Understand Your Competitors: How to Stay on Top of Trends and Identify Threats

Why is Competitor Analysis Important?

By conducting a competitor analysis you will learn about your own company. Understanding how other organisations tackle the same problems you face can offer insights that strengthen your business and increase your potential.

There may be market opportunities you were not aware of, customer bases you hadn’t tapped into or emerging trends that you didn’t know about. The results of your analysis will allow you to refine your value proposition and adjust your marketing strategy.

The Research Process

A competitor analysis should be a highly structured and repeatable process, as you will carry out the research and analysis of all of your competitors. When identifying competitors for your research, you should consider those not only that offer a similar product and have a similar audience, but also businesses that are industry leaders. This step is important for competitor categorisation, discussed in greater detail later on.

Before you categorise your competitors, you will want to identify their exact products and services, as well as pricing. Look for areas of overlap and differentiation, as this will help you understand where they directly compete with you and where they offer something unique.

Analysing competitors online

The next step is to take a deep dive into their marketing output. This involves a thorough review of their online presence, which means an analysis of their website and social channels. You can check out our guide to understanding social media performance here where we talk through key metrics.

There is a lot to consider when auditing a brand's social media presence such as post quality and frequency, preferred platforms, engagement, audience sentiment and SEO strategies. You can also view their current and expired social media ads.

Picking up on trends

With how fast the world of marketing moves, it can be very difficult to identify the trends that are worth getting in on. Some trends are only temporarily relevant whilst others eventually become the status quo. Analysing your competitors can help you identify changes in consumer behaviour, shifting opinions on key issues and emerging online or social trends that align with your brand and strategic goals.

Categorising your competitors

Once you have completed an analysis of your competitors you can then categorise them into three groups: direct, indirect and aspirational.

Direct competitors will offer similar products and services, share an audience, and will be comparable in terms of price or quality. Indirect competitors provide an alternative product or service which solves the same problem. Aspirational competitors are the companies and brands that are industry leaders and represent a level of success you aspire to. Categorising your competitors like this will provide a holistic view of your business and your market, whilst helping to inform your marketing strategy.

Mistakes to Avoid

Overlooking indirect and aspirational competitors

A common mistake in a competitor analysis is focusing only on businesses which are direct competitors. Whilst it is important to understand the businesses that offer the same services and are competing for your customers, broadening your scope will help you maintain an open mind. By looking at indirect competitors you can identify threats and opportunities. Aspirational competitors can inspire new ideas and ambition, which are central to growth.

Ignoring differentiation

Overlooking the importance of differentiation is another easy mistake to make. Whilst a successful competitor analysis will allow you to identify and replicate the strengths of your competitors so you can level up your products and services, identifying gaps in the market is just as important.

What works for one business may not work for another so it's important to define your unique selling point (USP) and build a strong brand. You can learn more about brand building in our recent blog.

Misunderstanding trends

When discovering and evaluating emerging trends it can be very difficult to identify which trends will be short-lived and which are there to stick around. Getting in on trends early can put you ahead of the pack, but too early and you open yourself up to the risk of investing in a fad.

The key to making the most of a trend is finding an organic way to relate it to your USP and brand identity. Just because a competitor has seen success with a new trend doesn’t mean you will too.

Failing to update and reassess

Finally, a competitor analysis should not be a standalone piece of work. Collecting new data and reinterpreting your findings is key to staying agile and reacting to market changes. New competitors will emerge so updating your competitor analysis will allow you to understand why a particular business has seen success in recent months.

Carrying Out Competitor Analysis Correctly Matters

Competitor analysis and market research more broadly require not only familiarity with a particular industry, product or service but a degree of introspection which can be difficult to achieve for some organisations.

A balanced and unbiased analysis of your own business can sometimes be the most challenging aspect of competitor analysis, which is why seeking outside help can lead to the best possible results. If you’d like to learn more about how your business could benefit from a competitor analysis, get in touch, we’d love to have a chat.