If you are a small business owner, you likely feel as if you know the competition. All to often, in an initial consultation, the prospect has said “I know my competition and don’t need a marketing strategy.” This is a flawed assumption.
Of course, there are 2-3 local competitors that quickly come to mind. However, there is much more that goes into a competitive analysis than simply identifying 2-3 local competitor examples. A competitive analysis as part of your marketing strategy can be an invaluable tool for inspiration of what you can learn from your competitors as well as a tool for differentiation to know what sets you apart from the competition.
What is a competitive analysis?
A competitive analysis ultimately assesses the strengths and weaknesses of current and potential competitors. The goal is to learn how the competition works so that you can identify how to outperform them and stay on top of your game.
Through a competitive analysis, you:
- Identify direct and indirect competitors,
- Research their products/services,
- Analyze their business and marketing strategies,
- Identify what is working versus what is not working,
- Outline offensive and defensive strategies, and
- Ultimately gain valuable insights for inspiration and differentiation
Through a competitive analysis, you gain valuable insights to who is your competition and how to position your business to stand apart.
There are many common emotional barriers to taking on a competitive analysis such as:
#1 I know my competition.
All too often, after the competitive analysis presentation, the business owner is surprised by just how many competitors there are. Why is this? Often, we are quick to think of direct competitors – businesses that offer similar products/services that substitute yours. However, what about indirect competitors – a business that provides products/services that solve the same problem? A competitive analysis can help capture the whole spectrum of competition.
#2 I have no competition.
Even if you do not have direct competition, there are definitely indirect competitors who offer a similar product/service. No there may not be an exact replica of your products/services, but customers can and will find another way to solve the given problem. No business has “no competition.”
#3 There is no one else like my business.
We all get stuck in the idea that we are original, unique, and special. In reality, no idea or business is totally unique without competition. There is always someone similar to you, so that is why it is so important to know your unique selling proposition and what makes you different from the competition so that you can convey that to customers along their customer journey.
If you can relate to any of the three thoughts listed above, it is time to get a competitive analysis so that you know how to better compete in the marketplace.
What goes into a competitive analysis?
At Kreative Solutions, we tailor the competitive analysis to the business. The general process is as follows:
#1 Identify the Competition
Kreative Solutions asks the customer for suggested competitors as a baseline for the research then we dive into identifying additional competitors. We like to include a diverse sample of competitors so that we covered competitors near and far as well as direct and indirect competitors.
#2 Research & Analysis
Once the competition is identified, Kreative Solutions goes into research and analysis mode to:
- Detail who the competition is and where they are located
- What products/services are offered
- What makes them unique
- Their marketing and sales channels
- Pricing and/or distribution strategy
- Content strategy
- Promotion strategy
Granted all of the above may not apply to a specific business, the research and analysis will be tailored to what is most relevant and applicable for the given case.
#3 Strategic Group Analysis
Once competitors have been identified, Kreative Solutions will group similar competitors based on a specific dimension. By exploring various dimensions, you can learn key success factors and evaluate your position accordingly.
#4 Identify Points of Inspiration & Differentiation
To help you find inspiration and differentiation, the competition will be ranked in order from best to last. That way you gain valuable insights on who to learn from and monitor for inspiration. On the contrary, you can learn valuable lessons on what not to do or how to be different and set yourself apart from the competition.
What are the key inspirations & differentiation takeaways from a competitive analysis?
Ultimately, the competitive analysis provides a baseline and insights to craft your marketing strategy. The competitive analysis can be especially beneficial for your positioning strategy, content strategy, promotional strategy, and search strategy.
Your positioning strategy refers to how your brand is perceived in the minds of consumers. The competitive analysis helps you identify how to best differentiate yourself from the competition. To define your position strategy, we will do a SWOT analysis, define your unique selling proposition, and ultimately write your positioning statement.
A SWOT Analysis enables you to evaluate internal strengths and weaknesses as well as external opportunities and threats that impact your business. It is a great tool to use when identifying your competitive advantage.
With a better idea of what the competition does well, you can reflect on what you do well and what customers want to identify as your unique selling proposition.
With a better idea of your unique selling proposition, you can define your positioning statement – who you target, your point of difference, the customer benefit, and ultimately the reason to believe in your brand promise.
After evaluating the competitor’s content strategy, you might just identify content marketing and providing valuable resources to your customers as a point of differentiation. Alternatively, you might identify competitors with strong content marketing who you can learn from or maybe even find topic inspiration from.
The marketing channels used for promotion usually directly align with your target audience. By studying the marketing channels used by the competition, you can find valuable insights on where to find your customers and how to best reach them. Alternatively, you might identify gaps in the competition’s promotional strategy that serve as a point of differentiation and opportunity for you to capitalize on.
With insights on how the competition leverages search and advertising, you can identify opportunities to reach your customer. For example, by studying their search strategy, you can gain valuable keyword insights and learn how to better speak to your customers. For example, if you are a retailer, you better use the keyword “kids” over “child” as that is what your customers are searching for! Alternatively, you might identify gaps in the competition’s search strategy that you can leverage to reach customers.
How to Get Started
At Kreative Solutions, the competitive analysis is the foundation of developing a marketing strategy for clients. The marketing strategy process starts with a customer interview and/or questionnaire followed by competitive research and analysis.
The competitive analysis presentation is delivered as a PowerPoint in the marketing strategy consultation. During the marketing strategy consultation, we start by defining your marketing objectives and target audience. Then we review the competitive analysis. With a better understanding of the competitive landscape, we outline your positioning strategy, content strategy, promotional strategy, and search strategy.
All of the insights from the research, analysis, and consultation are summarized into a marketing guide that serves as your roadmap for your marketing strategy. The marketing guide is then delivered to the client for execution or we can move into the implementation phase where Kreative Solutions implements the marketing strategy.