According to the world-renowned ancient Chinese writer, philosopher, and military strategist Sun Tzu, if you know your enemy and yourself, you will not be imperiled in a hundred battles. This applies to the market in which your company operates as well. Having a good idea and knowing your own company is not enough. Do you know who your competitors are? And do you know where you stand in relation to them in the market? We will show you the essential points to consider when doing a competitor analysis.
Competitor analysis is one of the most effective market research and search engine optimization tools – no wonder marketing agencies use it frequently. Analyzing competitors is not only useful for understanding the pricing policies, advantages, and disadvantages of their products or services, but also for inspiring you and generating ideas that you can shape to fit your own business. You can get an idea of how your competitors are acquiring visitors, what channels they are selling through, where they are communicating, or even what partners they have.
When you’re preparing a strategy, it’s important to start the process with competitor analysis and build on that later. This method has worked for us:
Competitor Analysis in 5 Steps
Identifying competitors
You don’t need to analyze dozens or hundreds of competitors! You should separate direct and indirect competitors. It’s worth focusing on those whose organizational structure, offerings, and results are similar to your company’s.
Gathering basic, easily obtainable Information
This includes examining revenue, but also the number of employees. In addition to analyzing prices, it is essential to map out the competitor’s offerings in detail. How broad and deep is your competitor’s product portfolio?
SWOT analysis
This is a favourite among marketing agencies: it shows the strengths, weaknesses, opportunities, and threats of the given competitor. The analysis can reveal how external and internal, as well as positive and negative forces, influence a given business and its customer acquisition strategies. Always conduct the SWOT analysis first on your own company!
The most important thing for you
is to understand the marketing strategy and map out the online presence. This includes a comprehensive and detailed analysis of the website, the quality and frequency of appearances and content on social media, and even tracking paid advertisements.
Taking notes of the acquired information is essential
For example, if you organize it in an Excel spreadsheet, the results of the research become immediately comparable, and it will be retrievable later on.
When analyzing competitors, it’s important not only to rely on static data but also to monitor changes. If you dig deep enough and notice that one of your competitors had a revenue of 10 million forints in the first year, 20 million in the next year, and then 40 million, you can see the extent of their development, not just the dry data.
TIP: Be skeptical of the data. Always check carefully how reliable the source of the information is!
At this point, the question is justified: “Okay, I’m skeptical of the data, which should not only be static but also dynamic if possible, but where should I collect them from?” Keep reading!
Conduct primary and secondary research as part of competitor analysis!
Wether you conduct the competitor analysis or your marketing agency, the realm of primary and secondary research encompasses all the methods by which you can gather the necessary quantity and quality of data. Once it has been determined in detail what information you need, you must then determine from which sources you will obtain the data.
In the first step, focus on searching for and collecting the already available data. So always start with collecting secondary data, which can be obtained from both external and internal sources. External sources include the website of ceginformacio.hu, the databases of the Hungarian Central Statistical Office (KSH), as well as Eurostat and Euromonitor. We can also include the press and corporate propaganda materials here. Internal sources may include the competitor company’s own website, public accounting, and statistical data.
What does the primary research part of competitor analysis consist of?
If after this you still feel that you don’t know your competitors well enough, then start a primary research. Primary research methods include in-depth interviews, focus group interviews, observations, questionnaire surveys, and so on. Be careful, it may sound simple, but conducting primary research is actually quite complex, time-consuming, and costly work.
Now you know where to get the necessary data. After this, it’s not surprising if I say: you should analyze your own business from time to time, just like your competitors. Knowing your own SWOT analysis or your online presence is just as important as knowing your competition. This way, you will get a realistic picture of the market situation, which will provide a solid foundation for future planning.
That’s why it’s essential, whether you’re analyzing your own company or your competitors, to be REALISTIC. This means that you’re not biased when calculating the data and you’re not trying to present reality in a different light. There’s no rose-tinted glasses, only the hard, actual, objective reality. Strive to make the picture you get COMPREHENSIVE and TRANSPARENT. Believe me, you’ll find it useful in the future when you can look at the data before making important decisions.
It is advisable to conduct competitor analysis at least once a year, which we do for you when we plan your marketing strategy! What is this? We also have a blog about this, which you can read by clicking here. The market is often opaque even for the strongest players. Find out what your options are and what you need to improve to become a market leader!
If you get stuck, feel free to contact us, we are here to help.
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