Why Is It Important to Keep an Eye on Your Competition?
Today, it’s almost impossible to find a company that would operate independently from its competition on the market. Actually, it doesn’t really matter whether you own a renowned brand or whether you’re just taking your first steps in e-commerce. Competitor analysis plays a key role when it comes to planning your brand strategy. Competition never sleeps! Keep reading to find out how to always be one step ahead of your business rivals.
Importance of competition in business – Why is competitor analysis so crucial?
Are you entering the market with an innovative business idea, thinking that there are no chances that someone could be better? Or maybe your brand is extremely popular and a wide range of customers shop regularly in your store? Although it might seem that your company is one and only in this industry and your product is irreplaceable, the reality looks slightly different.
E-commerce is like life, you never know what’s just around the corner, therefore, you should perform competitor analysis regularly, not only when you launch your business. Very often we underestimate offers of our competition because we’re convinced that our services or products are far more attractive. Why is it dangerous? Well, first of all, you may not be aware which companies offer the same services, how they do it and how they plan their marketing strategies. However, this is not the end! Let’s discuss the issue in more detail.
The business life cycle
Every year, the market is flooded with companies that strive to achieve success. New businesses spring up like mushrooms and aim at outdoing their competition and ensuring a stable position on the market. At the same time, companies that have failed to adapt to the prevailing conditions either suspend their activities or decide to end operating in e-commerce. The everlasting flow is what makes the market development and it’s basically why the competition is so an important factor to keep!
Thanks to constant monitoring of your competition you’re able to spot new companies emerging on the market, their characteristic features, and the advantages they have over other businesses.
Responding to changes
Monitoring activities of your competition enables you to identify a few factors on the basis of which you can conduct a thorough analysis. You should pay particular attention to elements such as competition identification, the scope of the services your competitors provide, their range of activity, relationships with customers, and the way of attracting new potential groups of recipients. All conducted advertising campaigns and promotional elements are also highly relevant.
By analyzing these areas, you’ll be able to compare yourself to the competition, examine its strategy or specific activities, and finally, based on this information, you’ll be able to devise your own strategy.
Choosing an appropriate strategy
Adapting a suitable strategy will allow you to redefine your position on the market and thus plan your further activities taking into account steps taken by your competition. By analyzing offers of other companies, you can get a bit inspired by their good ideas and then somehow incorporate them into your own strategy.
Moreover, you should also consider your current marketing and social media activities. Following various social media channels of your competition will enable you to pinpoint your weaknesses and consequently improve the strategy and make your company even stronger.
Building marketing communication that is based on advantage
It can be stated without a shadow of a doubt, that a product or service price is the main factor affecting the decision-making process. So what to do? Well, you need to set your prices in a way as to be competitive with similar companies operating in the industry. Moreover, an in-depth analysis of various businesses on the market will help you notice aspects that are still worth working on. On the other end of the spectrum, it’ll also make you see areas in which you have an advantage over your competition.
Quality is another important factor. Generally, we perceive products that are made of high-quality materials and in accordance with all the standards as more attractive mainly due to the fact that we hope they’ll serve us for many years. Therefore, your marketing communication strategy should revolve around aspects that make you stand out from the competition on the market.
Main principles of competitive monitoring
When you already have the list of companies that can be defined as your competition, all you need to do is to take a closer look at their methods of operation and other aspects that are of interest to you.
Keeping eye on competition rule #1 – Who is my competition?
We can distinguish two types of competitors. Your direct competitors are companies that reach similar recipients and whose strategy can be easily analyzed thanks to the similar offer and business model. The other type is indirect competition, otherwise known as substitutive competition which satisfies the same needs despite offering a completely different product or service.
It’s also essential to analyze benchmarks, meaning leaders who introduce innovative solutions to the market and consequently set trends. By observing the activities of your competition, you’re able not only to implement a new strategy but also to adapt to current trends and outdo your rivals.
Keeping eye on competition rule #2 – What does my competition specialize in?
Before analyzing a business and marketing strategy of a given company, it’s worth making sure that it’s really your competition. For this purpose, you should try to imagine yourself that you’re a customer looking for a specific product or service. It’ll enable you to perfectly understand the situation. Thanks to analyzing the offer of a given store, its group of recipients (taking into consideration demographics and psychographics) you’ll be able to determine your real competition.
Keeping eye on competition rule #3 – What are its objectives?
First and foremost, your competition’s strategy is also based on defining goals. Thus, you should answer the following question: what’s your competitors’ business plan and tactics? By analyzing the actions of particular companies you can estimate your position on the market and take certain steps that will allow you to outdo your competition.
Keeping eye on competition rule #4 – What can I do to be better than my competition?
If you already have some detailed information about your competition, you can think about aspects in which you can be better. While determining the gap between you and your competitors, it can be useful to monitor their offers and product availability because thanks to it you can check the work of your logistics facilities.
Moreover, the way a given company communicates with customers on social media channels also tells you a lot. If your competitors’ level of activity is rather low, you can plan a whole range of activities that will encourage your potential customers to take part in contests. You can also publish some expert content or attention-grabbing graphics.
Keep an eye on your competition online – Internet and social media monitoring
When analyzing your competition, pay attention to elements such as its visibility in the search results and specific SEO keywords. By knowing how a competitive company gains traffic to its site and which keywords it’s displayed on, you’ll be able to carefully plan your own strategy.
For more information on how to analyze your competition and which tools to use, go to one of our previous articles: How to analyze your Google competition?
Do you measure the effects of your online activities? When running a marketing campaign, it’s very important to thoroughly observe everything and assess the effectiveness of your strategy. Follow the way your competitors talk about their own companies or other businesses on the market because this will put you in the picture and show how your company presents itself when compared to others.
Moreover, a wide spectrum of useful tools give you the possibility to constantly monitor what others say about your company and consequently, whether it affects your brand image. Why is it so important? Well, when you have access to such information, you can immediately take appropriate steps and respond to the content published about you.
Today’s market provides many tools that enable you to keep an eye on the competition and assess information about the current trends in a given industry, the way your competition operates, how customers rank given businesses, and more importantly, what they tell about them and on which social media channels it happens.
Brand24 is an exemplary tool that may prove extremely useful in competitive monitoring. With its use, you can check on which channels your competition is mentioned the most frequently, who distributes that information, and whether it presents the company in a positive or negative light. Thanks to such pieces of information, you can learn more about the offered products or services and in the case of dissatisfied customers, you can avoid purchasing something of questionable quality.
This tool was created especially to provide information about content that is perceived attractive by users and to show how active they’re on different social media platforms. Thanks to it, we can easily find out what are the current trends.
SimilarWeb is a site that provides estimated analytical data by retrieving information about popularity or similarity rankings. On the basis of indicators such as global rank, country rank or category rank you can see how powerful your website is in regard to specific markets.
What are the most common mistakes when conducting a competitor analysis?
- a superficial competitor analysis,
- underestimation of the competition,
- ignorance of the customer’s point of view.
Remember about the abovementioned factors when conducting your competitor analysis. Monitoring and creating an advantage over your competition is an important part of your company’s strategy which can ensure your high position in the search results, bigger traffic to the site, and, consequently, a greater number of satisfied customers. When doing the analysis, you should not only monitor the business strategies of the competitive brands but also try to understand customers and their needs.
To sum up
Competitive monitoring is a key element of every company’s strategy. Its main goal is not to catch up with others but to always be one step ahead of your competition in the industry. Conducting a thorough analysis regularly will allow you to devise an efficient marketing strategy for your company which will, in turn, attract customers’ attention and improves your conversion rate.