In today’s fast-paced and fiercely competitive business space, standing on top of the industry is crucial for success. This is the time when a company needs to conduct a competitive market analysis. This is the key to shape your business strategies and to spot opportunities to innovate.
By conducting a thorough competitive marketing analysis, businesses can make informed decisions, identify their unique value proposition, and develop strategies that give them a competitive advantage.
In this article, we will delve into the importance, objectives, components, and benefits of competitive market analysis, providing a comprehensive guide for businesses looking to thrive in the ever-evolving marketplace.
What is competitive market analysis?
It is a process of evaluating and understanding the competitive landscape within the niche industry or market. This helps you assess the strengths and weaknesses of competitors, analyze their strategies, and identify opportunities and threats that can impact a business’s position in the market.
The purpose of a competitive market analysis is to gather information to make informed business decisions and develop effective strategies. It provides insights into market trends, customer preferences, competitor positioning, pricing strategies, marketing approaches, and potential areas for differentiation.
What is the importance of competitive market analysis?
Competitive market analysis plays a crucial role in various aspects of business. Here are some key reasons why it is important:
Understanding the competition
Competitive market analysis helps businesses gain insights into their competitors’ strengths, weaknesses, strategies, and market positioning. This understanding allows them to identify areas where they can differentiate themselves and capitalize on opportunities.
Identifying opportunities and threats
By analyzing the competition, businesses can identify emerging market trends, customer demands, and gaps in the market. This helps them spot opportunities for growth and innovation. Additionally, it helps in identifying potential threats from new entrants, substitute products, or changing customer preferences.
Competitive market analysis provides valuable information for making informed strategic decisions. It helps businesses evaluate their strengths and weaknesses in comparison to competitors, identify competitive advantages, and determine areas for improvement. This analysis aids in setting realistic goals, formulating effective marketing and pricing strategies, and allocating resources efficiently.
Analyzing the competition allows businesses to gain insights into customer preferences, expectations, and behaviors. By studying how competitors target and serve their customers, you can better understand the target market. This understanding helps in developing products or services that meet customer needs, improving customer experience, and enhancing customer loyalty.
Enhancing competitive advantage
Competitive market analysis enables businesses to benchmark themselves against their competitors. By identifying and capitalizing on their unique strengths, businesses can create a sustainable competitive advantage. This could be achieved through product differentiation, cost leadership, superior customer service, or other strategic initiatives.
Check out Voxco Online features to see how it can help you unlock the power of data with its robust functionalities.
100+ question types Advanced logic White-label Auto-translations in 100+ languages
2 Examples of competitive market analysis
Here are two examples of competitive market analysis in the fast-food industry and the automotive industry:
Fast food industry
Competitive market analysis in the fast food industry involves analyzing various factors such as pricing strategies, menu offerings, customer preferences, and market trends.
For example, a fast food chain may conduct a competitive analysis to understand the strategies and offerings of its main competitors, such as McDonald’s, Burger King, and Wendy’s. This analysis could include evaluating their pricing structures, promotional activities, new product launches, customer satisfaction levels, and market share.
By studying these factors, the fast food chain can identify areas it can differentiate itself, improve its offerings, and attract more customers.
In the automotive industry, competitive market analysis is crucial for understanding the strategies, products, and market positioning of different automobile manufacturers.
For example, a car manufacturer may conduct a business competitive analysis to evaluate its competitors’ product lines, pricing models, technological advancements, marketing campaigns, and customer feedback.
By studying these aspects, the car manufacturer can identify potential opportunities and risks in the target market. This enables the company to make informed decisions about product development and pricing, and develop effective marketing strategies to gain a competitive edge.
Additionally, the analysis can help identify emerging trends, such as the shift towards electric vehicles or autonomous driving, and allow the car manufacturer to align its strategies accordingly.
These examples demonstrate how competitive market analysis helps businesses gain insights into their competitors’ strategies, product offerings, customer preferences, and market dynamics. By understanding these factors, companies can make informed decisions, identify growth opportunities, and develop effective strategies to stay competitive in their respective industries.
How often should you conduct competitive market analysis?
The frequency of conducting a competitive market analysis can vary depending on several aspects, like the industry, market dynamics, and the level of competition.
However, as a general guideline, it is recommended to conduct competitive market analysis regularly to stay informed about the changing market landscape and competitive environment. Here are a few considerations:
Industries that experience rapid changes, technological advancements, or shifting customer preferences may require more frequent competitive analysis. This could include industries such as technology, fashion, or consumer electronics.
If the competition within your industry is intense and competitors frequently introduce new products or strategies, more frequent competitive analysis may be necessary. This allows you to stay updated on their activities and respond effectively.
Keep an eye on significant market changes, such as regulatory shifts, economic trends, or emerging technologies, that may impact the competitive landscape. Conduct competitive analysis when such changes occur to understand the potential implications for your business.
Product development cycles
If your business operates in an industry with long product development cycles, it may be beneficial to conduct competitive analysis at key milestones of the product life cycle. This ensures you have up-to-date information when making important decisions about product enhancements or launches.
As a general rule, it is advisable to conduct competitive market analysis at least once a year, if not more frequently. However, it’s important to assess the specific needs of your industry and business and adjust the frequency accordingly. Regular monitoring of the competitive landscape ensures that you stay informed, make informed decisions, and remain adaptable in a competitive market.
Market Research Toolkit
Get started with Voxco’s Market Research Toolkit. Market Research trends guide + Online Surveys guide + Agile MArket Research Guide + 5 Market Research Templates
9 Steps to do competitive market analysis
Here are the steps to conduct a competitive market analysis:
- Identify competitors
- Gather information
- Analysze product and services
- Study pricing strategies
- Assess marketing and branding
- Evaluate distribution channels
- Monitor customer feedback
- Conduct SWOT analysis
- Plan strategically
Let’s dive into these nine steps.
Step1: Identify competitors
Begin by identifying your direct and indirect competitors. Your direct competitors are offering similar products or services to the same target market. The indirect competitors cater to a different market but still provide alternatives that could potentially attract your customers.
Step2: Gather information
Collect relevant information about each competitor. This can include their product offerings, pricing, marketing strategies, target market, distribution channels, customer reviews, and any other data that can provide insights into their operations.
Step3: Analyze product and services
Evaluate the strengths and weaknesses of your competitor’s products or services compared to your own. Look for unique features, quality, customer benefits, and any gaps or areas where your offerings excel.
Step4: Study pricing strategies
Analyze your competitors’ pricing strategies. Consider factors such as price points, discounts, promotions, bundling, or subscription models. Identify how their pricing compares to your own and assess whether adjustments may be necessary.
Step5: Assess marketing and branding
Examine your competitors’ marketing and branding efforts. Look at their messaging, advertising campaigns, social media presence, website design, and overall brand positioning. Assess their strengths and weaknesses to identify areas where you can differentiate your brand.
Step6: Evaluate distribution channels
Study the distribution channels utilized by your competitors. Determine whether they rely on direct sales, third-party retailers, e-commerce platforms, or a combination. Assess the effectiveness of these channels and identify any potential opportunities or gaps.
Step7: Monitor customer feedback
Pay attention to customer reviews, feedback, and complaints about your competitors’ products or services. Look for common pain points or areas where customers express dissatisfaction. This insight can help you understand customer needs and identify opportunities to improve your offerings.
Step8: Conduct SWOT analysis
Perform a SWOT analysis for each competitor. This analysis will help you identify their competitive advantages, areas where they may be vulnerable, potential market opportunities, and external threats that may affect their business.
Step9: Plan strategically
- Based on the insights generated from the previous steps, develop a strategic plan to position your business effectively in the market. Identify areas where you can differentiate yourself, capitalize on competitor weaknesses, and leverage your strengths. Set specific goals and outline action steps to achieve them.
- Remember that conducting a competitive market analysis is an ongoing process. Continuously monitor the market, industry trends, and your competitors to stay ahead and adapt your strategies as needed.
Looking for the World's best Survey Platform?
Voxco is the leading online survey tool that annually powers more than 100 Mn+ surveys.
In conclusion, conducting a competitive market analysis is crucial to gain a competitive edge and thrive in their industry. By systematically evaluating your competitors and the market landscape, you can gain valuable insights that inform your strategic decision-making.
How to create a product survey?
Creating a product feedback survey is quite simple but involves a few steps, which are
Step 1: Define the purpose of the survey
Determine what you want to learn from the survey. For example, you might want to understand how users are using your product, what features they like or dislike, or how likely they are to recommend it to others.
Step 2: Determine the target audience
Identify the group of people who are the best candidates to provide feedback on your product. This might include current customers, potential customers, or industry experts.
Step 3: Develop the survey questions
Create a list of questions that will help you achieve your survey goals. As mentioned earlier, make sure your questions are clear, concise, and specific. You can use a combination of open-ended, closed-ended, and Likert scale questions.
Step 4: Decide on the survey format
You can create your survey using a variety of online tools such as SurveyMonkey, Google Forms, or Typeform. Make sure the survey is easy to complete and navigate.
Step 5: Test the survey
Test the survey on a small group of people to ensure that the questions are clear and that the survey format is easy to navigate. This will help you identify any issues that need to be fixed before distributing the survey to a larger audience.
Step 6: Distribute the survey
Share the survey link via email, social media, or your website. Encourage respondents to complete the survey by offering a small incentive, such as a discount on their next purchase or the chance to win a prize.
Step 7: Analyze the results
Once you’ve collected enough responses, analyze the data to identify patterns and trends in the feedback. Use the insights to make data-driven decisions about product development and improvements.
1. What are the two reasons for competitive analysis?
The goal of competition analysis is to compare your competitors’ strengths and shortcomings with your own, as well as to identify a market gap. It is vital since it will assist you in determining how to improve your business strategy.
2. What are the four components of competitive analysis?
A solid competition analysis framework consists of four main components:
- The Five Forces of Porter.
- The SWOT analysis.
- Models of business.
- Mapping the customer journey.
3. What is the main objective of competitive analysis?
This strategy’s purpose is to assist firms in developing a competitive advantage and defining compelling, unique selling propositions. As a result, market inefficiency cannot occur.
4. What is competitive analysis and its steps?
A competitive analysis entails investigating leading competitors to gather insights about their products, sales, and marketing strategies. This study helps you implement stronger company strategies, defend against competitors, and gain market share.
5. What are the six steps of preparing a competitive analysis?
Six steps to conducting a competitive analysis
- Determine your competition. Identifying your competitors is the first stage in doing a business competitive analysis.
- Examine your competitors’ web presence.
- Examine online reviews.
- Talk to the clients of your competition.
- Determine their strengths and shortcomings.
- Make use of research tools to gather feedback on customer’s perceptions of your competitors.