By performing a competitor analysis you protect yourself against unpleasant surprises even before you establish your company. And if you already run a business it is helpful to keep an eye on the competition. In short, competitor analysis is one of the cornerstones of a successful business venture, especially on the World Wide Web. And for that reason we’d like to share with you today what competitor analysis is, what its purpose is, and which opportunities the internet offers.
Competitor analysis in theory
What is generally understood as competitor analysis
- The researching of companies that offer the same products or services in a specific market. In addition, their structure and actions are analyzed. Example: A Nike dealer specializing in sneakers identifies all other dealers for Nike sneakers in the city.
- The researching of companies that offer so-called substitute products.
Example: A Nike dealer identifies all dealers of other brands of sneakers in the city.
- The researching of companies that offer similar items in the broadest sense.
Example: A Nike dealer identifies all shoe and sporting goods retailers in the city.
(Dealers who buy and sell can also be competition, just like classified ads or marketplaces on the internet.)
What is examined?
- The competitor’s economic situation, for example their capital structure
- How the competitor has positioned himself in the market
- Competing firm’s organizational structure
- Structure of his offerings
- Relationships to consumers and vendors, like contractual relationships or communication channels
These are the goals
- Competitor analysis should allow long-term decisions to be made, for example with regard to investments.
Example: Where would it be profitable for the Nike sneaker dealer to open new locations?
- Competitor analysis helps to quickly ascertain changes with the competition and to react to the new market conditions.
Example: The sneaker dealer two streets over is having supply difficulties, but you have the shoes in stock and can advertise that in a targeted manner.
- Competitor analysis makes it possible to find competing firms with whom a partnership can be entered into.
Example: Shoe retailers and sporting goods stores refer people to the Nike sneaker dealer and he reciprocates.
Competitor analysis on the internet in practice
Finding competitors online
The competitors who are listed ahead of you in search engines results are on the World Wide Web. To find them, go to Google and enter the most important search terms for your company.
Example: Buy Nike sneakers
If you work locally, then don’t forget to include the name of the city or region.
Example: Buy Nike sneakers Münster
A fully formulated question can also locate your competitors, because after all many users now perform searches using a smartphone. There voice search is usually the preferred method, using full sentences or questions.
Example: Where can I buy sneakers from Nike in Münster?
Indirect competitors can of course also be found in exactly the same way. To do this you may need to expand the search terms.
Example: Buy athletic shoes in Münster
Of course you can also search for and analyze your competitors using software. This can be done for example with the SEO tool Sixtrix. In its toolbox Sixtrix can identify all competitors for the search term “sneaker”, for example. How exactly that works can be seen in the provider’s competitor analysis tutorial.
Once you have found your competition, it’s time to analyze. Ultimately you need to figure out what those competing firms do better or not as well.
You should pay attention to the following points when doing the analysis of your competitors:
How well are they ranked by Google?
How often are they linked to from other sites?
How often and based on which keywords do their advertisements appear?
- Distribution channels
Do they only sell online or also locally?
Do they list their products on marketplaces like Amazon or eBay?
How quickly can they deliver?
How high are their prices?
How high are the potential shipping costs?
Are there additional fees for certain payment methods?
Which items / services do their offerings include?
How extensive is their assortment?
Do they sells used items / B stock?
Do they exclusively offer luxury items or only certain brands?
- Target audience
Who are they appealing to?
How do they address their target audience?
- Product quality
How good or bad are their product reviews on portals like Dooyou or on Amazon?
How well or poorly do their products perform in independent tests?
- Activities on social media
Do they have Facebook, Twitter, Instagram, etc. accounts?
How active are they on social media?
How often are they mentioned on social media?
How many friends, fans, followers, etc. do they have?
How good or bad are the competitors’ reputations?
How do they represent themselves?
What philosophy do they represent?
What are their unique selling propositions?
Many of these answers can be found directly on your competitor’s website. In addition to that you can do the following.
Research tips for competitor analysis
- Rating portals for companies and service providers like: Yelp, KennstDuEinen or Golocal
- Rating portals for special subject areas like: online shops (Shopauskunft, eKomi), employer review portals (Kununu, meinChef), car repair garages (Autoplenum, Werkstattvergleich), doctors and clinics (Jameda, DocInsider), restaurants (restaurant-kritik.de), travel (tripadvisor, HolidayCheck), tradespeople (Bestes Handwerk, Geprueft.de)
- Rating portals for products, like: Dooyou, Amazon, Stiftung Warentest
- Sixtrix allows you to monitor your competitors’ social media mentions
- Become a fan or follower of the competitor yourself to monitor his activities
- With SEOprofiler it can be determined free of charge which backlinks your competitor’s websites has. The competitors’ AdWords campaigns can also be identified with this tool.
Drawing the right conclusions
Now it’s a matter of drawing the correct conclusions from your competitor analysis. You can ask yourself the following questions about it.
- What is your USP?
- What are your competing firms’ USPs?
- What do you do better?
- What do you do not as well?
- What can you realistically improve on?
- In which respects are you in an inferior position and should possibly no longer compete?
- What is your competitor not thinking of and how can you make use of that?
- Where would a partnership make sense?
Once these questions are answered, a strategy can be planned, that could for example look like this:
- My USP: I am the only one in the region selling this brand.
- Improvement: I can optimize my website for search engines. I can run better SEM.
- No capacity: I can’t manage to tweet or post something new on Instagram every day. For that reason I will concentrate just on Facebook.
- My competitor hasn’t thought of loaning out replacement devices at no charge while repairs are being done. I will start offering that next week.
- Partnership: I can enter into a partnership with Company X regarding repairs because we don’t sell the same brands, but have the same (or similar) repair steps.
Online competitor analysis helps secure your business for the long haul
Thanks to an analysis of your competition you know which market they operate in and how strongly contested it is. You get to know your competitors and their offerings. In addition, an analysis allows you to discover your own strengths and weaknesses, and to develop your USP. Furthermore it helps you to better understand your customers’ desires and concerns and to react to changes in the market. And so your business will continue to exist in the long term because you’ll always know what’s happening around you.