Carrying out a comprehensive competitor analysis should be a priority for every company. This is particularly true in the current climate where the level of competition is continuing to increase and companies are under pressure to differentiate themselves.
Of course, competition in business isn’t necessarily a bad thing. As Bill Gates once said: “Whether it’s Google or Apple or free software, we’ve got some fantastic competitors and it keeps us on our toes.” The key is for you to be able to make sense of the landscape you’re operating in, which is why it’s such an important process to go through.
At its most basic level, a competitor analysis is an assessment of the strengths and weaknesses of current and potential competitors. By analyzing rivals’ tactics, you can build a better view of the threats and opportunities in your market and make more strategic decisions.
But how can you complete an effective and insightful competitor analysis? Here are three of our favorite methods.
1. Competitor comparison
This involves capturing key information about your competitors, e.g. the number of users/customers, price, functionality, etc. in a table format. It provides an easily reference-able source of information and offers an overview of how you compare to others in the market.
Simply list your competitors, identify the key factors and features that are relevant to your industry and fill in as much detail as possible.
The 2×2 diagram provides a more visual representation of how other companies are positioning themselves and the main areas in which you are competing. It can also help to uncover opportunities to develop a competitive advantage.
The hardest part is picking the two key variables that you want to compare you and your competitors against. Experiment with different variables until you find the ones that give you the best informative view of the competitive landscape.
3. Strategy Canvas
This is part of the Blue Ocean Strategy framework and is a powerful tool for understanding how you measure up to other companies. It lets you quickly visualize where your competitors are concentrating their efforts and how your offering is different.
Simply identify a few of the most important factors valued by customers, e.g. price, product characteristics, availability, etc. and map your positioning vs. your competitors’ based on a scale of 0-10.
Each of these methods will provide a valuable overview of how your offering compares to your competition. And remember – competitor analysis isn’t a one-time exercise. It’s an ongoing process that will put you in the best position to stand out from the crowd.