You can't look at the competition and say you'll do it better. You have to look at the competition and say you will do it differently. Show
- Steve Jobs Whichever product you sell, you are likely to face competition. However, not all competition is bad. Healthy competition among firms can drive innovation and growth. The key is to deliver superior value and maintain a competitive edge over your rivals. One powerful tool that helps companies do this is competitor analysis. In simple terms, competitor analysis means evaluating competitors and developing strategies to outshine them. Competitor Analysis DefinitionThe primary goal of marketing is to deliver great service and build long-term relationships with customers. This can only be done by develop a competitive edge - a substantial advantage over the companies. How can companies achieve a competitive edge? They can pour more money into product development and marketing, but a more effective way is to look at how the competitors are doing and do better. That said, competitive analysis is not easy. Marketers must repeat the process every now and then as a new competitor enters the market. Competitor analysis means identifying competitors and assessing their strengths, weaknesses, and strategies. The goal of competitor analysis is to understand which competitors to attack and which to avoid. The process can be simplified into three steps:
Competitor Analysis in MarketingSo, why do businesses need competitor analysis in marketing? Competitor analysis is an integral part of the strategic marketing management process. The strategic marketing management process involves three aspects:
Strategic marketing management involves evaluating the environment, selecting an appropriate strategy, and implementing the chosen strategy. Another reason competitor analysis is crucial in marketing is that it helps businesses develop competitive positioning tactics. Wilson & Gilligan (2012) propose that there are four tactics a firm can take when it comes to its market position1:
You might have seen Burger King's "Moldy Whopper" campaign, which shows an unappealing image of a mouldy burger. The campaign aimed to show viewers that Burger King burgers are made without artificial ingredients or preservatives. Burger King introduced this campaign after consumer outrage about McDonald's burgers and fries not showing any signs of rotting even after years. Can you guess which type of attack this campaign was? A flank attack! Competitor Analysis MethodsNow you've known what competitor analysis is, let's look more into its methods. There are three steps to conducting a competitor analysis:
Competitor analysis: Identifying competitorsThe first step is identifying competitors. The most basic step of competitor identification is to find businesses that sell similar products to you to the same customer segment. For example, Tesco in the UK might identify Sainsbury's and Aldi as competitors but would not view the Swiss Migros or German Penny supermarkets as the main threats as they serve different customer segments geographically. However, this may not be the best approach as companies might identify all firms selling similar products or in the same industry as competitors. For example, a delivery company see every firm operating in the FMCG (fast-moving consumer goods) or the aviation industry as rivals. A better approach would be to approach competitors from a market perspective or firms that satisfy the same market needs as you. Another trap of competitor myopia is when firms define their competition too narrowly. This can lead to latent competitors disrupting the industry and 'stealing' market share. For example, smartphones are taking over the digital camera industry. Competitor analysis:Evaluating competitors' strategiesAfter a company has identified its competitors, its next step is to evaluate competitors' strategies. This consists of four steps:
Some competitors may react quickly, whilst others respond slowly. Some competitors might not react at all! Competitor analysis:Choosing which competitors to attack and avoidAfter identifying the competitors and studying their strategies, companies need to choose which competitors to attack and which to avoid. A customer value analysis is a tool that assesses customer wants and needs and whether competitors are addressing these wants and needs. Businesses can use customer value analyses to determine competitors' strengths and weaknesses in creating value for customers. This helps them determine whether a competitor is strong (definite competitive advantage) or whether a competitor is weak in satisfying target customers' wants and needs. It also helps a business evaluate how its offering compares to market leaders' offerings. Ultimately, the firm's goal is to maintain a competitive advantage that creates value for customers in a way that rivals cannot imitate. Not all competition is 'bad'. Competitors can sometimes encourage demand for specific product categories in the industry, creating new opportunities. Competitor Analysis GraphA competitor analysis graph shows how competitors are positioned in a market. This can be done by constructing a competitor analysis graph. Figure 1 shows an example of a competitor analysis graph: Figure 1. Market Mapping Beauty Brands, StudySmarter Originals In Figure 1, we can see how different makeup brands are positioned based on quality and price (based on customer perceptions). Of course, there are various factors we can use to create market maps. For example, a brand could replace price with market share (low/high) on the x-axis and quality with customer reviews (positive/negative) on the y-axis. It is up to the marketer to decide which factors are essential for the overall competitive strategy. Competitor Analysis ExampleOkay, this is quite a long post. Before you go, let's go through a final competitor analysis example. The example we will look at is Pepsi - the company that makes soft drinks everyone has tasted at least once. Pepsi has various competitors. From an industry perspective, every soft-drink producer is in competition with Pepsi. But from a market perspective, only companies that address the consumer need of 'quenching thirst' is Pepsi's competitor. That includes fizzy drinks, juice, mineral water, tea, etc., producers. If we go deeper into market segments, Pepsi's competitors are narrowed down to manufacturers producing caffeinated drinks (e.g., on-the-go Starbucks frappuccinos, iced tea, etc.). However, the one iconic rival of Pepsi is Coca-Cola. The two companies fiercely compete to grab consumers' attention. Both also invest a huge sum of money in strategic communications campaigns. A classic example can be found in a Halloween ad released a few years ago where Pepsi shows itself draped in a Coca-Cola cape. The copy read, "We wish you a scary Halloween". In response to this attack, Coca-Cola used the same image for its campaign, with adjusted text. Fig 2. Pepsi vs Coca-Cola Ad Campaign. Source: @PerezTigidam via Twitter Coca-Cola's copy read, "Everybody wants to be a hero!" implying that Coca-Cola is superior to Pepsi - an apparent attack on Pepsi using Pepsi's creative asset. Competitor analysis - Key takeaways
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What is the first step in competitor analysis?The first step to doing a competitive analysis is identifying your competitors. There are two types of competitors: direct and indirect.
What are the steps to competitor analysis?How to conduct a competitive analysis in 5 steps. Identify your competitors. This sounds straightforward, but in fact there are different kinds of competitors to consider. ... . Gather information about your competitors. ... . Analyze your competitors' strengths and weaknesses. ... . Determine your competitive advantage.. What are the 5 steps parts of a competitive analysis?How to conduct your competitive analysis. Identify your top ten competitors.. Analyze and compare competitor content.. Analyze their SEO.. Look at their social media engagement.. Identify areas for improvement.. What is a competitor analysis quizlet?competitor analysis. focuses on the identification of threats, opportunities, or strategic uncertainties created by emerging or potential competitor moves, weaknesses, or strengths. identifying competitors.
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