What Should Be Included in a Competitor Analysis?
Analyzing competitors is a key activity for businesses in all industries, and plays a central role in the overall Competitive Intelligence (CI) strategy of the firm. By building a comprehensive understanding of the profiles, behaviors, and strategies of competitors, businesses can make more informed decisions and better position themselves for long-term success.
It’s important to note the distinction between a competitor analysis and a competitive analysis.
A competitor analysis is a detailed overview of one single main competitor, whereas a competitive analysis looks at all competitors within the marketplace. Of course, these types of analysis complement each other perfectly; in fact, a series of comprehensive competitor analyses are foundational to an overall competitive analysis of the target market.
A competitor analysis incorporates many different types of research. Generally speaking, a competitor analysis takes a holistic view of a competitor’s business, examining every area of their business, their relationship with customers, and their growth strategies.
When conducting a competitor analysis, it’s always best to use a consistent framework. This creates uniformity when competitor analysis is conducted on multiple competitors, guaranteeing a fair comparison of all competitors. A consistent approach also leads to better workflows, as CI analysts are able to better master an analysis tool, conceptual framework, and reporting structure.
The rationale behind undertaking a competitor analysis is clear. With that said, what should be included in a competitor analysis?
Company Overview
One place to begin is with an overview of your competitor’s corporate structure. By building an understanding of the way your competitor’s business is structured, you’ll uncover certain indicators that might point to areas they’re focusing on. Examples might include the creation of a new division or department, or a major investment in R&D.
Put together an overview of your competitor’s leadership team, paying close attention to any recent hires or newly-created positions. Assess the backgrounds, skills, and expertise of key leadership personnel, and consider the impact of these on the strategic direction of the company.
If your competitor is a public company, take time to review their financial filings, including key documents like Profit & Loss Statements, Cash Flow Statements, and Balance Sheets. Analyze these in as much detail as possible; in some instances, you’ll be able to see revenue by product line, region, or distribution channel. If your competitor is a private company, this type of analysis will be more challenging, but it’s still possible to glean interesting insights from other data sources.
Analysis of Products & Services
To truly understand how a competitor is positioned in relation to your own business, it’s critical that you conduct a full analysis of the products and services they offer. As they’re your competitor, there’s likely some overlap between your products and theirs, but this type of analysis is rarely as simple as a direct comparison.
A competitor’s products and services, even if in direct competition with your own, will likely have a different set of features and benefits to yours. The competitor could have a suite of more basic products or a selection of advanced solutions that are technically superior to anything your company offers. Your analysis should include an overview of the technical specifications of key products, information on pricing models, and an overview of how these products are brought to market.
Make sure to include some qualitative analysis here too; it’s important to understand how customers feel about your competitor’s products, what they use them for, and what they see as the biggest benefits. You may consider using some form of primary research to give you the highest quality insights.
By tying together a product overview with quantitative and qualitative analysis, you’ll build a holistic picture of your competitor’s products and services. Use these insights to drive product development and pricing strategy at your own company.
Customer Relationship Mapping
An important tenet of any competitor analysis is an overview of who the competitor’s customers are and how they reach them. This type of competitor analysis enables firms to build a complete picture of how their competitors attract and retain customers. Firms can then create competitive strategies to insert themselves into this purchase process and disrupt their competitor’s customer acquisition strategies.
Key things to consider when building an analysis of your competitor’s customers include the identities of key customers, the overall number of customers the company has, and the amount these customers are paying for your competitor’s products.
Think about the customer pain points that your competitor is solving, and consider how your firm could provide similar solutions. By analyzing all this information, you’ll be able to build and execute strategies that enable you to offer these customers better options, and understand the incentives you can offer them to switch to you.
Conduct further analysis into your competitor’s marketing, social media and distribution channels to establish an understanding of the processes they use to attract new customers. Include overviews of key marketing channels, and take note of any significant investments into digital channels. Also, map out the distribution channels used by your competitor; they may have relationships with resellers, distributors, or retailers that act as intermediaries to help them reach their target customer.
Perform all these types of competitor analysis and you’ll be able to fully map out the customer relationships your competitor has. Take these insights and use them to shape your own business and marketing strategy to improve your competitive positioning.
Competitor Analysis Frameworks
As you compile massive amounts of data on your competitor, it can be difficult to distill the analysis into actionable insights you can share. One of the most optimal ways to present a competitor analysis is to make use of established competitor analysis framework. Some of the most popular frameworks include:
SWOT Analysis
The SWOT Analysis is a classic analysis framework that examines your competitor’s strengths, weaknesses, opportunities, and threats. The model is popular because it presents an internal view of a competitor’s capabilities, while also considering the positioning of the competitor relative to external opportunities and threats.
Porter’s Five Forces
Another well-established model, Porter’s 5 Forces considers the positioning of a company relative to five key competitive factors: competitive rivalry, supplier power, buyer power, threat of substitution, and threat of new entrants.
Value Chain Analysis
A value chain analysis is a visual display that maps out how a competitor brings products or services to market. The analysis covers everything from where the competitor sources raw materials to how they deliver the product or service to customers. Including this in a competitor analysis offers a holistic view of a competitor’s operations in an easily-digestible visualization.
The Importance of Conducting a Thorough Competitor Analysis
Building a competitor analysis is a critical part of any competitive intelligence process, and enables businesses to better understand where they are strategically positioned in relation to their key competitors.
The key to any competitor analysis is a consistent framework, high quality analytics, and the production of actionable insights that inform the strategic direction of the business. By including the components outlined in this article, competitive intelligence practitioners will be well on their way to creating comprehensive competitor analyses that provide high levels of value to their business.
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MEET THE EXPERTS
Peter Grimm leverages his background in national security and experience as a strategy consultant and PE-backed CEO to help clients navigate rapidly changing environments. He is skilled in corporate strategy, market analysis, competitive intelligence, disruption planning, disruption preparedness, and organizational leadership.
Following service in the US Navy and as a counterterrorism analyst at a US government agency, Peter spent 8 years in the Strategy Practice of Deloitte Consulting. Peter then served as CEO of a PE-backed consulting and technology firm, leading the company through two successful exits. He’s helped middle market companies, Fortune 500 firms, and Federal agencies “see around the corner” and turn threats into opportunities.
Jennifer Buchwald has been helping companies make better decisions through strategic insights and competitive intelligence for more than 15 years. With a formal education in philosophy and experience working in a broad set of industries, Jennifer brings a holistic understanding of business challenges and forward-looking observations to a diverse set of clients.
Jennifer began her career fielding market research studies for clients in the Consumer Packaged Goods space before joining one of the largest grocery chains in the United States performing location intelligence and site analysis for their real estate division. After a period providing competitive intelligence services for a Fortune 100 infrastructure technology company, she joined a boutique firm offering strategic advice for clients in a variety of industries.