks
  • Webinars
  • Slides/POwerpoints
  • Whitepapers
  • Podcasts
  • FAQs
  • Press releases

Once you have a complete picture of their entire content. Check it’s quality and performance with customers. You can compare it with yours and determine the strengths and weaknesses of both.

Remember to take note of when and how frequently they release fresh content. Also, look out for how they are using SEO tactics to promote their content and the topics they cover. By the end of this process, you should have a detailed answer to this vital question.

What are they doing that you aren’t doing?

With the correct answer, you have a better idea of the main points to focus more resources and effort to produce better performing content.

 

Deconstruct the SEO Structure of their Website

Chances are your competitors have similar content, publish regularly, and maintain some level of quality. So what could account for the difference in performance?

The answer to this question might be in their SEO structure.

Businesses that maintain an active blog appreciate the importance of SEO when building an online presence. Therefore you need to assess the competitor’s approach to SEO for a better understanding of their content plan.

What is their approach to keywords?

Can you find main keywords in the following:

  • The URL architecture
  • The page title
  • H1 Tags
  • Image alt texts
  • Internal links
  • Content

Having covered the SEO structure of your competitors’ content, you can go a step further and analyze their choice of keywords. It is vital to know their keywords. Because it helps you in choosing lower search volume keywords, which might not be highly competitive. Usually, these would be long-tail keywords that are very relevant to your business. These types of keywords tend to be more specific too.

In addition, find holes in their SEO strategy by clicking their hyperlink to get a measure of their relevance. This would help you significantly improve the SEO keywords for your website — especially the positioning of links and call-to-action buttons.

The positions of these two elements are one of the critical factors that determine if the website generates the desired results. Therefore check out the strategic locations of links in the contents of the competition. Also, take note of where they place the CTA buttons on their website.

Always keep your eye on the goal of your competitive market analysis! Find out what they are doing well and identify where there are problems that you can fix.

 

Review their Social Media Profiles

social media review

As the days go by, companies not using social to up their online presence are losing out. They interact with customers and end-users through social media platforms. Therefore such platforms have become a valuable asset to exploit for business purposes.

As such, many companies today have some social media presence. Be it on Facebook, Twitter, Instagram, or LinkedIn.

Therefore your competitive market analysis would be incomplete if you fail to assess how other businesses in the same industry are using social. You are bound to find creative ways to either promote your content, engage users, increase brand loyalty, or gather feedback. The possibilities are endless, and you can rest assured that your competition knows this too.

There are some questions you should ask yourself as you dive into the social media pools for valuable information. Find these questions below and remember to gather as many answers as you can.

  • How do their profiles describe them?
  • Which words do they use?
  • What do they focus on posting or reposting?
  • What kind of follower base do they have?
  • How do they interact with their audience (followers)?
  • How have they integrated social media into their marketing strategy?

You should also make sure you consider the number of platforms on which they maintain an active presence. There must be a good reason why any company will pick LinkedIn over Twitter for social media promotions. Thus, you need to make sure your competitive market analysis is thorough enough to leave no stone unturned.

 

Evaluate Areas for Improvement

A competitive market analysis will be pointless if it doesn’t lead to actionable steps. Of course, these steps should lead to an improvement in your marketing strategy, business model, and overall positioning. All these are based on the insight you glean from all the information you gather. And how you went about analyzing the patterns, strategies, and shortcomings of your competitors.

A closer look at all the information gathered will reveal more than simple patterns. Also, you will see great opportunities within the market that you and your competitions are too busy to notice. Perhaps this is why competitive analysis is such a critical strategic step towards a more successful business. There are trends you can’t stumble upon by casual browsing.

From this analysis, you will also be notified of gaps that are ripe for improvement. Areas like social media management, content creation, search engine optimization, branding, and web design. Trends can help you leverage to get a competitive advantage over other businesses. As a result, you can take appropriate actions in this direction.  

Conclusion

At this point, it should be obvious how vital competitive market analysis is to your business and how it can benefit you. Provided you approach it the right way. As mentioned earlier, this process must be done on an on-going basis. However, it doesn’t mean you need to continually watch every move your competitors make like ‘The Bodyguard.’

Neither should you allow them to keep you up at night.

Hence, you only need to have a real and complete picture based on market research, competitive market analysis, your position in it, and the position of your competitors relative to you. With this, you should easily navigate the world of business without the need to always watch over your shoulders. Or worse, engage in guesswork and making decisions without concrete facts and data that backs them.