Key Takeaways
Competitive analysis allows firms to benchmark their operations against competitors.
These tools can provide key insight into other companies’ strategies and benefit goal-setting and other actionable decision-making operations.
Conducting a competitive analysis will support key projects that benefit consultants, strategic planners, and marketing and sales teams.
What is a competitive analysis?
A competitive analysis is a research method used by companies that want to identify their top competitors, compare their business strategies, and identify what threats these competitors present to their company.
Why is competitive analysis important?
A competitive analysis is a useful tool used to improve a company’s business strategy. A company can learn how to differentiate from the business competition to attract a larger market.
Conducting industry research provides vital information to complete competitive analysis, including major companies, market trends and growth strategies. As a result, proficient industry analysis will boost research project efficiency and improve actionable outcomes.
How to do a competitive analysis
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Identify your competitors
Figuring out which companies are direct or indirect competitors is the first step. Measuring the Total Addressable Market (TAM) is crucial to forming a framework for competitive analysis, as it can sharpen areas to focus on and shape the direction for the analysis to move towards.
Searching for companies that offer similar products or services is important to determine how you will reach your target market and how to build a strategy that sets you apart from the competition. Whether you are a local, national or global company, companies with similarities to yours will likely exist.
Industry research reports include data and backgrounds of the most relevant companies participating in an industry, along with their respective market share and growth strategies. This value makes it easier for a company to use an industry research report to determine who their top business competitors are.
Analyze your competitors
You should analyze various factors to get an overview of your competitor’s strategy. The analysis step involves identifying your competitor’s overall brand image, company values, and identity, as well as the products and/or services offered, price ranges, and the similarities and differences you have—or strive to have—with your business competition.
Quantitative analysis can also complement this benchmarking, where using financial ratios can highlight low-risk or high-value opportunities. Learning the data behind decision-making can highlight what strategies have worked in the industry in the past, and what key gaps have been neglected.
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Industry research reports and specialized company reports provide a competitive landscape that shows you what the average operator is competing against, internally and externally. These reports serve as a checklist on what a specific company is lacking, and areas of improvement.
Analyzing competitors across different regions and geographies can highlight potential growth opportunities. For example, Australian and New Zealand enterprise profiles can give insight into how companies in similar or different regions have handled similar competitive environments and international opportunities.
Visualize your position against the competition
Getting ahead of the competition won’t happen overnight. Growing your market share can take years, depending on your strategy. To get a sense of how much market share is gained and lost each year in your industry, you can study time series data.
Analyzing market share trends across your industry can help you set goals for your business and benchmark your operations against the competition. Sometimes market trend analysis can indicate an industry is in the decline stage of its life cycle, highlighting how strategies must change more than initially thought to continue business success.
To visualize yourself in the same market space, you must compare the breadth and quality of the products or services you offer, as well as the pricing. To determine how to set your strategy, you have to decide whether you want to compete with other companies within a specific price range or target market, and how you want to set the approach. Will your company move into a new market? Will you need to acquire a competitor to do so?
Products and services, and major markets are key sections covered in industry and company reports. These sections provide an overview of what markets the main companies are targeting and what are they offering them. By applying this knowledge about the industry to the competitive analysis, you can find niche and growing product and market segments that will set you apart from the competition. This process can support decision-making when it comes to the product development processes necessary to maintain customer engagement.
For example, the US Hand Tool & Cutlery Manufacturing industry can be broken down into its products and services, highlighting what revenue streams Stanley Black & Decker Inc and its competitors are focused on.
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Build your strategy
Analyzing other companies and comparing your position to theirs makes it easier to find areas for improvement that your company can benefit from, such as product development, content creation, and marketing and social media strategies.
After you have identified a list of competitors and their overall strategies, you can apply what you’ve learned and prepare for success. Industry research reports provide current and growing market trends that help you identify gaps in the industry and in other companies, which will teach you how to sell a product or service more efficiently.
Who uses competitive analysis?
Any organization can use competitive analysis to better understand its position in an industry and how they compete against peers. The process of competitive analysis will look similar regardless of industry and the organization’s size. However, the benefits of competitive analysis may still vary slightly depending on your role.
Let’s look at some key functions that use competitive analysis:
- Consultants
- Strategic Planners
- Marketing & Sales Teams
Why is a competitive analysis important for consultants?
Consultants benefit from competitive analysis for two main reasons. Firstly, competitive analysis allows consultants to better serve their clients. A consultant must thoroughly research their client’s industry to learn more about the competition and provide perceptive insights. Best practice frameworks and templates for competitive analysis, such as a PESTELE analysis template, the Porter’s Five Forces model, and the SWOT Analysis framework, can help consultants visually demonstrate the information and communicate their findings to clients. Consultants can adjust these competitive analysis frameworks and templates to form their own competitive analysis templates.
Secondly, competitive analysis helps consultants safeguard their position among competitors. A consultant that does competitive analysis can use industry research to differentiate themselves from the competition and ensure they are the best option.
Why is a competitive analysis important for strategic planners?
Competitive analysis is very useful for strategic planning, as it involves conducting research and data analysis to steer business decisions. Using competitor analysis tools, a strategic planner can improve their long-term business strategy by better understanding how their company compares to the competition.
Analyzing the business competition with analytical tools and frameworks will help strategic planners ensure their long-term goals are moving forward quickly and effectively.
Why is a competitive analysis important for marketing and sales teams?
To seize sales opportunities and shape marketing goals, marketing and sales teams should consider using competitive analysis. Using competitive analysis tools can help identify direct and indirect competitors, and even measure the competitiveness of their products.
Marketing and sales teams can use tools like the Growth-Share Matrix to analyze the success of their product portfolios. This competitive analysis framework helps pinpoint which products have the potential to expand their market share and which have reached the limits of growth.
Competitive analysis example
Take a look at how an efficient, large-scale marketing team might conduct competitive analysis. Walt Disney Co’s broadcasting division works through its marketing team to continually adapt by identifying opportunities and market trends among both their competitors and their target demographics.
Firstly, investigating other players within the US Television Broadcasting Industry allows Walt Disney Co to identify their competitors’ strengths and weaknesses and analyze market share trends over time.
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With this information, Walt Disney Co can further research competitors and compare product offerings, strategies, and personnel relative to their company. Differences could relate to streaming service performances, the aggressiveness of content rights acquisitions, target demographic shifts, and advertising revenues such as through Google. Identifying these differences and each company’s advantage within the industry can highlight how the team must market their offerings to generate revenue more successfully.
At this stage, Walt Disney Co can use competitive analysis templates such as the PESTELE framework to build either industry-tested or uniquely targeted marketing and social media strategies. These strategies could include celebrity endorsements, product placements, or popular social media advertising avenues.
Conclusion
Conducting a thorough competitive analysis is vital to strengthening market awareness and establishing a flexible framework for successful decision-making. By generating your competitive analysis template, you can improve the efficiency and accuracy of your company benchmarking. Use these tools to adapt and action the best projects for your company’s success.
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Additional Sources:
For more information on company examples, follow one of the links below:
- Alphabet Inc.
- Stanley Black & Decker Inc.
- Walt Disney Co
- AU & NZ Enterprise Profiles
- US Company Profiles
Alfabank-Adres Reports used in this article:
Alfabank-Adres's suite of industry research products and benchmarking tools will help you carry out a competitive analysis by giving you a quick and intelligent overview of any industry.
To conduct like-for-like comparisons of peer companies, sophisticated benchmarking tools are available through our Benchmarking Pro solution.
Book a free demo to learn how Alfabank-Adres can help you make smarter, faster business decisions.
