Posted: Wed 31st Aug 2022
Competition. It can be easy to underestimate it but knowing where to begin in analysing it can feel overwhelming.
As an experienced market researcher, getting stuck into a competitor analysis has helped me understand the wider market, its trends and indications of customer needs for my clients' businesses and my own business.
What is a competitor analysis?
Before we get stuck into the tips for doing a competitor analysis, let's look at what we mean by competitor analysis.
Intercom has a great way of defining the competition:
Direct: They do the same job in the same way, e.g. Mcdonald's and Burger King
Secondary: They do the same job in a different way, e.g. Zoom vs. Business Class travel
Indirect: They do a different job with a conflicting outcome, e.g. Mcdonald's and Weight Watchers
When we think about a 'job' it's part of the idea of the Jobs-to-be-done framework which is outside the scope of this article.
Put simply, it's something someone needs to get done and typically a product or service gets the job done.
There is no such thing as 'no competition' - there is pretty much always a way to get a job done in various ways, even if it is different from your product or service.
Five tips for doing a competitor analysis
Let's get into the tips for doing a competitor analysis.
1. Ensure you have a very clear value proposition to compare to your competitors
Before starting your competition analysis, ensure you have a value proposition. A value proposition is a statement that summarises why people would choose your products and services.
You can use the Strategyzer tool to help you figure a statement out if you need further clarification.
2. Set your parameters at the start so you're not overwhelmed
Having a really clear idea of what your competitor analysis will focus on will help to refine your competitor analysis.
So, it could be that you're looking at the job that your product or service solves in a particular geographical location. As an example, imagine you want to open a new coffee shop in the town centre of Northampton. Before you put too much time into making your dream a reality, you want to test out your competition.
In this scenario, the job the coffee shop is getting done is primarily providing people with coffee and possibly cake, so that is the main focus, but you may want to consider tea shops, restaurants and delivery services as they are providing people with coffee but in a different way.
The parameters will be the travelling distance people will be willing to take to get coffee and look in that area.
3. Reflect on your competition
A 'quick' competitor analysis will focus on the strengths, weaknesses and lessons learned from each competitor.
As the potential coffee shop owner, you may wish to pay the competition a visit: What did you like? What did you think was missing? How are they selling coffee to customers? What didn't you like? What did you learn about the experience? Are there any gaps in the market you've noticed?
Similarly, you can do this online by visiting the websites of your competitors. Keep a log by creating a small database on something like Notion, a word document or a spreadsheet - it depends on how in-depth you want to go.
4. Look at the feedback your competitors are getting from customers
You can learn a lot about the customer experience of your competitors by looking at what people are saying online about them, through reviews or forums.
This will show the weaknesses of your competitors and may give you some ideas as to how to beat the competition.
5. Keep the competition analysis going
Analysing the competition can be seen to be a 'one-off' task but it's something that needs to be revisited periodically as the competitors evolve and change and the market conditions change.
Some competitors may come out of the market, some may change direction in their marketing and sales tactics and others may grow and get stronger.