Competitive analysis is an essential step in market research. It helps the company to achieve its development objectives by taking into account the practices and reactions of the competition.> Download this free kit and do in-depth market research. ” align=”middle”/>
What is a competitive analysis?
Competitive analysis consists of comparing the situation of a company or a future company and the market in which it is developing. Its role is to analyze the weight of direct and indirect competition as well as its nature. It must follow a well-defined structure and is organized in several stages.
Why do a competitive analysis?
Competitive analysis makes it possible to list all the players present on a market, to define their offer and to identify their strengths and weaknesses.
The objective is to position the company and measure the viability of the project. Is it a saturated market in which it will be difficult to find a place? Is the proposed offer sufficiently differentiating to hope to gain market share points? Only a good competitive analysis can answer these types of questions.
The company then uses the results of its competitive mapping to:
- Refine its positioning and its value proposition.
- Stand out by leveraging its advantages over other market players.
- Exploit the weaknesses of the competition to strengthen its presence in the segment.
Finally, competitive analysis is essential in order to anticipate and quantify the investments to be made in order to hope to remain competitive.
How to do a competitive analysis?
- Identify competitors.
- Determine the criteria to be analyzed among competitors.
- Make a competition analysis grid.
- Analyze the results.
Competitor analysis must be carried out with regard to the company’s objectives and its positioning in the competitive environment. A 4-step methodology is ideal for studying the competition as a whole and drawing conclusions that will help in decision-making as well as in the construction of a sales and marketing strategy.
1 – Identify competitors
Competitive analysis attaches particular importance to the distinction between direct and indirect competitors. On the one hand, the direct competitors, that is to say the players marketing an offer similar to yours. On the other hand, indirect competitors, who offer goods or services with notable differences, but meeting substantially identical needs. Within the framework of the analysis, taking into account only direct competition would not be relevant, since the customer’s need is one of the main concerns of the market study.
During the identification phase of the players present on the market, it is important to separate those who have a similar offer from those who offer a different product, while targeting the same consumers. Thus, the list can have two separate columns, one for indirect competitors and the other for direct competitors. The two categories will not respond to the same strategic issues.
2 – Determine the criteria to be analyzed among competitors
Once your main competitors are listed, describe them individually by integrating their characteristics. The main criteria to be listed are:
- Company history.
- Geographical location.
- Internal organization.
- The business strategy.
- The offer.
- Pricing and distribution policy.
- The communication strategy.
The start list takes the form of a comparison table, also called benchmarking competitive. You can then start analyzing the identified actors, using different tools. Do not hesitate to cross-reference them to make the analysis more efficient.
First, essential marketing tools such as SWOT analysis and Porter’s 5 forces method will be effective in individually analyzing the listed competitors. You can also use the BCG matrix, especially if the competitive analysis is carried out as part of the launch of a new product or service.
3 – Make a competition analysis grid
The competition analysis grid consists of bringing together all the competitors listed in a table that compares their strengths and weaknesses. It is a relatively simple tool to set up and very visual. He will be able to summarize all the points of the analysis, while schematizing them.
The analysis grid can be supported by a perceptual positioning map. Also called mapping competitive, it is a marketing tool that allows you to present the position of competitors on a graph. You can create multiple charts based on the relevant criteria chosen to contrast them.
For example, a mapping competition that is based on the price of the future product will not bring the same results as another that takes into account only the level of quality. To better find your way around, do not hesitate to list your relevant criteria before formatting your perceptual positioning maps.
4 – Analyze the results
The first and ideal objective of the competitive analysis is to succeed in highlighting the best place of the company on a given market. For this, the competitive analysis must respond to each of the company’s positioning issues, formulated upstream of the study.
The data collected on the competition only has value if it makes it possible to justify strategic choices. The results of the competitive analysis provide an answer on the positioning to be adopted and lay the foundations for future strategy.
It is therefore essential to draw conclusions from the competitive analysis and not to stick to a pure and simple analysis. This last phase aims to draw strategic conclusions by taking into account the entire analytical approach deployed during the study.
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