The desire to understand and improve ourselves is remarkably strong.
People will go to great lengths to authentically examine and improve one or more aspects of their life.
According to recent market research, people in the U.S. spend about $13.2 billion each year on self-improvement. That figure is up from $9.9 billion in 2016 and is expected to continue to increase at a rate of 5.6% annually for the foreseeable future!
For entrepreneurs, self-improvement often involves some sort of mental training, stress management, or establishing relevant goals.
Professionals are frequently interested in improving time management skills and boosting productivity without jeopardizing mental health.
Businesses seek to grow revenue, optimize efficiencies, and lower expenses in order to improve their bottom line.
When it comes to business, it’s good to analyze yourself, in order to know what you’re made of.
…but it’s just as important to know what you’re up against.
“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.” – Sun Tzu,The Art of War
It’s incredibly important to know your competition. It can be the difference between business success and failure.
How can you get to know your competition?
You need to conduct comprehensive research and analysis on your top competitors individually and the competitive landscape as a whole. Conducting competitive analysis can be difficult, but it will provide you with invaluable information about where to focus your efforts and how to better position yourself against the competition.
Strong businesses know that doing research on their competitors isn’t just an exercise for startups or established companies during their growth cycle, but should be conducted by all companies at regular intervals to grow and maintain market share.
This article provides helpful tips for conducting a deep-dive competitive analysis for any company or business venture, so they can pinpoint what makes them unique and capitalize on those qualities to succeed in today’s global economy.
The main purpose of competitive analysis
Many are familiar with the terms competitive intelligence, competitor research or competition analysis and often use them interchangeably. Semantics aside, the main difference is the reason or purpose of analyzing your competition. The methodology for your analysis will differ slightly depending on your purpose.
The 2 main reasons for conducting a competitive analysis are:
- A key component of a comprehensive business plan
- An essential part of a company’s marketing plan
SEO research and various gap analyses are additional objectives of competitive analysis but they are really for the purpose of either the overall company business plan or strategic marketing plan.
The main focus for this article will be the value of competitive intelligence in marketing but you will quickly see how the information described here also has wide ranging benefits to overall business planning as well.
Good competitive analysis has many benefits.
For the marketer, research and analysis are crucial tools to help understand their competitive environment. It can help them identify weaknesses in their product or service offering that competitors may be exploiting, as well as strengths they should leverage.
It also helps marketers identify opportunities for innovation by looking at what other companies are doing that might not have been considered before.
A competitive analysis will typically include information about both direct and indirect competitors so an organization can better understand how they stack up against other players in the market who could provide similar products or services to theirs.
While conducting your competitive analysis it’s important to think carefully about all aspects of your business model including the 5 P’s – pricing, product, place, promotion, and people.
This analysis should also assess what advantages a competitor has that you don’t and what advantages you have that they don’t.
Beyond marketing benefits, a properly conducted competition analysis should help organizations find areas for improvement in their business model as well as “low hanging fruit” – opportunities for expansion and growth where there are currently low levels of competition from other companies.
We will focus more squarely on competitive intelligence analysis for business planning in a future article.
The undeniable importance of competitive intelligence
In 1943, the Allies were losing the war against Nazi Germany. They had been unable to stop Hitler from conquering much of Europe and it seemed like he would be unstoppable.
In a last ditch effort, they launched a top secret operation called Operation Overlord that was designed to turn the tide in their favor.
The plan was simple: land allied troops on the beaches of Normandy and take back France, securing their foothold in Europe before moving towards Berlin.
But there was one problem; they needed intelligence about where exactly to land in order to avoid German defenses or risk casualties that could end up being worse than if they did nothing at all.
They got the critical intelligence they needed by tapping into an extensive network of informants.
It was hard work. Dangerous work. But that successful intelligence gathering campaign was the turning point for them and led to winning the war.
Business organizations spend hundreds of thousands of dollars on market research each year – buying reports, funding studies, hiring consultants – because they know it’s worth it.
The reason why is simple: information is power. Information about what your competitors are doing helps you gain an advantage over them.
Your competitive analysis is your secret weapon. It’s the key to understanding and meeting your customers’ needs better than any of your competitors can.
Conducting competitive research will help you:
- Understand how competitive forces are shaping the marketplace, including what they’re doing right now and what they plan to do in the future.
- Know which competitive moves to make now for maximum effectiveness.
- Identify weaknesses in their strategy that could be exploited with a countermove or competitive attack.
- Know when it’s time to shift from defense to offense by anticipating changes in market dynamics before it becomes too late!
- Gain insights into their marketing strategies so you can avoid surprises and stay ahead of them at all times.
Competitive analysis in marketing has changed
In today’s very connected digital world, it’s easier than ever before to conduct competitive analysis on both direct and indirect competitors without having to go to the library, purchase reports or subscribe to expensive databases.
Having publicly accessible competitive intelligence at your fingertips is a true game changer.
In recent years, competitive analysis in marketing has changed dramatically. With the growth of the internet and social media, it has become increasingly easier for businesses to know what their competitors are up to and what messaging is resonating with customers.
This includes focusing not only on their website and social media presence but also their advertising campaigns and product offerings.
Another important change in competitive analysis is the increasing availability of customer data. Businesses now have access to more customer data than ever before, and this data can be used to track competitor activity and trends.
By tracking online reviews and reputation reports, businesses can recognize what customers like and dislike about the competition and adapt offerings to provide what they are really looking for.
Thorough competitor research includes these actions
The objective is not to gather ALL the possible data available, create a 256-page document and then leave it on a shelf somewhere gathering dust or taking up precious gigabytes in your cloud storage.
The idea is to maintain an evergreen resource to serve as a touchstone for ongoing discussion and measurement of progress.
The above list represents a snapshot of some of the essential components of a powerful competitive analysis but where do we find the information for each component?
What methodology, tools, and tactics do we use?
I am writing a step-by-step guide that includes all these items and a few additional nuggets of usefulness, with examples. Let me know if you would like a copy when it’s published.
Our unique competitor research methodology – The “Digging for Diamonds” Process
If someone took you out to a field and told you that there were diamonds buried about 3 feet down that were worth thousands of dollars and that you could keep them if you could find them, you would probably start doing some digging.
What if they told you that there were tens of thousands worth buried about 10 feet down? You would probably keep digging.
But what if they told you that there were millions of dollars in diamonds about 100 feet down? You would likely get a team together with some heavy equipment and do some SERIOUS digging!
The effort that we are willing to expend in the digging process typically corresponds to the potential value of the reward at stake.
It’s not uncommon for an even mildly successful business venture to have the potential for a multi-million dollar payoff over a 3 to 7 year period. It stands to reason then that the level of digging should match that type of reward.
It should be acknowledged though that some people like digging more than others. Some are busy working on other areas of the business that they value even more, like R&D and product development.
…but some people absolutely LOVE digging for hidden treasures.
I fit in the latter category. There’s a great sense of satisfaction that comes from unearthing priceless competitive intelligence.
I have developed that love for research and analysis into a personal strength by leveraging some valuable corporate-based training and rich experiences.
This inevitably lead to the launch of a useful service for companies that recognize the need for ongoing competitive analysis but have their hands full in other areas of the business.
For those of you that are ready to do the digging on your own, I am going to give you a link to an article I wrote as a sneak peek into our unique process so that you can get started.
The plan is eventually to produce a series of videos to walk you through each step separately, but the step-by-step guide that I posted is a great place to start.
How useful is this methodology?
I recently presented the “diamonds” from a recent competitive intelligence “dig”, along with an experience-based assessment and recommended marketing alignment strategies to a zoom conference with a client’s leadership team.
As I reached a point in the presentation where some very intriguing information was dug up from a less an obvious source, there was an audible gasp (no kidding), followed by some very excited strategic discussion.
This eventually lead to an offer to rebuild the company’s complete marketing plan and three unsolicited referrals to, and subsequent contracts from, other clients in their professional network.
Do I get a sense of accomplishment from enthusiastic reactions like this? Absolutely! Who doesn’t like when their work is valued?
The truth is, I’ve gone through this incredibly useful training and been paid very well by large multinational corporate employers to provide them with numerous competitive advantages by conducting this type of research for decades in the B2B world.
But I never realized the full potential value until clients started to reach out to me proactively after searching my profile on LinkedIn.
I thoroughly enjoy specializing in this field and building a practice around these services that even small and mid-market businesses can afford.
I am very grateful for the trust and investment placed in me by my former employers and thrilled with the prospect of utilizing this experience to assist growth hungry companies, big and small.
The overwhelmingly positive feedback I receive shows me that I am on the right track attempting to provide value to clients.
If you want some help to do some digging, contact me here.
I would love to dig up some priceless competitive gems for you!
Challenges in competitive analysis today
The biggest challenge marketers come across when conducting their own competitive analysis is that they may have too many options available to them – making it difficult to determine where to focus the search.
Additionally, a competitive analysis can be time consuming if not done correctly and it’s very easy to get caught up in the details.
It’s important to remember that the goal of a competitive analysis is not to copy what others are doing, but rather to understand what they are doing and how it might impact your business.
Another challenge with competitive analysis today is that it’s often conducted using information which may or may not be accurate. The public availability of competitive information is both a blessing and a curse. It’s awesome that it’s available but can often be hard to distinguish between the weeds and the wheat.
As a result, it’s important for marketers to confirm any information they plan on using as part of their competitive analysis through other sources such as interviews with industry experts or confidential competitive intelligence sources.
Remember, the goal of this analysis for the marketer is to determine what the business needs to do in order for their marketing efforts to be successful and how it needs to change its current strategy so that it stands out from the competition.
The data to inform these decisions needs to be accurate and comprehensive. Like my data scientist friends like to say, “garbage in = garbage out”.
Common mistakes when conducting analysis
One of the most common mistakes is not taking the time to focus the research more fully on the top competitors. It’s important to have a comprehensive list of competitors, as this will give you a better understanding of the market, but most of the actionable data needed can be gleaned from a thorough analysis of the top 3 to 5 competitors.
You also need to be aware of any changes that may have occurred in the market since your last analysis.
Another common mistake is focusing too much on the competition’s weaknesses. It’s important to identify your competitor’s strengths too, as this will give you an idea of what effort is required to beat them.
Another mistake I see is failing to use a SWOT analysis properly or failing to make the most of it. SWOT is a great tool to assess your company’s strengths and weaknesses, as well as the opportunities and threats that are present in the market, but it needs regular care and feeding to keep it alive and providing ongoing benefits.
Having leadership assign an owner and making it their responsibility to shepherd the various stakeholders through ongoing activities can be very helpful. As well as referring to it regularly throughout the fiscal year to highlight any significant updates to the competitive landscape.
It’s important to remember that a competitive analysis is not a one-time event. You need to update it regularly, as the market is constantly changing.
How often should you conduct competition analysis?
One best practice is to perform analysis on your top 3 to 5 competitors annually. By taking the time to thoroughly understand your competitive environment and what your competitors are doing lately, you can ensure that you’re business is shining bright lights on potential blind spots and consistently positioning for success.
Competitive marketing analysis made the difference – examples and case studies
Let’s have a look at a few examples of where competitive analysis contributed to a company’s success.
Example 1: Fallacy of functional superiority
There are many examples of companies with a better product losing ground to competitors that had superior marketing strategies.
What I find interesting is that leadership in companies with a great product often dismiss their competitor’s strong marketing strategies as “just marketing” and feel that having the better product will eventually win the war.
But does the evidence prove that? Let’s have a look at one well-known example.
“Build a better mousetrap, and the world will beat a path to your door” – Ralph Waldo Emerson
That phrase was intended to highlight the power of innovation and has often been taken quite literally. More than 4,000 patents have been issued for mousetraps in the U.S. alone. Thousands more ideas were developed but were unsuccessful with acquiring a patent and even more being submitted for a patent every year, making them the most frequently invented device in U.S. history.
Yet, the best-selling mousetrap continues to be the version designed way back in 1899, that nearly removes your finger if handled improperly. Apparently, having the best mousetrap has not produced a clear winner in a very crowded market category.
Example 2: Customer provided insight
A few years ago, I conducted some competitive market analysis for a SaaS IoT startup out of Silicon Valley. Their initial business model was centered around utilizing the on board diagnostics (OBD) port each vehicle comes equipped with to install a customized dongle that would produce actionable data to determine when a vehicle is in need of service or to predict when components in the vehicle were likely to fail and proactively provide service to avoid an unplanned breakdown.
One of their main competitors were the car manufacturers themselves, as they were getting into connected cars and on board analytics in a big way. So an obvious place to kick off some research was with car dealerships that were looking to increase their service offerings to existing customers. I had just bought a car from a local dealership so I leveraged a little good will with the general manager and invited him to lunch to get his feedback on my client’s business model.
What he was willing to share with me over a 1-hour lunch at a cost of $25 (including tax and tip) was incredibly valuable. This gentleman had many years of experience in the industry and had worked in a variety of roles. His real world feedback and additional research at his direction helped my client to adjust the pricing and business model to gain a foothold in large emerging market.
Example 3: Going deep
I recently completed a competitive analysis for an innovative SaaS startup that was a spin-off from a very well established brick and mortar company with a long track record of success in a specific B2B professional services market.
They were looking to determine their ideal go-to-market strategy and reached out for some assistance. They had not yet done any in depth research of the competition. Of course they know who the big players in the industry are but did not yet have a full understanding of their sales, marketing strategy or where they were investing for future growth.
Competitor research is the best place to start, at least that’s the way we do it here at Prorevgro.
We have branded our unique methodology as “Digging for Diamonds” (DFD) because the outcomes derived from this deep and extensive research are more valuable than a fist full of 10-carat diamonds.
This process was formulated from over 25 years of training and practice performing analysis of some of the brightest stars and fast movers in the dot com era and continuing into today’s B2B SaaS providers.
I have utilized this same experience in launching several successful startups of my own.
That was the case for this client. Through our DFD process we were able to uncover their competitors’ areas of weakness, areas of strength, evidence of strategic investment, examples of their marketing, advertising and sales process, key partnerships and plans for the future growth.
From there, the client was able to adjust their product offering, pivot in their business model and formulate a marketing strategy that greatly reduces risk and increases their chances at real success.
All within a modest marketing budget and providing a healthy ROI.
Competitive analysis is an essential part of any business and should not be overlooked. By taking the time to analyze your competition, you are minimizing your blind spots and giving your business its best chance for success.
The “diamonds” are just beneath your feet. You just need some digging to get at them.