A competitive analysis is an essential part of your marketing plan as a small business. When done correctly, a competitive analysis helps you to establish why your service or product is a better choice over your competitors. In this article, I will outline for you the following:
- What a competitive analysis is in marketing
- The benefits of a competitive analysis
- How a competitive analysis helps you establish a USP
- When a competitive analysis should be conducted
- BONUS: What a competitive analysis consists of
Note: Some people refer to a competitive analysis as a competitor analysis. The correct term is competitive analysis and the term competitive analysis is what I will use in this article.
So, let’s jump right into it.
What is a competitive analysis in marketing?
A competitive analysis, by definition is a detailed examination of the elements or structure of competitors, direct or indirect, in a business environment.
In marketing, a competitive analysis is a process of identifying your competitors, evaluating their marketing strategies, and determining their strongest (most competitive) points and their weakest (least competitive) points as they relate to your small business.
Based on your marketing strategy, a competitive analysis will likely be required to be completely multiple times. In addition to your products or services needing a competitive analysis, you may need a competitive analysis for your social media marketing strategy, your search engine optimization marketing strategy, your email marketing strategy, and your content marketing strategy.
For each of these strategies, it will be important to evaluate and analyze your competitors’ strategy for each subset individually and then look at their strategy as a whole.
What are the benefits of a competitive analysis?
A competitor analysis is one of the most beneficial tasks to complete when starting a new small business or when pivoting in an existing business. The benefit of a competitive analysis is that the better you understand your competitors, the higher your chance is of gaining a portion of their market share.
When you understand what is working well for your competitor, what is failing for your competitor, and what needs are going unmet by your competitor you are able to leverage that information to highlight how your product or service solves that problem to your audience.
How can a competitive analysis help establish a USP?
A USP is a unique selling proposition. A unique selling proposition is the summary statement that outlines what sets your small business apart from the competition.
Your unique selling proposition should be impactful and resonate with your customers (or clients).
A competitive analysis allows you to highlight the strengths and weaknesses or your competition, but you can also complete a competitive analysis on your own company to determine your own strengths and weaknesses. This is called a SWOT analysis.
Once you have determined your strengths and weaknesses you are able to compare your small business’ solution to your competitors’ solution and determine what you offer differently or better than them. That determination is your unique selling proposition.
When should a competitive analysis be conducted?
As we mentioned earlier, a competitor analysis should be conducted when starting a new small business or when pivoting in an existing business. Pivoting in an existing business may include, offering a new product or service, rebranding, or repositioning your target audience.
While a competitive analysis should be used in all departments of your business, for digital marketing you may need a competitive analysis for your social media marketing strategy, your search engine optimization marketing strategy, your email marketing strategy, and your content marketing strategy.
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BONUS: What does a competitive analysis consist of?
A thorough marketing competitive analysis will include the following:
- Competitors’ products or services
- Competitors’ pricing
- Competitors’ growth rate and pattern over time
- Competitors’ current strategies and results
- Competitors’ past strategies and results
- Competitors’ marketing budget and frequency
- Competitors’ strengths
- Competitors’ weaknesses
- Competitors’ target market
- Competitors’ customer service
- Competitors’ employees (and their network, strengths, and weaknesses)
- Competitors’ operating area (which platforms and geographic location)
- Competitors’ strengths
- Competitors’ network and relations (for example, press/media outlets)
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In conclusion, a competitive analysis is extremely beneficial for small businesses when done correctly. It does take a lot of time and effort, and is a living document, which should be updated often, but it is worth it. A thorough competitive analysis will allow you to always stay ahead of your competition and steadily gain market share to grow your business.
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