How To Conduct A Competitive Analysis

“Taste the relish to be found in competition - in having put forth the best within you”

- Henry Kaiser

There are a multitude of factors that drive a business to its success.  Among them, competitors play a vital role in shaping your journey toward excellence. Far from being mere rivals, competitors challenge you to continuously improve, innovate, and bring out the best version of your brand.

That’s why keeping a watchful eye on your competitors is a cornerstone of any effective business strategy. But competitive analysis is not just about comparing yourself to others nor is it about blindly imitating your competitors.

By looking into your competitors’ strategies, you can gain valuable insights into their strengths and weaknesses. This information in turn can help you make better decisions about your own business and give you a competitive edge.

In this blog, we’ll show you how to conduct a competitive analysis. We’ll cover everything from identifying your competitors to analyzing their online presence. We’ll also list some competitor analysis tools that are available to make the process easier. So let’s get started!

What is Competitive Analysis?

Competitive Analysis, also known as Competitor Analysis, is a strategic process of gathering and analyzing information about your competitors to gain deep insights into their strengths and weaknesses across various areas. 

By delving into this valuable data, you can uncover new opportunities, develop more effective marketing strategies, and make informed decisions that propel your business forward. 

But competitive analysis is not just about keeping an eye on your rivals. It's about arming yourself with knowledge and using it to your advantage. By identifying your competitors' weaknesses, you can turn them into opportunities for growth and overcome any looming threats while also leveraging your competitor’s weaknesses to gain a competitive advantage.

How to do a Competitive Analysis?

Here are the steps you can take to perform competitive analysis.
 

1. Identify your Competitors

While you may already have a general sense of who your competitors are, it's essential to delve deeper and recognize the different types of competitors that exist within your industry.

Your competitors can be classified into - Direct, Indirect, and Replacement.

• Direct Competitors:Direct or primary competitors are the ones that offer similar products or services, target the same customer base, and operate within the same category.
  
  Picture fast-food giants McDonald's and Burger King, both serving burgers to the same hungry customers. They compete head-to-head, vying for a share of the fast-food restaurant market.
   
• Indirect Competitors:Secondary competitors operate within the same category but offer different products or services and cater to a distinct customer base. While their offerings may not be identical, they still compete for the attention and loyalty of customers seeking similar solutions. 
  
  Think of Taco Bell, a secondary competitor to McDonald's. Both fall under the fast-food restaurant category, targeting overlapping audiences, yet each has its unique menu and value proposition.
   
• Replacement Competitors:These are the tertiary competitors that offer different products or services but solve the same problem. They act as a substitute for your product or service.
  
  Consider a grocery store as a tertiary competitor to McDonald's. While they sell different products and operate in separate industries, both address the common problem of hunger. Customers can choose between dining out or purchasing frozen food from the grocery store, offering a viable alternative.

There are numerous ways of identifying your rivals in the market. Some of them are:

a. Google Search -Start by conducting a thorough Google search using relevant keywords for your business. Filter the results to identify brands that are direct competitors in your industry.

Pay attention toGoogle adsthat appear at the top of the search results. These could indicate significant competitors since many big brands don’t spend their time on SEO positioning due to their time-taking nature. Instead, they invest in paid advertising for increased visibility.

b. Monitor Social Media -Social media is a great way to identify your competitors. The popularity of social media makes it almost impossible for a business to remain unplugged. Explore their profiles, posts, and customer interactions to gain insights into their offerings and customer sentiments.

c. Talk to customers - With their firsthand experiences and decision-making journeys, customers can provide unique perspectives that help you stay one step ahead in the market.

Before choosing your business, it's highly likely that your customers explored a multitude of options within your industry. They might have carefully evaluated your competitors and ultimately settled on your offering. But what about the alternatives they considered? Knowing their next best choices can shed light on potentially formidable competitors.

You could gather this information by simply starting a conversation with them or by sharing a survey form. Another way could be monitoring the customer's conversations and feedback.

d. Read Trade Publications - Industry magazines and publications such as Business Today and Forbes India often feature new brands and emerging players. These magazines can give you insights into the new entrants in the market and gain insights into their offerings and competitive pricing.

e. Attend Industry Events - Industry events provide a unique opportunity to meet and learn from your competitors. By attending conferences, trade shows, and networking events, you can directly interact with other businesses in your niche, gather information about their strategies, and gain insights into the industry's current trends.

Once you’ve identified your competitors, the next step would be to gather data about them.

2.Gather Information about your Competitors

This step involves collecting information about your competitors. Take note of what products they’re offering, what is the pricing structure, what methods are they using to promote their products, and what is their target geographical area. 

Try to gather insights into their reputation, their staff performance, and how they communicate with their customers. You could do this by analyzing their reviews and feedback on different reviews and social media platforms. 

Additionally, take a look at their website and their social media. Understand the range, quality, and unique selling propositions of their offerings. Assess their pricing structure to determine how they position themselves in the market and what value they provide to customers.

Analyze their social media platforms, their marketing efforts, and the type of content they share. Observe their engagement levels, content strategy, blog presence, and the information they provide on their website. Analyzing their SEO efforts, such as the keywords they target and their on-page optimization, gives you a glimpse into their digital marketing strategy.  

3. Examine your competition's strengths and weaknesses

Perform a SWOT analysis of your competitors. SWOT analysis is an acronym that stands for Strengths, Weaknesses, Opportunities, and Threats. Start with identifying the strengths of your competitors and then make your way to the next ones.

• Strengths- These are the strong points of your competitors. These are the areas where your competitors are performing well. This could be anything from having a strong social media presence to a well-established distribution network. Understanding their strengths helps you identify areas where they are performing well and where you need to strategize effectively to compete.
   
• Weaknesses -Next, explore the areas where your competitors are not performing well. It could be gaps in their product line, inefficient customer service, outdated technology, poor online presence, limited geographic reach, or ineffective marketing strategies. By identifying their weaknesses, you can focus on providing better solutions to attract more customers and position yourself as a stronger competitor.
   
• Opportunities -These refer to the opportunities that are in front of your competitors. Opportunities might include a new strategy to attract more customers, a new product or service, or perhaps a new pricing strategy.  Determining these opportunities could be a challenging task but with enough research on market and industry trends, you could get an idea of what opportunities could your competitors grab in the future.
   
• Threats - These refer to the threats that your competitors face or might face in the future. These could be external factors that impact their business operations or market conditions. Threats could include rising prices of vendors or raw materials, new entrants with disruptive offerings, changing customer preferences, economic downturns, evolving regulations, or high employee turnover affecting service quality.
  
  It's crucial to be aware of these threats as they may also affect your business if you offer a similar product or service. Understanding the threats your competitors face allows you to develop strategies to mitigate those threats and maintain a competitive edge. 

4. Identify your Competitive Advantage

Now that you have gathered all the information regarding your competitors, you can now work on identifying your own competitive advantage. 

This is the unique factor or set of factors that set your business apart from the competition and gives you an edge in the market. Here are two approaches you can consider:

a. Exploit Competitors' Weaknesses:By analyzing your competitors' weaknesses, you can identify opportunities where you can outperform them. Focus on areas where your competitors are falling short and develop strategies to excel in those areas. For example, if a competitor has poor customer service, you can prioritize exceptional customer service as a key differentiator. If they have limited product offerings, you can expand your range to meet diverse customer needs. By addressing their weaknesses head-on, you can position your business as a superior alternative.

b. Counter Competitors' Strengths:Another approach is to counter your competitors' strengths by making changes to your own strategy. If a competitor has a strong social media presence, you can invest in social media marketing and create engaging content to build your own brand visibility. If they have advanced technology, you can focus on enhancing your own technology or offering a unique user experience. By strategically countering their strengths, you can level the playing field and attract customers who value the specific advantages you offer.

Use Competitor Analysis to build a Positive Reputation

Competitor analysis not only helps you understand your market position but also provides valuable insights to build and maintain a positive reputation. By comparing your performance with that of your competitors, you can identify areas for improvement and enhance your customer experience.

As a result, you will be able to determine where your current reputation stands among your competitors.

Assess the performance of Ratings and Reviews

To begin with, you could first analyze the quality of your ratings and reviews as compared to your competitors. Consider factors such as overall rating, total number of reviews, average response time, and average rating trend.

Analyze your ratings and reviews to see how they compare to your competitors. For example, you and your competitor might both have an overall rating of 4 stars. However, if you analyze the reviews, you might find that your competitor has a mix of 5-star, 4-star, 3-star, and 2-star ratings, while you have mostly 4-star ratings. This means that your competitor is getting more positive reviews overall, even though you have the same average rating.

Analyze the sentiment trends to understand if your competitors have a higher proportion of positive customer experiences.

Compare NPS scores to gain insights

NPS, which stands forNet Promoter Score, is a powerful metric that measures customer loyalty and their likelihood to recommend your business. It provides an indication of how customers' satisfaction levels and how likely they are to recommend your business to others.

NPS provides the number of promoters, detractors, and passives of your business.Promotersare the ones that give you 5-star ratings and are highly likely to recommend your business to others.Detractorsare the customers who give you low ratings and are unlikely to recommend your business to others.Passivesare the customers who give you neutral ratings and may or may not recommend your business to others. 

You can check competitors’ NPS by comparing their 5-star ratings with a number of ratings from 1-3. However, this process could be lengthy as well as challenging, so we recommend you use a tool to do the same.

NPS score is calculated by subtracting the percentage of detractors from the percentage of promoters, resulting in a score that can range from -100 to 100.  A positive score indicates that the majority of customers are likely to recommend the business, while a negative score indicates that improvements are needed to increase customer satisfaction and loyalty.

By comparing your NPS score with competitors, you can gauge your performance in keeping customers happy and identify areas for enhancement.

Top Competitor Analysis Tools

1. Rannkly

Rannkly is anonline reputation management toolthat provides you with detailed insights into your competitors based on their customer reviews. With the advanced AI of Rannkly, you can gather data related to customer sentiments, NPS as well as the top-performing staff at your fingertips. Additionally, Rannkly gives you a grade based on how your reputation compares to your competitors and shows you where you currently stand.

2. BirdEye

Birdeye is another tool that helps in the process of competitor analysis by analyzing customer reviews. The platform provides grades on categories that customers are mentioning in their reviews, helping you understand how your competitors are performing in different areas. 

3. SEMRush

SEMrush provides valuable insights on SEO, content, traffic, and marketing of business and its competitors. It allows you to analyze your business and competitors, helping you improve your content strategy and drive more traffic to your website. 

4. Moz

Moz is another competitor analysis tool that businesses use to compare their business with others on the basis of SEO.  It enables you to compare your business with competitors based on factors such as backlinks and keywords. By utilizing Moz, you can gain insights into your competitors' SEO efforts and identify opportunities to improve your own search engine rankings.

5. Hootsuite

Hootsuite is a social media tool that needs no introduction. Being one of the renowned tools for social media, it also aids businesses in conducting effective competitor analysis. You can track the type of content they post, their marketing contests, and even specific keywords and hashtags they use. By leveraging Hootsuite, you can stay updated on your competitors' social media strategies and identify areas where you can differentiate yourself.

Enhance Online Presence to gain Competitive Edge With Rannkly

Rannkly is an all-in-one reputation management tool that helps businesses in staying ahead of their competition. With its advanced AI technology, businesses can easily keep track of thousands of their reviews on multiple platforms on a single dashboard and make strategies on the basis of customer reviews and sentiments.

In addition to reputation management, Rannkly also offers powerfulsocial media managementcapabilities. Businesses can schedule and publish creative content on multiple social media platforms directly from the Rannkly interface. This streamlined approach saves time and effort, allowing businesses to maintain an active and engaging social media presence.

Moreover, Rannkly provides valuable insights on social media performance, including engagements, all-time followers, and top-performing posts. By understanding which content resonates with their audience, businesses can optimize their social media strategy and drive better results.

Learn how to get started with your online reputation management