Competitor Analysis: A Full Guide for Business Owners

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Apple, the American company that makes everyone’s dream phone (iPhones) is one of the leading technology companies in the world. But did you know that in 1996, Apple nearly went bankrupt? 

Back then, their business was crumbling and they needed to act fast or shut down. Fortunately, Steve Jobs returned as Apple’s CEO in 1997 and conducted a competitor analysis for the company. He took a broad view of the market and analysed the activities of Apple’s competitors in the tech industry. 

Thereafter, he created a market-winning strategy that focused on Apple’s strengths. Ever since then, Apple has dominated the tech industry. All thanks to Steve, the genius.

Just the same way it did magic for Apple, competitor analysis can help any business looking to move to the next level. No matter your type of business, you need this analysis concept to thrive in your industry.

In this guide, I’ll be revealing to you all you need to know about competitor analysis, and how to apply it for success in your business. You’ll also learn the easy template called SWOT analysis that you can use right away.

What is Competitor Analysis?

Competitor analysis, also known as competitive analysis, simply means looking at your market, figuring out businesses that offer the same products/services as yours and studying why they are succeeding or failing. 

This analysis is a crucial part of market research as it gives you an idea of your position and what you’re up against. Asking other vendors how much they sell their goods, or how much other people charge for the same service you offer, is a form of competitive analysis.

Why is Competitor Analysis Important?

You need to conduct competitor analysis to oversee the growth opportunities and avoid silly mistakes that can shut down your business. Diving into a business blindly just because you heard how much others make from it is the worst thing you can ever do. 

Many people have opened clothing stores, and restaurants, or started an online business only to close down after a few months due to frustration, no profit or even being in debt. These people undoubtedly failed to spend a few hours finding out what it takes to succeed in the business they ventured into.

Thus, if you want your business to stand the test of time, competitor analysis is key.

Benefits of Competitor Analysis

Below are 7 benefits of conducting a competitive analysis: 

1. Helps to avoid fatal mistakes

Experience, they say, is the best teacher. However, it is common sense that you don’t have to go bankrupt or shut down your business before you learn. Competitor analysis helps you identify the mistakes that make other businesses fail so you can avoid them.

2. Discover how to succeed in your business

“Follow who know road” is a common slang in Nigeria. Now, let me ask you. In your business “shey you dey follow who know road?”

With competitor analysis, you can identify the leaders in your line of business and the strategies they are using to push forward. When you know what they do, implementing it in your business will become easier.

3. Implement stronger business strategies

Who says you can’t be the best in your industry? When you understand the market well and know what the best and the worst are doing, you can create stronger strategies that will set your business apart while others are sleeping.

Look at what Steve Jobs did at Apple. When the tech industry became more focused on technology than the customers, features rather than benefits to the consumers, Steve saw an opportunity and grabbed it.

He made Apple focus on simplicity and creating an enjoyable experience. Now they’re dominating the world.

4. Get more customers

More customers means more sales and more money for your business. You can then expand and invest in other areas. With competitive analysis, you can easily spot opportunities your competitors overlook to gain more customers.

MTN are experts in this aspect. From sponsoring popular shows like Project Fame and Who Wants to be a Millionaire, to creating specific tariff plans that appeal to different target groups (MTN Family and Friends for people that prefer calls, MTN Pulse for us lovers of data and internet browsing). They have succeeded in pulling customers from all walks of life.

5. Remain ahead of your competitors

Some business owners in Nigeria at least try to analyze their competitors before they start. But after that, they never do it again.

The top businesses in any industry run a competitor analysis at least twice each year. When you know the strategies your competitors are using and what is working or failing, you can stay on top of your industry.

6. Find your unique selling proposition (USP)

You don’t just do competitor analysis because everyone else is doing it. You do it to find key areas of opportunity. To figure out areas with an unmet need that your business can solve.

A typical example is online shopping sites and home delivery. Their USP is convenience. Their products are not necessarily better than the ones in the market, but they take away your stress. All you do is scroll a little, make a few clicks and get your item delivered.

7. Deliver better products/services

When you know the strengths and weaknesses of your competitor’s products and services, you can combine the strengths of different products and eliminate the weaknesses, thereby creating a market winner.

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How to Conduct Competitor Analysis

Analyzing competitors is not only for Apple and MTN. It is important for every business owner or intending businessman.

Whether you sell perfumes, an online course, wigs, blenders, etc, competitor analysis will save you much stress and wasted effort.

Below are the steps involved in conducting a competitive analysis:

1. Get a list of your competitors

You don’t need to make a list of 100 competitors to execute a strong competitive analysis. 10 to 15 competitors on a list should be okay.

If you don’t know who your competitors are, ask yourself these. “If I am not available, who will my customers go to? If my service is poor, who will my customers run to for a better experience?”

Note that you have direct and indirect competitors. Direct competitors offer the same product/service as yours. Indirect competitors offer a different product/service, but it still meets the need you’re trying to solve.

Suppose you’re a digital marketer who focuses on Facebook ads. Your direct competitors are other Facebook ads experts. Your indirect competitors are those into other forms of marketing like search engine marketing, email marketing, etc. You’re all solving the need of generating more leads for your clients but through different methods.

Don’t focus only on competitors at your level. Also, look at those ahead of you and those way below you. Another good way to find your competitors is to ask customers or simply search for ideas on Google using the advanced search method.

2. Find important information about your competitors

A good place to start is the company or business’ website if they have one. You can ask around if it’s a physical business without any online presence. You can also ask their customers.

You might not get all the information you need. However, you can make good estimates that will inform your competitive analysis from the ones you’re able to get.

Below is a list of important information you should endeavour to gather about your competitors:

• When did they start the business?
• Who are their founders?
• Progress made so far. Any growth?
• Current size (whether it’s a single person or many employees)
• What is their vision and mission statement?
• How many customers do they serve?
• What is their revenue or profit margin?

3. What products/services do they offer?

Write down the products and services each of your competitors on the list are offering.

4. Who is their target audience?

Remember I asked you to find out your competitors’ vision and mission statements. It can point you towards their target audience.

You can also check their social media pages to see:

• Who they are following and who follows them. 
• The kind of conversations they are having.
• The tone and language they use. Are they professional and serious or friendly and jovial?

If it’s a physical business without any online presence, you might have to do some spy work. Observe their environment and their customers closely.

5. How is their product/service performing?

You are not just doing competitive analysis for the sake of it. You want to find out what is working and failing in the market so you can come up with a winning business growth strategy.

Find the answers to the following questions:

• Which product is bringing in the most sales?
• What is the pricing like?
• What are customers saying about their services? (Pro tip:- Look at original reviews or ask customers, instead of testimonials on their website or social media pages)
• What makes one company’s product sell more than another?
• Why do you think the product is a success or a failure?

6. What is their marketing strategy?

At this stage of your competitor analysis, all you’ve got to do is to find out answers to the questions below:

• Do they have a good content marketing system?
• Paid advertising?
• Affiliate programs?
• Do they offer discounts for loyal customers?
• Do they have a high-performing newsletter?
• Giveaways? Free webinars?

7. Carry out a SWOT analysis

SWOT stands for Strengths, Weaknesses, Opportunities and Threats. After gathering facts from the previous steps in your competitive analysis, simply write down your strengths and weaknesses, any opportunities you’ve noticed in the market and anything that threatens to halt your business.

Your SWOT analysis should look like this:

Strengths

• Good customer service
• Quality products
• 24/7 availability
• Favourable location
• Affordability
• Strong network
• Influence

Weaknesses

• Lack of capital
• Poor location
• Lack of manpower

Opportunities

• Home delivery
• Free trial

Threats

• Security
• Economic crisis
• Legal issues
• Natural disaster

The list is not exhaustive. Your own SWOT will depend on the business you want to do and what you have to offer. Likewise, your competitors’ SWOT analysis will depend on the information you’ve gathered during your research.

8. Summarize and make final decisions

With your SWOT analysis completed, you can already get a sense of direction and where you stand in the market. You can see things that will drive your business forward or shut it down soon. With this, you can plan how to win in the market.

Frequently Asked Questions About Competitor Analysis 

1. When should I conduct a competitor analysis?

You should do a competitive analysis before launching your business. Then, continue it at least twice each year, preferably after every 6 months.

2. How do I find a competitor’s website?

One way is to use google advanced search. Another way is to research the competitor, read more about their company and gather as much information as possible online to locate their website. 

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3. What are the types of competitor analysis?

There are no different types of competitor analysis, but rather different methods of conducting a competitive analysis. The SWOT analysis explained above is the easiest and the most popular method.

Other methods include:

• Buyer’s journey analysis
• Market share percentage
• Feature matrix

Conclusion

Competitor analysis is the key to business success. It doesn’t matter the kind of business you’re into. Competitor analysis is an important part of your market research and could be the difference between launching a highly successful business or wasting money, time and energy.

Do you have further questions or need some clarifications? Let me know in the comment section. Thank you! 

Article Edited by Priscilla Ajayi.