Competitive analysis is necessary at the very beginning of running your business. A diligent approach helps you avoid costly mistakes and increases your chances of being ahead of your market rivals. Find out how to analyze your competitor and decipher the sources of their success.
What is competitive analysis in internet marketing?
Competitor analysis for internet marketing purposes is the activity of collecting and analyzing information about your competitors via the Internet. You check the marketing strategies of other companies in your industry and their actions.
The scope of the study depends on your needs. Professional, high-value companies conduct extensive competition research and touch many business sectors. They analyze business models, target groups, products, marketing activities, and a list of strengths and weaknesses. Smaller companies choose only crucial areas from their point of view. They cut their coat according to their cloth.
You probably know the proverb “Keep your friends close, and your enemies even closer”. It is the essence of competitive analysis, a significant part of a successful marketing strategy. Here’s why:
- Without analysis, you will not conquer the market and build a successful business, especially on the Internet, where the competition is immense.
- It will allow you to identify areas where your business has gaps and needs improvement.
- It allows you to understand your customers and competitors and make informed and accurate decisions.
- You will identify potential threats such as the step-in of a new big player.
- It helps to identify trends in the market (e.g. increased demand for specific products).
- You will get a benchmark of where you are currently and estimate the time it takes to climb to the top.
- You will learn the tools and channels that helped your rivals reach customers.
- Determine how you can compete with other companies in your industry.
- You will estimate the costs related to the marketing activities that you have to incur.
What is the purpose of analyzing competitors?
- Learn as much as possible about your current and potential competitors. Get to know their plans, check the activities, conduct a SWOT analysis and compare the current position on the market.
- Get to know the answer to the questions:
- Why is the competition’s page displayed higher on Google?
- How do they sell more than you? Do they have a better offer? Better marketing? Better opinions? Analyze the number and quality of products and their price.
- What do they do to make their brand more recognizable? What marketing channels do they use to reach customers? How do they keep customers for longer?
- Conclude and write your thoughts down. You will use them in building your marketing strategy to invent your competitive advantage.
Who and when should perform a competitive analysis?
Each company should systematically analyze the market and competition, regardless of whether the company is just starting its adventure or already operating.
If you need sophisticated analysis you can outsource it to an external company. But even if you want to outsource it, you should define the scope and goals. If you decide to perform the research without external help, appoint a responsible person. The more detailed the analysis, the more tools, and data will be required.
If you outsource, divide the scope of the competition analysis between your team and the expert. After all, you have more knowledge about the industry and the market than external companies. So you would explore areas such as:
- target group,
- the scope of the offer and the technology used,
- the price of non-standard products and services,
- SWOT analysis,
- market trends,
- financial results and employment structure,
- sales tactics and business model,
- the unique value proposition.
On the other hand, the external company may take care of:
- sales and traffic levels,
- marketing channels, methods of communication, and sales channels,
- SEO: backlinks, keywords, strategies used,
- blog, social channels, and content marketing,
- global trends,
- features of products and services.
Now you need to know the most common mistakes to avoid during the analysis.
The most common mistakes made when analyzing competition on the Internet
- The inaccurately conducted analysis leads to wrong conclusions and choosing erroneous marketing strategy. Remember that the quality of the collected data determines the quality of the decisions made: trash in – trash out
- Narrowing the analysis to a few companies – omitting smaller rivals false the picture.
- Narrowing down the scope of analysis may cause the omission of relevant areas of competitors’ activity.
- Lack of specific goals. You can’t analyze if you don’t know what.
- Invalid use of tools and data may lead to collecting incomplete or inaccurate data on competitors and their marketing activities.
How to use the collected information?
By performing a competition analysis, you will see what you are better at and what advantages your competitors have. An essential part of competition analysis is recording your notes, thoughts, and conclusions. Based on the data and conclusions from the analysis, plan your marketing activities. Don’t be afraid to test other channels to reach potential customers.
As you can see, performing an analysis of the companies you compete with on the Internet is a complex process, often necessary to build a solid business, so you shouldn’t be indifferent to it. I hope that the process and methods of competitor analysis that I have presented step by step in this guide are clear to you and that you will use them in your company.
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