A competitive analysis lends you the power to update yourself and your organization in order to survive in an ever-evolving market.
WHAT IS A COMPETITIVE ANALYSIS?
To conduct a competitive analysis, one must investigate the products and services offered by major rivals as well as their customer base and marketing tactics. To adopt more successful business strategies, dissuade competitors, and grow market share, a competitive market analysis is essential.
A competitive analysis will shed light on your competition’s methods and help you identify potential areas of improvement. In addition, you may keep tabs on industry trends and make required adjustments to your product, ensuring it can constantly meet or exceed customers’ expectations.
The MBV framework holds that the competitive environment and structural features of a given industry are the sole determinants of a company’s performance.
Many businesses in one industry vie for the attention of consumers. The top players in your field, their strategies for success, and the resources at their disposal can all be gleaned via a thorough competition analysis.
BENEFITS OF CONDUCTING COMPETITIVE ANALYSIS
Below are benefits of conducting competitive analyses:
Helps you identify what makes your product stand out from the competition so you can focus your marketing efforts on selling its benefits.
Allows you to spot areas where your rivals are excelling. You need this information to show that your products and marketing strategies are superior to the market.
Identifies your competitors’ areas of weakness, allowing you to capitalize on their blunders and experiment with new, cutting-edge marketing strategies they haven’t attempted.
To fill in the features of competing products, you can study user feedback to see where the gaps are and how you can best fill them.
Gives you something to measure your development against.
WHY IS A COMPETITIVE ANALYSIS IMPORTANT FOR E-COMMERCE?
While overall retail sales dropped by 3% in 2020, online sales increased by 27.6% to $4.20 trillion.
Many customers who previously shopped only in brick-and-mortar establishments shifted to conducting most or all of their purchases via the internet after the pandemic. The number of brick-and-mortar stores having an online presence has increased for all of these reasons.
In contrast, online-only retailers have seen their revenues soar. Black Friday and Cyber Monday sales pushed Amazon’s global revenue to $4.85 billion in 2020, an increase of 60% from the previous year.
The data proves it without a shadow of a doubt. The retail industry has undergone radical transformations in recent years, with an ever-growing percentage of sales now made via the internet. It is still unclear how long this change will continue. The present annual growth rate of e-commerce is 20.3%; projections for 2021 suggest that it will slow to 14.3%.
HOW TO DO A COMPETITOR ANALYSIS IN 9 STEPS?
For those “hidden in plain sight” nuggets of knowledge, here are nine steps to finding them:
Identify your competitors
In 2020, traditional retail sales dropped by 3%, while online sales surged by 27.6% to $4.20 trillion.
In the wake of the pandemic, many consumers who had previously shopped only in brick-and-mortar establishments shifted their attention to the Internet. Due to these and other factors, an increasing number of brick-and-mortar shops are opening virtual doors on the World Wide Web.
In contrast, online-only retailers have seen their revenues soar. With the help of Black Friday and Cyber Monday sales, Amazon was able to increase its global revenue by 60% in 2020, to $4.85 billion.
The evidence is irrefutable. Changes in consumer shopping habits, with more and more purchases being made online, have had a profound impact on the retail industry in recent years. There is currently no way to predict how long this change will endure. By 2021, analysts predict that the annual growth rate of online retail would slow to 14.3 percent from its current level of 20.3 percent.
Here’s how to identify YOUR competition:
Analyze the first few pages of search engine results for terms associated with competing products.
Market share information can be found on Statista or a related site.
Find out if your rivals are buying their supplies from the same distributors and factories that you do.
In interviews, take note of the brands and products your ideal customers frequently mention.
However, while it’s simple to keep an eye out for obvious competitors, less obvious ones may slip under the radar.
Indirect rivals provide a unique solution to the same problem, while direct competitors all sell the same thing.
Perform a competitor SWOT analysis.
Compare your company’s growth against that of the competition by using a graph. When you have a large number of direct competitors in your market, it is time to conduct a SWOT analysis of each of them.
The following factors should be considered in your analysis:
Positioning a Brand
Shopping cart website
Emotional connection with the product
Business plan for sales
Methods for Setting Prices
A Method for Promoting Products
Planning for Content
Distribution Plan
Methods of Advertising
and Discounting
To get answers for each section, ask the following questions:
Specifically, what are the brand’s selling points?
How do they differentiate themselves from the competitors through intangibles (such as a well-known brand name)?
Is there a way we can make things easier for you (like shopping online)?
Is there something they always overlook (like optimizing for search engines to get more organic traffic)?
Compare and contrast the benefits and advantages offered by your business to those of your rivals. Just think of all the doors they’re closing. Does it occur to you that there might be a way to profit from them?
Alternatively, gaining an awareness of the market’s opportunities and threats will help you better comprehend the market’s current state and the nature of the competition within it.
Examine your competitors’ websites and customer experiences.
Successful e-commerce sites understand how important it is to give customers what they want when they shop. Some 59% of American buyers will stop buying from a company after a series of bad experiences, while 17% will give it only one chance.
Competitor analysis provides crucial information for developing a comprehensive e-commerce website strategy.
Our 5-step user experience research framework will make it simple to analyze the UX and CX of the competition.
Set the objectives: Please tell me what you think I should focus on learning more about. Examine the site’s foundational components, such as its navigation, product listings, shopping cart, shipping terms, and analytics (such as discounts, coupons, upsells, etc.)
Create research hypotheses: Based on your analysis of the competition’s strengths and weaknesses, formulate a set of hypotheses about their target market. Assess your competitors’ positioning in the market and follow its economic trends and implications. Can your customers learn anything from exploring products similar to yours that exist on other websites?
Select your research methods: These will be based on how much cash you have on hand. Use a combination of quantitative (benchmarks, user testing data, performance metrics, etc.) and qualitative (surveys, focus group interviews, customer reviews, etc.) methods to evaluate their UX/CX.
Conduct the evaluation: Learn as much as you can in the time you have for the research.
Synthesize the findings. Make use of the data you’ve gathered to close any gaps in your understanding, test and strengthen your hypotheses, and assess potential new directions for your design.
Determine your competitors’ market positioning.
The ability of your business to stand out from the crowd is its “differentiator.” Indirect rivals can be evaluated simply by contrasting their solution to your own.
Their special selling point is what separates them from the competition and attracts new customers. You should buy one if you want to establish a solid brand.
By adhering to these recommendations, you will be able to gain a deeper understanding of the industry landscape and the current standing of various businesses.
Give an illustration of the primary category of client desires you aim to fulfill.
Pick somewhere that interests you and go check it out. If keeping tabs on the entire market seems impossible, don’t feel pressured to do so.
The study’s focus can be on inexpensive products, luxury ones, or something in the middle. Identify the key customer benefits across different price points.
Make a rating system that considers the pricing and quality of similar products offered by different companies.
LOOK AT YOUR COMPETITORS’ PRICING AND CURRENT OFFERS
Perceptual mapping helps identify how different competitors price their products and where you could fit in. This data gives you some baseline figures on how much people are willing to pay for different types of goods (from different brands).
Yet, it’s not just objective factors such as quality or feature range that impact consumers’ price sensitivity.
For example
43% of all consumers are ready to pay more for greater convenience such as faster shipping or low-hassle delivery.
71% are ready to pay a premium for brands that provide full product traceability.
As you analyze the competitors’ prices, pay attention to such “add-ons”. Try to determine how they tie in extra value to their prices to avoid competing on dollar value alone.
LEARN ABOUT THE TECHNOLOGY YOUR COMPETITORS ARE USING.
In some ways, technology may appear to be a service that any enterprise can pay for. The technology is irrelevant; what matters is how it is used.
Indeed, competing businesses can share an e-commerce platform while still maintaining their identities by making slight modifications to the software (intangible asset).
In doing your research, therefore, keep the following in mind:
Can you tell me what kind of e-commerce platform the company uses, such as open source, SaaS, or headless commerce?
Do they offer any specialized plugins or extensions?
What methods do they use for accepting payments, sending out emails, coordinating with shipping and delivery firms, etc.?
Does it use innovative technologies like AI, chatbots, AR, or VR to provide a realistic buying experience?
How might a change in technology platform or the addition of new integrations enhance the shopping experience on your e-commerce website?
Ensure you are being competitive with shipping.
According to the Baymard Institute, the high cost of shipping is a major reason why customers do not complete their purchases.
Find out what your rivals are charging.
Same-day or next-day delivery is guaranteed.
Quick turnaround time of two days for shipping
The State of the Seas in General
International shipping
The next thing to do is check the prices of other logistics firms to see if they are competitive with yours. It is common knowledge that online stores can save money on shipping and contracts by purchasing in bulk.
The cost of stocking up on such large items can be offset by adding a markup to the prices.
As a final step, consider BOPIS or curbside pickups for your storefront. A reduction in order processing costs is a result of each of these factors.
Review social media feedback and performance.
Several popular brands with large and active fan communities have their subreddits devoted to offline fan interactions. Look into these to discover the likes and dislikes of your target market, along with their latent abilities.
Aside from brand-specific subreddits, general subreddits also feature lively and honest debates on a wide range of products (such as those devoted to skincare or gaming). Keep your eyes peeled for those:
Twitter:
Check how quickly questions from customers are answered by the company.
Check with them to see how they respond to questions about the product.
See what people are talking about by following the hashtags and mentions.
Facebook:
Take a look at the newest comments. These could be used to identify problem spots.
To find out what other brands your fans enjoy, type “pages liked by people who like” into the Graph Search bar.
Instagram:
Look into how other brands are presenting their aesthetics and when they plan to release new content. I was wondering if you could elaborate on the visuals they use. Do they make use of the most recent Instagram features, such as Reels and Shoppable posts?
Estimate the mean number of people who interacted with each of their posts. You think this is the real deal, right? If we compare comments and likes, what is their likes-to-comments ratio?
To what extent are they collaborating with influential people? Who are they working together with? Why?
Reddit:
Several popular brands with large and active fan communities have their subreddits devoted to offline fan interactions. Look into these to discover the likes and dislikes of your target market, along with their latent abilities.
Aside from brand-specific subreddits, general subreddits also feature lively and honest debates on a wide range of products (such as those devoted to skincare or gaming). From these shared characteristics, you can extrapolate the factors that influence the choices made by your competitors’ customers.
Use tools and methods for staying aware of competitors.
Do you think the things that have been said so far amount to a lot?
You can use one of the following competitive analysis frameworks:
What Porter’s Five Forces tell us.
The Resource-Based View (RBV) model is one type of perceptual map that can be used in place of the more common SWOT analysis.
To use Facebook’s Pages to Watch or a comparable feature, or to incorporate their data into your social media analytics tool, they also require a dependable, up-to-date source of competitive intelligence.
Findings from an Online Seach (SERPs). Using analytics and research tools like Ahrefs and Semrush, you can gain valuable insight into your competition’s keyword rankings and link-building methods.
Online report filing. Setting up Google alerts for their brand name will let you know when and where their name is mentioned in the media or among influential people.
Flow rate and geographic origin of the visitors. In addition to providing in-depth analytics on your site’s traffic, SimilarWeb also provides a free overview of your top referral sources.
ADVANTAGES AND DISADVANTAGES OF RESEARCHING THE COMPETITION
Advantages Of Competitive Research
Provide Fast and Detailed Organic Research
Because it shows how your business compares to others in the market, organic research is the most crucial component of market analysis. You can learn more about the SEO tactics used by your competitors by conducting an “organic” search of the internet. It’s useful for attracting organic traffic, too.
Create A Unique Selling Proposition (USP)
Why should people buy your product over others? If you were to describe your company, what would you highlight? By inquiring about the other brands in the market, you can differentiate your own. It describes the characteristics that set the rival product apart.
Allows You to Acquire Backlinks
You can’t overstate the importance of backlinks to your websites if you’re familiar with search engine optimization (SEO). Search engine rankings can be improved by earning backlinks from other reputable websites that speak to your knowledge of your subject.
Increasing the number of high-quality links pointing to your site requires research into your competitors. The list can be used to reach out to popular websites for guest posting and link building.
Disadvantages Of Competitive Research
You can misinterpret the data
The analysis of one’s rivals can yield a wealth of useful information. Before beginning such a large-scale investigation, careful consideration of available research methods is essential. The precision of the tool used determines the reliability of the results. Information collected without a reliable tool is not only more likely to be wrong but also more challenging to comprehend. At best, it will cause a waste of resources. In the worst-case situation, we use this inaccurate data to make poor business choices. Get a second opinion and use the best competitive analysis tool available to ensure nothing untoward occurs.
Too much data can be overwhelming
Conducting a competitive analysis can provide invaluable insights that can be used to expand and improve your business. However, there are times when it is difficult to process all the information we have. By studying the competitors, you can learn where they are focusing their advertising dollars. It also draws attention to trouble spots like public relations, advertising, link building, and so on. However hard you try, you may spread yourself too thin trying to fill every void at once. Possible far-reaching consequences for your business’s fortunes. When evaluating the findings of a competitive analysis, keep your own company’s strengths in mind. Instead of flooding the market with advertisements, focus on your preferred clientele and grow your business from there.
A competitive analysis is your greatest bet if you want to differentiate yourself from the pack and outperform the competition. No matter how big or small your firm is, it could benefit from a careful analysis of your niche market. As a result, if you want to increase your company’s market share, you need to undertake a thorough analysis of the competitors. If you put in the time and effort, you’ll have no trouble overcoming the minor issues with this strategy. Performing a competition analysis could be especially useful for small businesses with expansion goals, perhaps even more so than for larger corporations. In any industry, there will always be competitors, and successful businesses thrive when they have healthy competition. One way to evaluate growth is by looking at how well you stack up against the competition.
INDIRECT VS. DIRECT COMPETITOR
What are Direct competitors?
When most people think of a marketing competition, they imagine a direct opponent. A firm is a competitor if it offers a service that is either the same or substantially similar to that of another firm serving the same audience.
For argument’s sake, let’s say the western United States is home to the vast majority of your restaurant clients. There are probably other firms out there offering equivalent restaurant advertising services in the West.
What are Indirect competitors?
Let’s pretend a major portion of our clientele lives in a city close by. Customers in search of a bite to eat will often look first along the main drag. Four major restaurants, each with its specialty, can be found in the immediate vicinity. The town’s restaurants cater to a wide range of tastes and demographics, but they all share a common goal: satisfying the town’s hungry.
Consider a buyer in a similar situation who must locate presents for a birthday bash. There is only one store where you can buy clothes. There is a jewelry store directly across the street. Competing for the same customers yet selling different products, both stores are in direct competition with one another.
HOW TO GAIN AN ADVANTAGE OVER DIRECT AND INDIRECT COMPETITORS?
Here are some steps you can follow to separate yourself from your competitors:
Identify your competitors
The first step in getting ahead of the competition is to conduct a competitive analysis and figure out where they excel and where they fall short.
You can gain some insight into the current market situation from this, such as:
Find the optimal price for your product or service by analyzing competitors’ prices.
Find out what your competitors are offering their employees in terms of benefits and salary by observing their operations.
Examining the connection between supply chains and value chains is a great way to gain insight into the complex procedures involved in delivering products and services to end users.
With a firm understanding of their interactions with customers, the opinions of those customers, and the issues those customers have with the products they offer.
Discover gaps or loopholes in the market
Finding out what advantages your customers enjoy that your rivals do not is the focus of the second stage of researching the competiton. Your customers will tell you this when they air their issues about your competitors.
Find out what share of the market your rivals now hold and how much more business there is to be had. Think about the dominant players in your industry and think out ways to undercut their prices in response to consumer concerns about competitors’ pricing practices, for example.
Analyze trends in the market
The competitive advantage of a business can be increased by adopting the most effective and cutting-edge technological instrument and implementing it company-wide. The market responds to external stimuli such as new entrants, changes in legislation, and technological innovation. To maximize productivity, businesses should keep an eye on and adjust to these tendencies.
Identify your competitive advantage
For a business to gain an edge over the competition, it needs a well-developed corporate strategy that fits in with day-to-day operations. To maintain a customer-centric business model, it is essential to identify and evaluate your ideal customer. The most successful businesses in any industry use a winning formula involving state-of-the-art tools, widely recognized brands, seasoned management, an effective promotional plan, and plenty of capital.
Maintain a solid relationship with your customers
Many companies prioritize the opinions of customers when developing practices. Treating customers with dignity and respect is crucial to retaining customers and gaining more market share. Also, implementing customer-centric strategies such as responding fast to complaints from customers and offering special delivery services can help you attain business growth.
Build partnerships with competitors
Although partnering with direct competitors might not always be an effective strategy, you can partner with indirect competitors operating in a similar niche to leverage their customer base and network. For example, if you own a car spare parts manufacturer, you can partner with an automobile company. With this, you can increase your value-added services and gain more market share than your direct competitors.
The practice of creating profiles has several applications in the fields of marketing and public relations. Find the channels your competitors aren’t utilizing and start advertising there. Test the waters of underserved demographics. There may be underserved communities that, if given the chance, would become dedicated patrons. Communicate with them and tell them how your product can make their lives better.
Research on the opposition is underway. The corporate world is always evolving. Companies can’t adapt to changes in their environment if they don’t know what those changes are. Use the above strategies regularly to remain ahead of the curve and avoid unpleasant surprises.
START YOUR BUSINESS JOURNEY WITH RFC
At RFC, we conduct thorough market research and use competitor analysis tools to analyze both direct and indirect competitors. We also perform a SWOT analysis to identify our client’s strengths and weaknesses, as well as industry trends. By using our expertise and competitive analysis proficiency, we develop comprehensive analyses to help our clients better understand their competitors’ businesses, marketing strategies, target customers, marketing tactics, and target audiences. Our analysis also includes an evaluation of competitors’ websites and the competitive landscape.
