Steps to study and analyze competitors

 

 Steps to study and analyze competitors

study and analyze competitors

 

Competitor Analysis: A Step-by-Step Guide

Competitor analysis is a critical part of market research and business strategy development. Without studying, understanding, and analyzing your competitors, you're like a boxer fighting in the dark.

In today's fast-paced and ever-changing world, competitor analysis is one of the most important factors for business success and sustainability.

In this article, we'll dive into how to conduct competitor analysis in simple, easy-to-follow steps.

What is competitor analysis?

Competitor analysis is a set of processes and steps that companies and organizations take to understand the institutions and companies that operate in the same field. This understanding is then converted into decisions that contribute to the success of the organization and its superiority over these competitors in the market.

The competitor analysis process is based primarily on collecting and organizing information and data available in the market about competitors. This information and data is then evaluated in light of the specific circumstances of the organization conducting the competitor analysis.

In the end, the organization makes developmental decisions based on the information and data it has to qualify for success in the market and to excel over these competitors.

And of course, this is not the end of the story, but the competitor analysis process is an ongoing and cyclical process.

Benefits of competitor analysis

Competitor analysis can help businesses in a number of ways, including:

• Understanding the competitive landscape: Competitor analysis can help businesses understand who their competitors are, what their strengths and weaknesses are, and what their strategies are. This information can be used to identify opportunities and threats in the market.
• Developing competitive strategies: Competitor analysis can help businesses develop strategies that will help them compete effectively in the market. This includes strategies for pricing, marketing, and product development.
• Identifying new opportunities: Competitor analysis can help businesses identify new opportunities in the market that their competitors may not be aware of. unique insights and capabilities can lead to the development of new products, services, and markets that are not possible

 

Steps for Analyzing Competitors

1. Identifying Competitors

The first step a company takes in competitor analysis is to identify its main competitors in its field of work. This step begins by the company listing all companies that compete with it, regardless of their size or competitive ability. These companies are then divided into two sections: the first section contains the direct competitors to the company's activity, also known as direct competitors, while the second section is reserved for indirect competitors, or indirect competitors.

What is the difference between the two types? Direct competitors offer a product that is identical to the product offered by the company. These competitors also typically operate in the same geographic area or market as the company.

Finally, these companies offer products at the same level of quality as the company conducting the competitor analysis. The similarity between the company and its competitors in this type also extends to after-sales service, technical support, and warranty, etc.

For example, we can consider the following companies as the most famous companies that are considered in direct competition with each other:

• Coca-Cola and Pepsi
• McDonald's and Burger King
• Boeing and Airbus
• Netflix and Disney Plus

Each pair of the previous companies offers almost the same products, which makes the competition between them direct and fierce.

Indirect competitors are competitors that offer products that belong to the same product category that the company offers in general but not the same product.

This is clearly seen when comparing global brands in the clothing industry, for example, with each other. For example, both Adidas and Dolce & Gabbana operate in the clothing manufacturing business and in the same global geographic range.

However, Adidas cannot be considered a direct competitor to Dolce & Gabbana. This is because the former focuses on producing sportswear, while the latter specializes in producing high-quality fashionable clothing.

Companies should focus primarily on their direct competitors, but indirect competitors should not be ignored completely, as they may change the nature of their activity at any time and become direct competitors.

Well, this is confusing, how will the rest of the steps of competitor analysis proceed? The focus in the following steps of competitor analysis is on direct competitors, while indirect competitors are collected from time to time to make sure that they still belong to the category of indirect competitors.

 

study and analyze competitors

2. Categorizing Competitors

Now it is time to deal with direct competitors. This type of competitor is also divided into smaller categories.

Competitors are divided into two lists according to the strength of each category:

• List 1: This is the list of primary competitors. These are the companies that compete with the company that is conducting the competitor analysis very strongly.
• List 2: This includes weaker or less powerful competitors currently.

You can imagine this as a competition between the leading companies in the mobile industry. For example, Samsung is considered one of Apple's main competitors in the mobile phone industry.

Of course, there are other companies in this field such as Google, Xiaomi, and Sony, but they are not as strong. These companies are included in the second list, and the focus of competitor analysis is divided between the two lists, with the first list receiving the largest share of analysis attention.

In this example, Samsung will include Apple in the first list and analyze it while placing Sony, for example, in the second list.

This is different if the company conducting the analysis is Sony. In that case, it will include Google and Xiaomi in its first list. In other words, Sony will focus on analyzing competitors who are in the same competitive strength as it is currently in order to increase its market share.

When Sony increases its market share in the mobile phone industry, it will start studying stronger competitors until it reaches Samsung. Finally, these lists are flexible, as the companies' positions between the lists change from time to time, and their ranking sometimes varies within the same lists.

Note: Competitors can be divided into more than two lists according to the number and strength, but only two lists will be dealt with at most. For example, companies can divide competitors based on their strength in lists starting with the letter A, then B, C, and so on.

Here, list A contains the strongest competitors and B the least, and so on. Only competitors in these two lists are analyzed, at least for now. Later, the other lists can be reviewed and determined if it is important to study and analyze them or not.

Note that not all competitors deserve the same share of study and analysis, and some of them do not deserve it at all. Competitor analysis costs a lot of money and time, so only competitors that lead to a rewarding return should be focused on.

 

3. Collecting Basic Information About Competitors

In this step, companies begin to collect basic information about their competitors. This information may include:

• The size of their companies

• The products or services they offer

• The locations where they operate

• The technologies they use

• The marketing tools they rely on

• How they interact with customers (how they target their customers, their after-sales service, and the technical support they provide to customers)

There are several sources that companies rely on to collect information about their competitors, such as:

 

(a) Online research

Companies rely on search engines and the official websites of their competitors to obtain general information about them. This information may include the products and services they offer, the market they target, and any other relevant information.

Search engines are the best way to assess the effectiveness of competitors' websites. The role of companies' websites is to promote their brands, identify their activities, products, and services on the Internet, and sometimes practice this activity.

Of course, this varies from industry to industry and from company to company. For example, there are technology companies that sell their products directly to their customers through their websites, such as Samsung and LG, in addition to selling through other channels such as e-commerce stores.

Therefore, these companies strive to top the search results on Google and Bing, for example, when searching for these products. A lot of a company's capabilities and weaknesses can be learned from the performance of its websites on search engines, especially in the current time.

Currently, all companies are keen to have a strong presence on the Internet by creating websites for them. Therefore, the absence of a website for a particular company or its failure to appear on the first page when searching in its field of activity means that there is a weakness in the presence on the Internet.

Also, searching online about companies is useful in knowing the opinions of customers about them and their reputation in their user community.

There are several websites that these companies rely on to read customer reviews about them, such as:

• Trustpilot
• Birdeye
• Reviews
• Powerreviews

Companies register on these sites to provide an opportunity for their customers to express their thoughts and opinions about them. These sites represent a neutral third party between companies and their customers that aims to create an objective communication channel between the two.

These sites follow strict standards in recording customer reviews about products and companies to ensure the validity of these reviews. Trustpilot, for example, requires customers to add proof of the validity of their reviews about companies, such as purchase invoices. This makes these sites a reliable source of information.

 

(b) Monitoring social media

Social media provides companies with an excellent opportunity to monitor their competitors' activity and how they interact with their audience.

Typically, one of the following departments is responsible for monitoring competitors:

• Marketing
• Advertising
• Planning

For example, the marketing department constantly monitors competitors to track their marketing performance and market penetration.

The planning department may also monitor these platforms if the company intends to expand into the market or provide a new product or service. The role of the planning department here is to plan the launch and marketing process in a way that outperforms competitors.

Companies use specific tools to monitor competitors' social media. Some of these tools include:

1. Social Mention: Allows companies to monitor the hashtags and keywords related to their competitors on social media.

The tool also provides the ability to track new posts, similar posts, and any changes in engagement rates and views.

2. Brandwatch: It is an advanced tool for monitoring and analyzing social media. Companies rely on this tool to track competitors' accounts, keywords specific to their industry, analyze customer impressions and feelings about companies, and monitor market changes.

3. Mention: It is a powerful tool for monitoring keywords related to competitors on social media.

The tool also provides the ability to track mentions, tags, posts, comments, and publications related to competitors and the industry in general.

4. Awario: It is a comprehensive social media monitoring tool. The tool allows companies to track conversations about their competitors across different social media platforms, blogs, and forums. The tool also provides a large number of detailed reports and analyses.
   

 

(c) Secretly buying competitors' products

In some cases, companies buy products or services from competing companies to evaluate their quality and user experience.

This is not unethical or illegal at all, but it is completely legitimate. The secrecy here is to get a product that the average consumer gets.

After obtaining the product, companies analyze its pros and cons and assess its ability to meet customer needs in general. This will provide companies with most of the information they need about the user experience that competitors' customers go through when they buy their products.

Companies can take advantage of the flaws they find in this experience and avoid them in their own experience, which will benefit them in competing with these companies.

 

(d) Participating in trade shows and conferences

Companies make sure to attend trade shows and conferences related to their industry. This provides them with an opportunity to meet competitors and interact with them. These companies visit their competitors' sections at these shows and collect their marketing materials.

They also communicate with representatives of competitors to obtain additional information. Don't be surprised, because unlike the previous method of following secrecy, information is exchanged between companies at trade shows and conferences with a great deal of transparency and professionalism in public.

Trade shows and conferences are an excellent opportunity for companies to observe their interaction with their customers face-to-face. Also, through these exhibitions, companies can discover the relationships of their competitors with other companies, whether within their field of activity or outside it.

  

study and analyze competitors

4. Analyzing Competitors' Strategies

This step is an advanced one, as it does not aim to collect information and data only, but to understand the strategies, plans, and pattern of development followed by competitors, that is, to understand what is behind the managerial behavior followed by competitors.

Here are the most important aspects that need to be focused on in this step:

 

A. Pricing

Pricing strategies adopted by competitors are considered one of the first elements that companies are interested in knowing in competitor analysis, as price is the most important factor affecting companies' sales.

Companies are annoyed when they notice the existence of a competing product that enjoys high quality and a lower price than the price they set for their products. This may mean that the competing company is adopting a pricing strategy that ensures the manufacture of a good product and the realization of a reasonable profit margin. Here, the company that is conducting the analysis should take a break to face this challenge.

There are questions related to pricing strategies and product costs in general, for example, companies are interested in knowing the answer to questions such as:

• Do competing companies offer competitive prices to customers for the services and products they offer?
• Do companies aim to make price alone as a key factor to attract customers to buy products, or do they use it with other factors?
• Do companies not care about the price of their products (especially if it is high) and focus on the unique value that the product provides to customers?

Finding answers to these questions helps companies to determine how to set the price of their products or services in a way that is compatible with similar products. Companies also use the answers to these questions to build their own pricing strategies that outperform competitors' strategies.

 

B. Marketing, advertising, and promotion

Companies are interested in knowing the marketing, advertising, and promotion strategies used by competitors to promote the products and services they provide.

These strategies can be discovered by analyzing some elements of the marketing and advertising operations carried out by competing companies.

Here are some methods that can be used in analyzing marketing and advertising in competitor analysis:

1. Analyzing the marketing strategy: Companies evaluate the general marketing strategy adopted by competitors in competitor analysis and the marketing methods they rely on.

Do they use digital marketing strategies such as social media and email marketing? Do they rely on television advertisements or traditional print advertisements? And so on.

2. Analyzing target audiences: Companies analyze the target audiences targeted by competitors. It is true that the target audience is generally similar between companies and their competitors, but each company targets a certain segment of this audience in order to enter a field and compete in it.

3. Monitoring advertising campaigns: Companies track the advertising campaigns launched by competitors and evaluate them. Companies are also interested in knowing the advertising media they use, how the audience interacts with them, the details of these advertising messages, and the special offers they contain, if any.

4. Analyzing electronic marketing channels: Companies analyze the electronic marketing methods used by competitors for marketing. This means analyzing the competitors' websites, their mobile applications, and any other electronic means they rely on for marketing.

Note: Monitoring advertising campaigns and marketing channels depends on the information that was obtained in the monitoring step that we explained earlier.

5. Monitoring and analyzing offers: Offers attract customers and annoy competitors, so companies are always looking to know the details of the offers offered by competing companies. Companies try to understand the details of special and promotional offers in order to offer similar or better offers in the future.

Companies are also interested in analyzing customer interaction with those offers and their success in encouraging them to purchase the product or service.

 

C. Distribution channels they rely on

Companies are interested in analyzing the channels that their competitors use to distribute their products or services. Analyzing these channels requires taking several steps, including:

1. Identifying the distribution channels used: Companies identify the channels that each of their competitors uses to distribute their products or services.

This may include direct distribution channels such as the competitor's own stores or indirect distribution channels such as distributors, resellers, and wholesalers.

2. Evaluating the efficiency of channels: In this step, companies evaluate the efficiency of the competitors' distribution channels that were discovered in the previous step.

3. Analyzing new distribution channels: In general, companies add new distribution channels from time to time. These channels could change the balance of competition in their favor.

Companies are interested in monitoring their competitors' new distribution channels and analyzing and evaluating their potential impact on the market and their current channels.

4. Comparing product and service availability: Companies may provide an excellent product that is not available in some places or seasons. Companies discover products that their competitors are unable to provide to their customers. This is an ideal opportunity for companies to fill the market gap in these products with their own products.
   

 

D. Customer service, technical support, and after-sales policies

Some companies offer their customers services that are of higher quality than the products they offer. This may seem counterintuitive, but it is a reality that can have a significant impact on the success of a company.

To illustrate, let's compare the customer service of Amazon to the customer service of Jumia. Amazon is known for its excellent customer service, while Jumia's customer service is often criticized.

In a hypothetical situation, let's say you purchased a product from both Amazon and Jumia. Upon receipt, you discover that the product from both stores is defective. You contact the customer service of both stores to request a refund or replacement.

Amazon is likely to be more accommodating in this situation. They may offer you a full refund, a replacement product, or even a gift card. Jumia, on the other hand, may be more rigid in their policies. They may only offer you a refund if you return the product, and they may charge you a restocking fee.

In this example, Amazon superior customer service has made you more likely to do business with them again. Even though the product you purchased from them was defective, you were still satisfied with the customer service you received.

This is just one example of how customer service can be more important than the product itself. Companies that focus on providing excellent customer service are more likely to build loyal customers and generate repeat business.

Leadership always means superiority and is reflected positively in profits. One of the most important factors that help companies achieve leadership in their industry is innovation.

These innovations can be new modifications to products that have been on the market for a long time, either in terms of technical or functional improvements. Innovations can be radical changes in the products that a company offers, or completely new products.

Several methods and techniques can be used to understand and evaluate these new technological innovations that competitors offer in the field, such as:

• Reviewing new products and services to understand their features and benefits.
• Analyzing the technology used to understand the underlying concepts and technologies.
• Monitoring market response to understand how customers are reacting to the innovations.
• Monitoring intellectual property rights to identify potential areas of competitive advantage.
• Comparing technologies and innovations to identify best practices and opportunities for improvement.

  

study and analyze competitors

5. Competitive Analysis

In this step, companies analyze the strengths and weaknesses of their competitors based on the information they have collected about them. There are several popular methods and techniques in the field of competitive analysis, the most important of which is SWOT analysis.

This analysis aims to identify the strengths, weaknesses, threats, and opportunities facing companies and businesses.

Despite the strength of SWOT analysis, there are other methods that are equally strong and important in the field of competitive analysis, the most important of which are:

a) PESTEL analysis

The name of this PESTEL analysis is derived from the initials of each of the factors it analyzes, which are:

• Political
• Economic
• Social
• Technological
• Environmental
• Legal

This analysis aims to understand the external environment and identify the potential impacts on the performance of competitors.

b) Five Forces analysis

The Five Forces analysis is used to assess the competitive forces in a particular industry. This analysis includes the analysis of the strength of five entities, namely:

• Direct competitors
• Threat of substitute products or services
• Customer purchasing power
• Supplier power
• Threat of entry of new competitors

This analysis helps to understand the level of competitiveness in the industry and identify the strengths and weaknesses of competitors.

c) Value chain analysis

Value chain analysis focuses on analyzing the internal operations of competitors and analyzing the value chain they create. This analysis helps to identify activities that companies can improve and achieve competitive advantage in.

Value chain analysis starts with analyzing the process of sourcing raw materials to the process of distributing products and passing through processes such as marketing.

Note: Sometimes companies also analyze themselves using one of the previous analysis methods. The purpose of this analysis is to use its results and compare them with the analysis of competitors, as we will explain in the comparison step later.

 

6. Recording, documenting, and sorting

All the previous steps and stages result in a massive amount of information and data that needs to be stored. Companies rely on several programs and applications to record the data they collected during competitor analysis according to the nature of this data and its purpose.

In general, there are two ways to record data. The first relies on general data recording programs such as Google Sheets and MS Excel. The second relies on specialized programs to record each type of competitor data.

 

7. Exporting reports and comparing information

In this stage, companies begin to extract reports from the previous tools and compare their information with each other. This step may be accompanied by a process of refining the data and information that has been collected to reach the most accurate possible information that objectively reflects the true position of the competitors.

After refinement, companies often rely on data analysis and final information programs that will be used in competitor analysis. These programs also provide tools and techniques for extracting data from a variety of sources.

Finally, these programs contain tools to analyze data effectively to identify patterns, trends, and understand competitive performance.

The most important tools that can be relied on to export and compare competitor information:

• Tableau
• IBM Watson Analytics
• Salesforce Einstein Analytics

Finally, this step is supposed to produce reports that illustrate the company's complete position compared to its competitors. These reports are considered the main goal that is required to reach from competitor analysis.

 

 8. Discovering areas that can be improved

The reports that companies extracted in the previous step are supposed to reveal their weaknesses or aspects that need to be improved.

No company does not have weaknesses, but what distinguishes each company from another is the seriousness of each in striving to eliminate these points or limit them.

In this step, companies begin to develop strategies that help them to:

• Increase the exploitation of their strengths.
• Eliminate their weaknesses or reduce their impact on their activity.
• Exploit the opportunities available in the market, whether those available in their market of activity in general or available to them specifically.
• Develop strategies aimed at eliminating threats at their inception or as soon as possible, or even preparing to face them.

 

 

 

Conditions for Successful Competitive Analysis

 

1. Continuity

Competitive analysis is not a one-time task, but a continuous process. It is important to analyze competitors regularly and consistently because both the market and competition are constantly changing. New developments may emerge in the industry, or competitors may change their strategies and plans.

Therefore, it is important to monitor and analyze new data and information on a regular basis. This regularity helps companies to stay up-to-date with the changes and transformations in the competitive landscape.

Continuity in competitive analysis allows companies to identify new trends in the market and changes in competitor strategies. It also allows for rapid adaptation and monitoring of emerging challenges and opportunities.

Finally, continuity enables companies to take proactive measures to maintain their competitive edge and achieve success in the market.

 

2. Relying on a Variety of Sources

The quality of competitive analysis is measured by the amount and quality of information available to it. Companies use a variety of sources to complete a competitive analysis that they can rely on to excel in the market in which they operate.

Some of the most important sources include:

• Industrial reports
• Websites
• Interviews
• Market research
• Self-assessments of competitors
• Personal experiences (if available)

 

3. Ethical and Legal

Companies are careful to follow ethical standards when conducting competitive analysis. In other words, companies are committed to the principles of fair competition, and they respect intellectual property rights and applicable legal standards.

It is important to note that any illegal or unethical practices by companies can negatively affect their reputation in front of their customers. This is in addition to being held legally accountable and subject to penalties, and sometimes risking being liquidated or completely terminated.

  

Conclusion

In this article, we highlighted the steps for competitor research, which relies primarily on the information that companies collect about them. Through this research, companies can direct their strategy to match the capabilities of their competitors.

Also, through competitor analysis, companies can make decisions that help to enhance their competitive edge in the markets. Have you participated in competitive analysis before? Share your information about this analysis in the comments.

 

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Article sources  :

• "The Importance of Competitive Analysis" by Harvard Business Review.
• "How to Conduct Competitive Analysis" by HubSpot.
  
• "Competitor Analysis: A Step-by-Step Guide" by Smart Insights.

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