Competitive Analysis

In the world of business, competition is just as fierce as in a cycling race. To stay ahead of the game, companies must constantly innovate, offer better products and services, and effectively meet customer needs. To achieve this, a keen sense of awareness is necessary. Just like in a race, businesses must keep a watchful eye on their competitors and analyse their every move.

That's where competitive analysis comes in. Its primary purpose is to help companies stay ahead of the competition by providing insights into their rivals' strengths and weaknesses.

In this article, our market research experts explain:

• Everything you need to know about competitive analysis
• The insights competitive analysis provides, and
• Why digital market research is an ideal tool for systematically examining your competitors

What is a Competitive Analysis?

A competitive analysis is a vital part of market analysis from the customer's perspective.

It involves systematically exploring the current and potential competition to reveal both the strengths and weaknesses of your own company and your competitors.

A comprehensive competitive analysis achieves the following:

• Systematically explores current and potential competition
• Reveals strengths and weaknesses of your own company and competitors
• Identifies future trends and potential threats to your business
• Provides insights into the strategies of your competitors

By identifying your main competitors, understanding their strategies, and using this knowledge to overtake them, you can position your company more strategically in the market.

• Introduction of new products
  Are these products already available in the market? How well are they received by consumers?
  
  
• Start-up of a new company
  What is the structure of the target market?
  
  
• Development of new target groups
  Which target groups do I serve, and which ones are being served by the competition?
  
  
• Development of innovations
  What unique and innovative products can my company offer in the market?
  
  
• Review of marketing strategies
  How do competitors advertise, and how is it perceived by the target audience?
  
  
• Examination of recruiting strategies and employer image
  How do competitors hire new employees, and how satisfied are the employees at competing companies?
  
  

Gaining knowledge about competitors is challenging. Without understanding their strategies, it is almost impossible to outperform them.

It is important to gather insights from consumers, who are the primary source for competitive analysis. Their opinions on your products and those of the competition can make all the difference.

How to conduct a Competitive Analysis step by step

Step 1: Identify your main competitors

Identifying all relevant competitors is a crucial first step in conducting a competitive analysis.

Key competitors are those companies that offer similar products or services to the same target audience as your company. These can include current suppliers in related markets as well as potential future entrants.

For example, if a fictitious supermarket, Supermarket A, wants to assess how it is perceived compared to other supermarkets, it needs to identify which other supermarkets to include in the analysis.

A competitive analysis questionnaire should therefore ask consumers to name potential competitors and indicate where they buy, which companies they know, and whose products they do not purchase.

Consumers should also be asked to name a few brands spontaneously to determine how present a particular company or brand is in their minds.

Below are some question ideas to identify competitors:

• Thinking of supermarkets, which names come to your mind spontaneously?
  
  
• In which supermarket do you regularly buy groceries?
  • Supermarket A
  • Supermarket B
  • Supermarket C
    
    
    

Step 2: Obtain information about your competitors

To develop a competitive analysis, it's crucial to define precisely what information is needed to understand the competition.

Consumer surveys can provide valuable insights that may not be readily apparent and only come to light through strategic questioning.

For instance, understanding why consumers prefer a particular brand or supplier could be illuminating. Age demographics can be used to determine which segment your brand is popular with, and asking how consumers perceive different competitors' advertisements compared to your own can reveal valuable information.

In the case of the fictitious supermarket, it would be beneficial to know why consumers choose one supermarket over another. An open-ended question or a question with multiple answers can be used to gather this information.

Asking open-ended questions has the advantage of revealing information that would otherwise not have been available.

• Why are you shopping in this particular supermarket/supermarkets?
  • Lowest prices
  • Best quality
  • Largest selection
  • Is closest
  • Another reason, namely: (free text)

As part of a competitive analysis, the supermarket could also test which advertising strategy consumers are more reactive to.

• • Yes
  • More likely yes
  • Rather no
  • No

Step 3: Find strengths and weaknesses of your own company and those of your competitors

• In which supermarket do you find the most friendly staff?
  • Supermarket A
  • Supermarket B
  • Supermarket C
  • Other, which is [free text]

• Please tell us a reason why you would change your telecommunications provider.
  
  
• Here are five sneaker brands. In your opinion, which do you think offers the best design in general?
  
  
• Which drugstore is closest to your home?
  
  
• When you think of coffee shops, which chain comes to your mind spontaneously?
  
  
• What does a sportswear brand need to offer you to buy there again?
  
  
• Which detergent advertising campaign has been on your mind lately?
  
  
• Which of these insurance providers would you trust the most?
  
  
• Please think of a modern café. What would it have to offer to be ahead of others?

Analysis of the results

Digital market research offers the advantage of quickly obtaining a plethora of ideas, opinions, and evaluations from consumers of various target groups.

These data form a crucial basis for future corporate strategies and marketing. The large amount of data collected at the beginning of a survey, such as demographic information, can provide unexpected insights.

For instance, in the case of supermarket A, they could retrospectively analyze which supermarket names come to the minds of consumers in different cities or which stores attract certain age groups.

If they find that their store is unpopular among young people in a particular area compared to the competition, they could target this group in their future marketing strategies.

Find questionnaire templates and sample surveys to get your competitive analysis started in minutes via the Appinio dashboard — or book a demo and talk to our experts today!