7 Reasons why competitor analysis is important
The Internet provides brands with multiple platforms and channels that connect them to wider segments of the audience, which makes the competition transcend geographical borders, so analyzing and comparing competitors has become an urgent necessity before starting any business or marketing activity.
Analyzing and comparing competitors has numerous benefits beyond aiding in services and product pricing. It can help suggest design modifications and assist in developing marketing strategies by utilizing competitor analysis reports to determine the appropriate tools to be used.
This article will discuss the importance of analyzing and comparing competitors, how investing in these reports can positively impact brand profits, and the most effective tools for conducting this task.
What does it mean to analyze and compare competitors?
Competitor Insights analysis and comparison involves conducting research on brand competitors or companies that provide similar products or services that users may consider as alternatives to the brand’s offerings.
The purpose of conducting such research is to gain a better understanding of the brand’s competition, which can be highly valuable during the planning, design, and marketing stages. The following are the most important points a competitor analysis and comparison report illustrates:
- Identifying brand competitors.
- Describing the products or services they offer, including their features in detail.
- Detailing the prices they charge for these products or services.
- Examining their sales performance.
- Analyzing their marketing strategies, such as offers and promotions.
- Reviewing their content plans.
- Assessing the level and quality of interaction they have with their content.
- Observing and studying their social media presence.
Gaining insights into competitors through analysis and comparison helps reduce the uncertainty and guesswork in decision-making at all stages of production. This information has a significant impact on clarifying the brand’s image and setting goals for the marketing team. Therefore, it’s essential to conduct this research before beginning product design.
The Importance of Competitors Analysis and Comparison
Analyzing and comparing competitors is crucial during the planning stages, whether it involves launching a new product, organizing an event, or running a specific marketing campaign. In the planning stage, information and facts are the cornerstone for making informed decisions. The following points highlight the importance of investing in competitor analysis and comparison reports during the planning stage and beyond:
Understanding the brand’s position in the market
Conducting competitor analysis reports provides a realistic understanding of the brand’s position in the market based on data and facts, rather than relying on hypothetical expectations. These reports can help identify which competitors outperform the brand and how to surpass them through effective marketing strategies.
Furthermore, competitor analysis reports can highlight what distinguishes the brand from its competitors. This point may not always be clear, as the brand’s image in the customer’s mind may differ from the image that the brand is trying to portray. Understanding the brand’s strengths and unique selling points can help enhance its distinction and formulate a compelling marketing message.
Identifying the strengths and weaknesses of competitors
Identifying the strengths and weaknesses of competitors is particularly useful during the planning stage, as it provides valuable information that can be leveraged in designing the product or service. For instance, the weaknesses of competitors’ services can be exploited to promote the product and highlight the market’s need for it as a better alternative.
Moreover, understanding the strengths and weaknesses of competitors can inspire ideas for the product itself or its features. By developing features that address the shortcomings of competitors, brands can attract customers who are dissatisfied with their current options.
Identifying new market opportunities
Analyzing and comparing competitors can help identify opportunities that can be leveraged. For instance, if one competitor targets a small audience of children and adolescents while the other targets older people, the youth group is left open to targeting by a new brand. Identifying and exploiting such gaps can reduce the impact of competition and provide new opportunities for growth.
This approach is not limited to age groups, but can be applied to geographical areas, income levels, and other aspects. Identifying and exploiting such opportunities can save costs that can be used for other more important things.
Pricing of products and services
Price is a critical factor in a customer’s decision to make a purchase, which is why it’s important for companies to establish logical pricing strategies that incentivize customers to buy without harming profits. One effective way to establish these strategies is through competitor analysis reports.
By researching the prices of competing products and services before launching their own, companies can better determine the most appropriate price for their offering. If the price is set too high, customers may seek out more affordable alternatives, while setting the price too low may imply low quality of the product or service.
Developing effective marketing strategies
Studying and comparing your competitors can be beneficial in many ways. By analyzing their successes and failures, you can learn valuable lessons that can help you improve your own marketing strategies. For instance, if your competitors launch a marketing campaign that doesn’t resonate well with their audience, you can avoid making the same mistake by not replicating the same campaign.
Analyzing your competitors’ reports can also help you create a strong marketing message that highlights the unique features of your product compared to those of your competitors. For instance, if you find out that customers are experiencing interference issues with your competitors’ products, you can use this information to your advantage by crafting a message like “Enjoy uninterrupted music with our portable music speaker that keeps noise to a minimum”.
Developing content plans
Analyzing and comparing your competitors can help your content team target keywords that your competitors are dominating, as well as identifying keywords where they have no presence. This knowledge can help you attract traffic from search engine users to your brand’s website and introduce them to your marketing funnel. You can use various tools to extract these keywords.
Similarly, understanding which hashtags your competitors are actively using on social media can help you create more accurate content plans for your social media platforms.
Studying competitors’ presence on social media
The audience that is interested in your competitors’ content is likely to be interested in what your brand has to offer as well. Therefore, conducting a study of your competitors’ social media presence can help you reach this interested audience.
This analysis can also help you identify the platforms on which your competitors are active, and the type of interaction their content generates. This information can help you decide whether or not to enter these platforms and determine the type of content that will attract the audience interested in what your brand offers.
Performing a SWOT analysis to organize information
Collecting information is an important step, but it’s equally important to organize it in a meaningful way that enables you to extract useful insights. One popular method for organizing information in the field of competitor analysis and comparison is the SWOT method, as the word SWOT is an abbreviation for four words:
These four points are divided into two parts, internal points related to the brand’s competitors such as strengths and weaknesses, and external points related to what happens in the environment surrounding competitors and clearly affects them.
This method is useful in answering many questions such as:
- What are your competitors good at?
- Where do your competitors have an edge over your brand?
- What are the weaknesses of your competitor?
- How does your brand stand out over your competitors?
- What can your competitors do best?
- In what areas would you consider this competitor a threat?
- Have your competitors identified any market opportunities?
How information about competitors can be collected
There are many traditional methods for gathering information about your competitors, but they often come with drawbacks such as inaccuracies and difficulty accessing data. Fortunately, there are modern tools available that provide accurate and comprehensive insights about your competitors, saving you time and money by helping you make informed decisions.
At Lucidya, we offer a cutting-edge solution that allows you to collect precise information about your competitors, enabling you to stay one step ahead of them. Our platform allows you to measure customer impressions and reactions across all social media platforms, giving you the ability to compare and contrast the performance of your competitors.
Measuring your share of voice can provide valuable insights into how your brand is performing compared to competitors. One way to do this is by analyzing the engagement of social media followers with your brand and those of other companies to determine your market share of audience engagement. This information can help you develop strategies to maintain or increase your share of voice.
Performance evaluation is a critical step that follows the production process, as it helps identify areas of strengths and weaknesses in a brand. By leveraging this information, businesses can work towards improving their brand’s strengths and mitigating weaknesses, which can have a positive impact on their performance in the market. Lucidya tools are designed to assist with this process, providing businesses with the insights they need to stay competitive.
Making random design decisions without a realistic basis is one of the leading causes of costs and material losses in the production process. Fortunately, many of these decisions can be avoided by conducting analysis and comparison reports of competitors. It’s important not to neglect these reports and invest in tools that provide the marketing team with the necessary information.