Ah, competitive analysis. It’s one of those business terms that’s thrown about as casually as the phrases “outside the box” and “in today’s world” (guilty of both.)
But competitive analysis is actually critical for learning the market landscape, launching and iterating products, and even getting funding. So how do you conduct competitive analysis?
We’ll answer that now—in the most Goji way we can: through the power of interpretative dance.
And bullet points.
Mostly bullet points, though.
What is Competitive Analysis?
Competitive analysis (aka, competitor analysis) is the process of identifying and researching your competitors in the industry.
You’re looking to understand their positioning, offerings, and marketing strategies. So, how they do things, whether people like how they’re doing things, and whether you like how they’re doing things.
From there, you can identify points of weakness and strength in their strategies and learn from them. And, you can apply competitive analysis both at a high level and use it to drill down into a specific aspect of their business.
Why is Competitive Analysis Important?
A competitive analysis is important because it’s crucial to learn from the successes and mistakes of people doing similar things to what you’re doing. It’s likely that if you’re targeting similar markets, you’ll want to learn from them.
Additionally, it’s essential to understand the industry standards for marketing, design, and offerings. With that understanding, you can set more accurate benchmarks and metrics for growth. So you’ll also know your market better—and refine your knowledge of where you stand in it.
Through a competitive and then comparative analysis, you can then identify your business’ points of strength and weakness. And from there, you can also differentiate from the crowd—but not be so out there that no one knows where to place your brand mentally.
Lastly, prospective investors will be very interested in your ability to assess what you’re up against correctly. And, of course, they’ll also be interested in what you’re up against (not just your ability to evaluate it.) So especially if you’re in the business of raising Pre-Seed, Seed, or Series-A funding— you have to have your competitive analysis down pat.
When to Do a Competitive Analysis
Of course, it’s imperative to conduct a competitive analysis at the initial stages of your business or startup. That’ll tell you if there’s room for you in the market, how you should differentiate your offerings, and the necessary standard features your product should have.
A competitive analysis at the beginning of your startup—say, when you’re building your app or web-based product—will also indicate to you industry design and UX/UI standards. So, these should guide you in building a product that isn’t totally foreign (and is slightly familiar) to users—and baking in an aspect of user-intuitiveness into your design, navigation, and UI.
Care for an example? When we helped our partner, Wayfarer, redesign their app, we used competitive analysis. We needed to create help them redesign their navigation design so that it would be more user-intuitive. So, we looked around and took inspiration from the widely-familiar features of other navigation apps.
If you’re past those beginning stages, competitive analysis is also important when you’re launching a new product or entering a new market. However, it also doesn’t hurt to conduct one periodically—just to see how you’re fairing with prevailing industry trends.
How to Conduct Competitive Analysis
1. Find and Identify The Competition
Risking stating the obvious—but the first thing you need to do in the competitive analysis is to actually find who your competitors are. You can do this by Googling some of your product-related keywords or your product to see what else comes up.
You can also ask yourself: what to the customer I want to acquire use now? And where would they go if my product didn’t exist?
You’ll want a list of no more than ten competitors to focus on in your competitive analysis efforts. From there, you should divide them into:
- Direct Competitors: or, those who sell a similar offering to a similar market.
- Indirect Competitors: or, those who sell a different offering but one in the same category as yours to a similar market.
- Replacement Competitors: or, those outside of your offering category but fulfill a similar customer need or pain point.
Focus on the direct and indirect competitors—but you may pick up one or two things from a brief look into your replacement competitors as well.
2. Sort Your Competitors into a Competitor Matrix
Basically, a way to compile and visualize alllll the information you’re about to find. There are several different kinds of competitor matrices, depending on what you’re comparing. Here are a few from HubSpot—which has downloadable templates for different kinds of competitive analysis:
3. Collect General Competitor Information
First off in your quest to conquer both competitive analysis as a concept and your market as a whole, you should learn the basics about each competitor.
These points of information include:
- History: founding date, mergers or acquisitions, new market entrances, product (re)launches and iterations, rebrandings, etc. (Check out old press releases, CrunchBase, their “About” section)
- Funding Data (if accessible*)
- General Business Stats (user base, bookings, etc.—if accessible*)
*If it’s a public company, for instance, it will be.
From there, begin investigating if there are any trends in your data.
For instance, are there trends that point to a particular success or failure with a specific campaign or product release? What did happen when they rebranded? Or, how much have they grown in the last year, funding- and headcount-wise? And, why do you think that is?
4. Create Customer Personas for Your Competitors’ Target Audience
To understand how you stand and compare in shared markets, you need first to isolate what the customers look like. So:
- Isolate the painpoints your competitors’ solutions address
- Investigate who has those painpoints
- Examine your competitors’ mission statement and messaging
- Look at their social media following and interactions
- Read any case studies or customer profiles in their published content
From there, you can more or less build customer personas for your competitors. Likely, they won’t be too far off from yours. However, you must understand the slight differences between their customer personas and yours; this is where your advantage lies.
5. Develop a Marketing Mix (The 4Ps)
Finally, it’s time to delve into how your competitors’ segment their target audience and customer personas. Ergo—how they market to each of them.
The 4Ps (aka, The Marketing Mix) consist of:
- Product: or, what are they selling? What features does their offering have? And, what are the strengths and weaknesses of their product when it comes to customer appeal?
- Price: or, what is their pricing and business model? What are their prices? Any strategic sales or discounts? How does pricing align with the quality or perceived value of their offerings?
- Promotion: or, what are their marketing strategies and preferred marketing channels? What does their messaging revolve around? And, what’s their brand voice and brand story?
- Place: or, where and how do they sell their product (location if brick-and-mortar, D2C, channel sales, etc.)?
6. Analyze Your Findings
This is where the “analysis” portion of competitive analysis comes into play.
Meaning, taking all of that information you’ve aggregated—and compiling it into learnings. And specifically, learnings about the strengths and weaknesses of both your competitors and your business.
Questions to ask here are:
- Why did my competitor choose product or marketing strategy X?
- How well did product or marketing strategy X resonate with customers?
- Why did these customers select this competitor over me or any other?
Finally, examine your company’s strengths and weaknesses. How does it compare with the rest? Where is it ahead of the crowd, and where is it behind? By having the answers to these questions, you’ll be able to iterate, become the golden child of your industry, and exceed your target audience’s expectations. Or something close to that.
Well, this was a lot. We know.
Coincidentally, hi, we’re Goji Labs—a product and software development consultancy with experience in designing, “rescuing,” and deploying hundreds of products.
Have any general questions about who we are and our authority on the subject?
– Goji Labs