There is a reason some companies succeed and have an impressive development while so many fail after a short time. Reasons for this include poor industry knowledge, lack of detailed knowledge of the market, and a non-precise outline of their target group.
Systematic market analysis and competitive analysis are extremely important, but ongoing market observation is just as vital. Only those who can see and assess the market, customer, and competition can properly respond to market requirements, so the company is successfully positioned in the market.
Experience also shows that systematic confrontation with the market and competitive environment often shows weaknesses and possibilities for improvement for the entrepreneur and can be an important source of constant business optimization. The market analysis can be developed by specialized external consultants with some time and expertise. However, the founding team can also create a resilient market analysis themselves. What should be considered, read below.
Structured Market Analysis
Even those who want to convince banks, funding facilities, or other project participants from his idea, mostly in the context of a business plan – a precise representation of market potential, approaches to differentiation in competition and its target customers. To depend on many other start-up projects and obtain the contract for financing or promotion, it is worthwhile to invest energy and time in systematic market research or market analysis. This applies both to start-up projects in the B2C sector and companies in the B2B area.
A crucial success factor is the structured structure of market analysis. Thus, systematic market analysis and competitive analysis, for example, should include information on market volumes/market potential of the product or service. Also, statements for the expected development of the market growth are relevant for evaluating a market.
Besides, it is important to create an overview of the competitive structure, i.e., the number and types of competitors in the market environment in the context of market analysis, and to illuminate the main competitors as part of a detailed benchmarking. For investors and funding bodies, it is important to learn about it at this point how the start-up of the current offers in the market wants to stand out.
The central part of successful market analysis and competitive analysis is also the exact definition of the young company’s target groups. For example, market analysis defines which customer groups are to be operated, how large these target groups are in the market, and what needs and requirements of potential customers should be addressed with the new company.
Ultimately, structured market analysis and competitive analysis include the lighting of industry trends and industry developments of the future, which is shown which topics will become more important in the market over the next few years and how the young company wants to respond to these trends.
Examining the Competitive Analysis
Competitive analysis is an important instrument before entering a market. If you want to start a business, you should know exactly this market, its competitors, and its potential. Lighter is certainly with a checklist on the competitive analysis, which includes all important points. Below you will learn more about the things you need for good competitive analysis.
Content of a competitive analysis
Competitive analysis can be represented in different ways. However, experience has shown that a representation in an Excel spreadsheet is particularly simple and clear.
A competitive analysis, therefore, contains mainly the competitors based on the market. However, this is not everything, so that a competitive analysis checklist is quite useful. Because in addition to the information about the competitors, they also need comprehensive knowledge around the market.
Only in this way can you get an overview and can assess opportunities and risks. Surely there are other instruments such as the popular SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) or the use of paid tools. But it is often sufficient in the first step to carry out a good analysis of the competition, write down and present.
A competitive analysis contains the following points:
- Direct and indirect competitors in named nomination
- Important features of these competitors such as the price, service, quality, and location
- Strengths and weaknesses of the abovementioned competitors
- Prioritization of the competitors in the strongest and less strong competitors
- The knowledge of opportunities and problems in the market by considering competitors
Above all, the resilient assessment of the competitive situation is what companies frequently challenge. Typical questions of competition analysis are: how many competitors do the market are currently being operated on? Which main competitors are in the market? Are there any substitutes, i.e., other solutions or technologies that satisfy our target customer’s needs? What are the companies currently operating in the market, and how successful are they? What direction do the competitors develop, so what trends and developments follow?
There are 2 main steps:
In step 1, the analysis gives an overview of the competitive landscape, i.e., the number of providers operating on the market and the division of the same in suppliers.
In step 2, some exemplary main competitors are selected and illuminated in detail competition analysis. In this detailed analysis, there is an overview of important key figures, the product and service portfolio or the competitor’s technologies, the company’s strategic orientation, and the company’s strengths and weaknesses. In direct comparison with the competitors, the strengths of their offer can then be worked out.
Competitive analysis: Tips on Data Sources and Search Methods
Decisive for the resilience of market analysis or competitive analysis is the scope and quality of the data sources used. Banks and funding institutes ensure that external and neutral sources have been selected and not merely summarized the founders’ personal opinions.
Important market analysis methods are both secondary research and the collection of our data, also called primary research. One of the essential sources in the field of secondary market research includes:
The systematic evaluation of search engines like Google:
Typically, the entry into an investigation is made for market potential and competitors over a structured search engine research. For this purpose, important keywords and topics are defined, which are then queried in planned. Staying in the context of a market analysis of accidental searches in search engines without a clear research destination, and, as much time is needed here, the results are often incomplete. Advanced analysts prepare a keyword list or a search plan with the key search terms that you want to query in the search engine.
- Company databases:
Allow efficient access to competition and customer information. Often these databases are chargeable and require professional research for operation.
- Statistical Publications:
Look for governmental structures in your country that charge a large amount of data on markets, companies, and industries. Portals like Statista also provide information that can be used for market research of start-ups and young companies.
- Technical journals of the target industry:
Often offer relevant articles on industry trends, important providers in the market, or statistical information. Access options offer many trade magazines online (partly restricted), more comprehensive access offers subject printing databases.
- Industry fairs:
The visit to relevant industry fairs allows you to perform a market analysis. Here you will find the direct exchange with other market participants. Exhibitor Directories, which are provided online by the trade fair organizers, can be searched for possible competitors, customers, or partners.
- Annual Report Databases:
Specialized tools As the Federal Gazette makes it possible to conveniently access business reports of competitors. For example, with larger competitors, e.g., Insight into sales development, the company’s profitability, the number of employees, and strategic planning for the next few years.
- Forums, blogs, and social networks:
More and more companies are also represented in portals like Facebook, Twitter, Xing, LinkedIn and publish information about products, services, and innovations within them. Also, YouTube has an ever-increasing number of videos on companies, trends, and new products of possible competitors.
How Does an Online Competition Analysis Work?
Online competitor analysis is also performed in advance because you need to compare your potential competitors with the competitors that use your targeted keywords on the website.
In this area of analysis, we clarify these two questions.
First of all, the analysis allows you to see if your competitors generate high-quality content. During the research, you can also find alternative keywords used by the competitor to take into your future keyword analysis.
Another valuable metric is whether your competitors use Google Ads and Google Product Listing Ads. You can decide then whether it is something you want to invest in to compete for search engine results.
Traffic and Backlinks
In individual cases, it is advisable to analyze and observe more social activities of your competitors. How much traffic do your competitors have? How well are you positioned in search engines compared to your competitors? To find out, you need to google your company’s website and compare it with your competitor’s website traffic. To perform this comparison, you can use the Ahrefs tool.
You should also pay attention to the difference between organic traffic, which comes from real visitors, from promotional traffic, provided only by ads. Also, you can compare your visibility with the perceptibility of your competitors at the Top3 and Top10 rankings.
In 2016 Google officially confirmed that the number of backlinks leading on the page is the main factor in the rank position evaluation. This means that the more websites have a link to your blog post or service page, the higher your website will rank in Google search results. Do not underestimate the backlinks’ power and research what websites have backlinks on your competitor’s website. Search for the opportunities to have several yourself.
To Sum Up
An online competitive analysis only collects your internet competitors. A competitor can still be a very organized and successful company, despite poor online marketing. However, If online marketing is neglected, the company loses online visibility, so it can not only cause financial damages to existing business but keep you away from growth and new markets.
Only the combined evaluation of these methods for market analysis or competitive analysis makes it possible to obtain a wide and neutral image for market potential, competitive situation, and the target group’s requirements. Also, interviews with potential customers can offer deeper insights into assessing the business models’ success in the context of market analysis.
While a larger number of conversations are required in the B2C area to achieve a resilient assessment, in industrial B2B markets, often a few selected interviews range to an impression of market opportunities, strengths, and weaknesses of the young company to obtain.
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