Do You Conduct A Competitive Analysis?
Why Is Market Analysis important
There’s a reason some companies succeed and grow impressively while many others fail after a short time. This includes poor industry understanding, lack of detailed market knowledge, and a vague target group outline.
Systematic market and competitive analyses are extremely important, but the ongoing market observation is just as vital. Only those assessing the market, customers, and competitors can properly respond to market requirements so that the company is positioned successfully.
Experience also shows that systematic market confrontation and competitive environments often display weaknesses and possibilities for entrepreneurial improvement and can be an important source of constant business optimization. Market analysis can be developed by specialized external consultants – it only requires time and expertise. However, the founding team can also resiliently analyze the market themselves. What to consider? Read below.
Structured Market Analysis
Even those wanting to get banks, funding facilities, or other project participants to understand their idea should view it as a business plan – a precise representation of market potential, approaches to differentiation in competition, and target customers. To get the benefit from other start-ups and obtain financing or promotion, invest your energy and time in systematic market research or analysis. This applies for both start-up projects in the B2C sector and the B2B ones.
One crucial success factor is a thought-out structure of market analysis. Thus, systematic market and competitive analysis, for example, should include the information on market volumes and potential of the product or service. Also, statements for the expected development of market growth help evaluate the market.
Besides, it is important to create a competitive structure overview — the number and type of competitors in the market environment in terms of analysis. Next, illuminate the main competitors as part of detailed benchmarking. For investors and funding bodies, it’s important to be updated here in terms of how the start-up aims to stand out considering the current offers.
The key part of successful market and competitive analysis also defines the target groups. For example, market analysis outlines the customer groups involved, how influential they are, and the needs and requirements of potential customers to be addressed.
Ultimately, a structured market and competitive analysis covers the industry trends and developments, which shows the topics that gain importance in the market over time and how the new company responds to them.
Examining Competitive Analysis
Competitive analysis is an important instrument to use before entering a market. If you want to start a business – know the market, its competitors and potential. It’s easier with a competitive analysis checklist covering all the important points. Below, you’ll learn more about what’s needed for a proper competitive analysis.
Competitive Analysis Content
Competitive analysis shows itself in different ways. However, an Excel spreadsheet representation is particularly simple and clear — this comes from experience.
Competitive analysis, therefore, mainly includes competitors based on the market. However, that’s not it, so a relevant checklist is useful. Because, in addition to competitors’ data, having comprehensive knowledge of the market also matters.
Only this way can you get an overview and assess the opportunities and risks. Surely, there are other instruments such as the famous SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) or the paid tools. They’re often sufficient when carrying out a decent analysis of competitors, making notes, and presenting.
Competitive analysis covers these points:
- Direct and indirect competitors named
- Their key features — price, service, quality, and location
- Strengths and weaknesses
- Competitor prioritization — from weak to strong
- Understanding of opportunities and problems in the market based on competition
Above all, resilient competition assessment is what frequently challenges companies. Typical questions here are: how many competitors are there now? Who are the main ones? Are there any substitutes, other solutions, or technologies that satisfy our target customers’ needs? What are the current companies in the market and how successful are they? How do competitors develop, and which trends come as a result?
There are 2 main steps: First, the analysis describes the competitive landscape — the number of providers operating on the market and the division of the same regarding the supply. Next, some of the main competitors are selected and illuminated in a detailed competition analysis. We’ll share an overview of the important key figures, the competitor’s product and service portfolio, the company’s strategic orientation and its strengths plus weaknesses. In direct comparison with the competitors, their strengths can then be worked out.
Competitive Analysis: Tips On Data Sources & Search Methods
What impacts the resilience of market and competitive analyses are the scope and quality of the data sources used. Banks and funding institutes ensure that external and neutral sources are selected instead of the merely summarized founders’ personal opinions.
Key market analysis methods are both secondary research and data collection, also known as primary research. One of the essential sources in secondary market research includes:
A systematic evaluation of search engines like Google: typically, entering an investigation works better for market potential and competitors over a structured search engine research. For this purpose, fitting keywords and topics are defined and then queried. Even if you maintain the context of a market analysis of accidental searches in search engines without a clear research destination, the results are often incomplete regardless of the time spent. Advanced analysts prepare a keyword list or a search plan with the key search terms to insert into the search engine.
- Company databases: Allow efficient access to competition and customer information. Often, they are chargeable and require professional research for operation.
- Statistical Publications: Look for the governmental structures in your country charging data on markets, companies, and industries. Portals like Statista also provide information for market research of start-ups and new companies.
- Technical journals of the target industry: These commonly offer relevant articles on the industry trends, important market providers, or statistical information. Access options suggest trade magazines online (partly restricted), while the more comprehensive ones provide subject-printing databases.
- Industry fairs: Visiting the relevant industries simplifies market analysis. Here, you’ll face direct exchange with other market participants. Exhibitor Directories online from trade fair organizers can be searched for the possible competitors, customers, or partners.
- Annual Report Databases: Specialized tools like the Federal Gazette make it possible to conveniently access competitors’ business reports. For example, there are insights into sales development, profitability, employee number, and strategic planning for the next few years.
- Forums, blogs, and social networks: More companies show up on portals like Facebook, Twitter, Xing, or LinkedIn and publish information about their products, services, and innovations. Also, YouTube now displays an ever-increasing number of videos on companies, trends, and new products of the possible competitors.
How Does Online Competition Analysis Work?
Online competitor analysis is also performed in advance since you’ll need to compare your potential competitors with those using your targeted keywords on the website. In this area of analysis, we clarify these two questions. First of all, the analysis shows if your competitors generate high-quality content. While researching, you can also find some alternative keywords used by competitors to include in your keyword analysis.
Another valuable metric is whether your competitors use Google Ads and Google Product Listing Ads. You can then decide whether it is something you want to invest in to compete for search engine results.
Traffic And Backlinks
In individual cases, it’s best to analyze and observe your competitors’ social activity more. How much traffic do they have? How well are you positioned in the search engines compared to them? To find out, you’ll need to google your company’s website and compare it with your competitors’ website traffic. For this, you can use Ahrefs.
You should also pay attention to the difference between organic traffic – which comes from real visitors – from promotional traffic provided by ads only. Also, you can compare your visibility with the perceptibility of your competitors in Top 3 and Top 10 rankings.
In 2016, Google officially confirmed that the number of backlinks leading to the page is the main factor in rank position evaluation. This means that the more websites link to your blog post or service page, the higher your website ranks in Google’s search results. Do not underestimate the backlinks’ power and research websites with backlinks to your competitor’s website. Look for the opportunities to get some yourself.
To Sum Up
Online competitive analysis only covers your internet competitors. They can still be a very organized and successful company despite poor online marketing. However, if online marketing is neglected, the company loses visibility. This not only causes financial damage to the existing business, but thwarts growth and new markets reach.
Only a combined evaluation of these methods for market or competitive analysis makes it possible to obtain an extensive, yet neutral image for market potential, competitive situation, and target group requirements. Also, interviews with the potential customers offer deeper insights into assessing the business model’s success in terms of market analysis.
While most communication in the B2C area is needed for a proper assessment, in industrial B2B markets, a few selected interviews often outline the main market opportunities, strengths, and weaknesses for the new companies needing this info.
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